FFP, Newco’s loss and huge consequences


Two weeks ago, in the State of the Club Report, I noted, “What happens in [Newco’s] qualification tie against Malmo and if they progress, in the subsequent play-off round, will go a long way to determine how competitive the league race is over the next decade.  It is the sting in the tale of losing such a momentous title.”

The next decade’s power within Scottish football is what last night’s result is all about.  To explain why, let’s look at what is allowed under Uefa’s Financial Fair Play (FFP) rules:

Clubs are allowed to lose €5m each season without breaching FFP.  Some costs are deductible: spending on youth development and depreciation (often incurred to improve facilities) are deducted from your FFP loss.  In addition to this, clubs can convert up to €25m debt into shares, raising the maximum allowable loss for any period under consideration to €30m.

The monitoring period for FFP in normal times covers the three years before the current season.  In response to the current crisis, Uefa amended the reporting period for season 2019-20 to cover two seasons (2019-21), so currently, the FFP reporting period is for seasons 2017-18 until 2020-21.  Uefa also permitted crisis-related costs of revenue falls would be recognised, so clubs that are normally run prudently will not be penalised due to the mess the world is in.

Newco’s most recent accounts are for year ending June 2020.  Figures for the season just ended have not been published yet, but they were obliged to report their figures to Uefa at the middle of last month and are due to report again to Uefa in October.

See graph below:

I calculate three of the four FFP years show a cumulative loss of £32.76m.  This converts to €38.657m.  Unlike Celtic, Newco did not offer season ticket holders refunds for season 2019-21, though there will be some crisis-related loss of revenue, I estimate no more than £500k.

To align with FFP requirements, Newco would have to have made a profit after adjusting for the crisis of around £8m last season.  That did not happen.  It is more likely that their adjusted figure was between the trend of £11m loss and £15m loss.

All of this crystallises now.  Champions League revenue would have resolved this, but now they are in breach, and will be required to come into compliance if they wish to compete in European football.

So what happens next?  Uefa will investigate Newco’s financial housekeeping on receipt of the figures submitted last month.  This will be reviewed in October, allowing Newco to downsize and come into compliance during this transfer window.

If they do not come into compliance, Uefa will offer a Settlement Agreement.  The most relevant recent example is Milan, who were in breach for the monitoring period, seasons ending 2015, 2016 and 2017.  Uefa offered, then imposed, a two-year European ban in 2018.  Milan appealed to CAS, then in 2019, the club accepted a compromise one-year ban.

Other remedies short of a ban are available and have also been used.  These always include a transfer ban and reduced European squad size, and are only permitted when strict measures are taken to bring the offending club into compliance.  The process can be lengthened by appeal, so Newco can choose to bury their heads in the sand and compete for the title this season.

This latter possibility is dependent on them continuing to raise money.  Between November last year and June this year, Newco issued share capital on 10 occasions, giving the impression of a business living very much hand to mouth.

With Europa League revenue, everything else being equal, I estimate their loss for this season will be around £15m.  If they fail to reach the Europa, that figure will rise to a £25m loss.  That’s a lot of BMW sales.

I started CQN in 2004 because there was financial madness going on at Ibrox and many Celtic fans were asking why we were not working with the same gusto.  For 8 years, I predicted Rangers would crash and burn before they eventually did.  I predicted this would lead to a Generation of Domination – which it did.

Those were tough years in the Celtic financial blogging scene as we lost leagues and trophies to an outfit that seemed to always survive.  Like Oldco Rangers, Newco are playing casino football.  They run huge losses in order to become competitive.  If they lived within their means, they would have finished nowhere near the top of the table last season.

The predictions I made for Oldco were always likely but never certain.  We have followed Newco’s accounts for years.  The direction of travel was clear, but a team that was a goal up and comfortable against 10 men at halftime last night, blew their chance of competing for a £40m lifeline tie against a side from Bulgaria.

On the turn of a 4-minute spell last night, the world changed.  Football is a fascinating business; the complexity of risk is incomprehensible.  If you think it looks easy from the outside, you are almost certainly missing a huge part of the plot.

And permit me another point, if a grinning Jon Dahl Tomasson knows all of this, why do you have to come to CQN to read about it?  We are talking about publicly available information here, noted in Newco accounts and prospectuses.  A decade on and again, the mainstream are sleeping while the biggest story in football unwraps.

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  1. I accept all that Paul has said – he knows much more than I and 99.9% of those who post on here.



    I don’t know what the outcome of Sevco’s recent years’ shenanigans will be, however I do know that this time there is not a Craig Whyte figure at the helm and therefore things will be handled differently. There is no large institutional debt extant(e.g. HMRC) and it is not in the interests of those who have sunk money in for ‘confetti shares’ to seek anything like an administration, pre-pack, or, otherwise, to ‘right the ship’.



    We look on in disbelief on a yearly basis at the continuing losses which seem to make not one iota of difference to the running of the Ibrox club. The Mike Ashley court cases, which we are told he has won, is another area where it appears not a finger has been laid to date on the Ibrox coffers, so why would UEFA’s fair play regulations be any different?



    Paul says “the direction of travel was clear” as to the Ibrox club’s immediate future plans. It was, CL qualification & the title this season, and automatic CL qualification next. King spelled it out in some detail only a few days ago. The first fence has not been jumped and now all depends on the league title this season.



    Celtic must do ALL in its power to prevent this happening. We are not equipped at this moment in time. We have twenty days to ‘gear-up’. Ernie Lynch and some others have a theory that we facilitate ‘them’ by default, last season being a prime example. I don’t necessarily go along with this, but surely how we approach this season’s task will answer any doubts either way.



    Ibrox will ‘milk’ the Covid effect to the maximum, just like they have with their biggest loan from the Scottish administration. Would we then be in the least surprised if they were also able to side-step the FFP consequentials?

  2. Angel G- that’s really terrible news,I conversed with Robinbhoy on here many times, sincere condolences to his wife and family, may he Rest in Peace.

  3. Good post Paul.



    A week is a long time in football but it has afforded Celtic time to train together and plan ahead with a capable coach.



    We require a few more faces as our squad is light and the Manager needs support in the backroom urgently. Get this sorted and we may be having a better period than many anticipated. However, much work to be done and whilst they remain alive the Hun remain a major challenge on the park.



    We’ll have a better idea come September.

  4. PeterLatchfordsBelly on

    History repeating itself. It’s why JDT’s mischievous performance at the press conference was seized upon as instantly iconic.



    Lawwell’s Celtic would risk next year’s bounty by continuing to operate as a project farm for the EPL Dom going for mature, established pros. I heartily welcome the change, but time will tell if that strategy works.

  5. Stx2 @ 1.02



    So now I have a stalker as well as a woose merchant who talks a good game …


    For the Sheep that is SB.



    I fear you are extending your patio as I type …


    No problem — I will put in a small donation to Strathcarron if SB has a better season than JMcC.



    Settled will of CQN will be my criteria.



    As for your snash about directions to CP — a bit below your normal school teacher style.


    Something to ignore and hope your form returns.



    “Dom going for mature, established pros. I heartily welcome the change, but time will tell if that strategy works.”



    It will only have worked if we retake our title PLB, the proof of the pudding and all that, por cierto.

  7. The Battered Bunnet on




    There is no price set by the Lowland League for match tickets and each club has their own pricing.



    Locally, EKFC charges £6, with accompanied U12s free. I have no idea if they intend to increase the price for the visit of Celtic B, but it wouldn’t make much more than £1000 of difference to the total gate receipts if they charged £10 instead.

  8. ANGELGABRIEL on 11TH AUGUST 2021 12:59 PM



    Very sorry to hear that. May he rest in peace.

  9. ANGELGABRIEL – sad news.



    Robinbhoy RIP. Pray peace for his family, his pals and peers.

  10. The Battered Bunnet on

    Terribly sad news of Robinbhoy’s death. He was always a fair minded and insightful poster on here, one I looked out for.



    My thoughts are with his family today.




  11. TBB- Might just be me,but I think we are getting fleeced at every turn right now,still charging £1.50 to print at home etc

  12. Go tell the Spartim on




    Sad news indeed 😔 condolences to those that knew him



    As Etims mentioned in today’s Diary, sometimes someone at the club does something that makes you proud, that being the minutes applause for all those we have lost 😞 RIP to all of them who are treading a safer path now 🍀🍀🍀

  13. YNWA Robinbhoy🍀



    Great article Paul, financial doping along with their “covid” doping. Stories screaming to be in the mainstream and investigated and nothing……no change there….

  14. If we sign or go for a player like Thomas Henry, then I believe our front 3 would be Abada – Henry/AN.Other- Kyogo



    James Forrest may be the one to miss out unless he gets a midfield berth, highly unlikely, but, this is what will happen, por cierto.

  15. By the way, Abada reminds me of Davy Provan the way he runs and dribbles, anyone else sees that? por cierto.

  16. Rip Robinbhoy.



    Appreciated his posts; sad to lose him.


    Thoughts with his wife, family and friends.









  17. POR CIERTO on 11TH AUGUST 2021 1:21 PM


    By the way, Abada reminds me of Davy Provan the way he runs and dribbles, anyone else sees that? por cierto.






    more direct than provan, a better left foot as well, i would say provan was the better dribbler

  18. Gordon Strachan’s appointment is intriguing. Why three months? Why/How will it fit with his Dundee remit?



    Of course if anything happened to Ange, we would have someone to hand and another Eddie Howe debacle would be avoided.




  19. MM,



    I had several name calls from you to me over this bet thing. All very childish and purile, and yet surely with 2 games in 4 days it is easy to meet and agree the terms,



    unless offcourse ……………

  20. Back down to earth with a bang, so sad to hear about Robinbhoy.


    Condolences to his family and friends.



  21. Josip Juranovic looks like a steal at 3m. Played regularly for the last 6 years at Hadjuk Split and Legia Warsaw, consistently providing 2-3 goals and a handful of assists each season. Recently a regular in the Croatia squad, played in the Euros against Scotland and Spain, supplanting Sime Vrsaljiko of Athletico Madrid.



    A lot of bargains to be had in the eastern Europe market. András Schäfer, the young midfielder who put in a storming performance for Hungary at the Euros is valued at just 1.3m, surprised no one’s picked him up.



    Sorry to hear the news about Robinbhoy, thoughts with his family.

  22. The FFP rules will be amended or completely rewritten as a result of the Covid pandemic. Then politics will come into play, as those who make up the rules will be either sympathetic or hostile to the big spending clubs like the Qatari Works Team or Abu Dhabi Citizens.


    The fact that the Qatari Works Team have just signed the poor man’s Kyogo Furuhashi from Barca, would indicate a confidence that the FFP rules are up in the air at the moment.


    Having said that, if we want to have a chance of witnessing Messi, Neymar, and Mbappe, on our own pitch, then the 21/22 title is a must.



    From his South African bunker, Dave King, in his head anyway, had the Govan outfit a shoo-in for back-to-back CL qualifications, and seventy million big ones. A bear with a sore head today Dave ? What colour are the pack of cards being picked from the floor today ?



    Having said that (again), we need two quality defenders asap to stay in the hunt this season. The AZ Alkmaar games will be a good barometer of progress.

  23. The Blogger Formerly Known As GM on

    “And permit me another point, if a grinning Jon Dahl Tomasson knows all of this, why do you have to come to CQN to read about it? We are talking about publicly available information here, noted in Newco accounts and prospectuses. A decade on and again, the mainstream are sleeping while the biggest story in football unwraps’.



    Indeed, anyone paying attention can see that result last night was CATASTROPHIC. Anyone except BBC Scotland and the SMSM, that is. Let it continue, I say.



    The only problem I have with today’s missive is that it relies on rules to be enforced. Usually they are bent, changed or ignored when it comes the Huns. Given its an external governing body tasked with applying them without fear or favour provides some hope.

  24. JIMDOM on 11TH AUGUST 2021 1:36 PM



    Totally agree re FFP rules being “adjusted” for those and those alone. Teams like us and them will, of course, feel the full force of the sanctions imposed so as to keep the lesser football authorities on their toes, por cierto.

  25. While today’s article is timely, relevant and very informative. I hope those running Celtic are busy building Ange’s squad and get more players in prior to our own daunting Europa play off. We can’t spare too much time laughing at the huns counting an 40 million bounty before they kicked a ball.



    We can enjoy the next few days, we should win well tomorrow and gain some revenge on Hearts at the weekend.



    Make no mistake though, next Thursday is a mammoth task and should command the full focus of our Club’s hierarchy.

  26. Rangers dominated until they scored twice says the pundits ……………



    Possession – 33%



    Shots – 1 (1 ffs, aye 1)

  27. Scuderia Verde on

    JHB I share many of your sentiments but surely if UEFA have the resolve to apply FFP to a club like AC Milan they can deal with the Newco? The Covid situation may play a part but it seems there are allowances made for that within the process.