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. JHB



    I make up nothing.





    You posted a while back that “every young golfer to a man” was for allowing past champions of the golf majors to participate in those tournaments no matter their age, physical condition.



    You made that up.



    Now your telling lies.

  2. Back to Basics - Glass Half Full on

    Paul’s leader has stimulated an interesting and occasionally forceful debate.



    Good. As it should be (as long as it is honest and respectful).



    Sevco’s finances are not transparent.



    IMHO they are deliberately obfuscated.



    So we’re all working with only some of the facts.



    The absence of facts leads us to fill the gaps based on our knowledge, experience, instincts, intuition, biases and even our hopes for the outcome.



    Straight from my experience, intuition, instincts and biases – with barely a fact to substantiate it ….



    People wrongly assume a direct correlation between being intelligent and being rich.



    Rich people can be just as silly and driven by emotion as anyone else.



    Which is why they hire clever people.



    Hypothetical ….



    A guy might front load massive financial commitments over 2 years for the promise of 2 x £40m return starting in year 3.



    The guy advising the guy might say “OK”.



    When the front loaded investment stretches to 3 years with a reduced prospect of a 1 x £40m return?



    His advisor might say “Haud oan a minute”

  3. It would certainly appear that sevco, whilst skint, are not carrying anything like the external debt that rangers were.


    As Phil mac oft reminds us, they have no credit line from a bank. Equally, I am not aware of them owing a large sum to hmrc. Allowing such a situation to exist would be negligent on behalf of the revenue.


    If they do suffer an implosion, it appears the pain would largely be felt by their shareholders who may have to take a bath on their entire stake.


    Whoever controls the debt, controls their destiny

  4. SQUIRE DANAHER on 11TH AUGUST 2021 12:57 PM




    I know that you are right of course, as any Winnings from the Bookie is MINE….Until I give it to the Pub Landlord etc etc….





  5. JHB on 11TH AUGUST 2021 2:55 PM



    “I merely question, not rule out, the willingness and appetite of UEFA to come down hard during a period where Covid has had such a massive effect on the finances of many clubs.”



    As Paul very clearly says, Uefa are making reasonable allowances for extra losses because of covid



    He clearly explains how the Huns will be in breach even with these allowances

  6. UNCLE JIMMY on 11TH AUGUST 2021 3:05 PM



    “I am not aware of them owing a large sum to hmrc.”



    Nobody would be. It’s not beyond the realms of possibility that HMRC are allowing deferrals of PAYE and VAT on an individual basis to businesses struggling because of COVID. Especially to businesses with serious cash flow problems



    But none of us would know that




    They owe HMRC just over ten million according to their prospectus for the latest share issue.

  8. JHB on 11TH AUGUST 2021 1:04 PM


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




    FFS…There you go again…stating your opinions as FACT !


    How do you know about THAT so called 99.9 %…how can YOU possibly put a percentage on something that is ONLY your opinion…It may be that its only 90%, 80%…or 50%…YOU havent a clue..have you ?


    Much like YOUR OPINION ( NOT FACT)….that 60% of the Celtic support are Secteran and UNIntelligent ?


    How much of the Huns support that were at Ipox last night are Unionist Orange Scum, UNintelligent, Racist and Bigoted ?



    Have a wee go at THAT Percentage..

  9. “The assessment of a club’s compliance with FFP Regulations remains on a case-by-case basis which does not allow for a wholesale hiatus. As such, any non-compliance would need to be measured and necessary in the circumstances the club finds itself in. Therefore, ongoing breaches of the FFP Regulations for matters unrelated to COVID-19 would be unlikely to receive such leniency from UEFA.”



    Paul said as much in his post, por cierto

  10. MADMITCH on 11TH AUGUST 2021 1:11 PM


    Stx2 @ 1.02







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




    YOUR NO Right in the Feckin Heid………WHO would wish “Stalk” You ?



  11. Hear we go again Celtic Supporters can’t sleep ,worried about them over at Ibrox ,talk up up all things Celtic never mind about them ,some how they always get mugs to keep the club afloat,

  12. SAINT STIVS on 11TH AUGUST 2021 1:28 PM




    That CHUMP “MM” likes to FLATTER himself at every turn…WHO in their right mind would ” Stalk” him ?


    As for him calling you a ” Woose” ?….its CLEAR that HE is the Feckin ” Woose” by his refusal to meet you man to man .


    Maybe he lives in Outer Mongolia and cant make it to Glasgow ?


    NAW…Hes too feart to actually meet another poster…SIMPLES. There are others just like him on here, sadly.


    In FACT….I enjoy a Bet…and I will Wager that he’s far too FEART to meet anyone face to face ?




    HH Mate.

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



    Just awful news.



    Blethered with Robinbhoy on here many times.



    Condolences to his wife, family & friends.




  14. The Blogger Formerly Known As GM on

    JHB –



    “We have all witnessed that the ‘normal rules’ of finance don’t seem to apply down Ibrox way over recent years – how do they do it? Having a queue of eager and well-heeled supporters ‘coughing-up’ seems to be the answer – what do we know?”



    I don’t know much, but I do know that you don’t become “rich” throwing good money after bad. I don’t buy there’s a queue of rich fans willing to make what is essentially a donation. “Rich” people want a return on their capital. I don’t see how you get that investing in Sevco.



    What I suspect, but have no way of proving, is those funding them either have equity interest in players or their investment is securitised against future player sales e.g. Sevco buy Kent for £7m; 6 external investors put up £1m each and Sevco puts in £1m. Kent gets sold got £20m and the £14m profit gets split 7 ways. Alternatively you loan them £5m at 10% interest p.a. with a bullet payment in 3 years. If they can’t pay because, say, they fail to qualify for the CL and don’t have the funds, Kent gets sold to make good on the debt payment.



    Needless to say I’m sure most of the foregoing is against the rules, but as history suggests, they think rules don’t apply to them, particularly when it comes to financing.



    So, ‘what do we know?’ Nothing for certain. But I know there’s something, er, not quite kosher going on.

  15. We might not want to read anything about what happens across the river but…



    – What happens there has a direct impact upon our future


    – We are the club that they measure themselves against & who they HAVE to defeat


    – Compliance with these UEFA rules is enforced, just ask Chelsea


    – This forum would not exist if they hadn’t played casino football


    – If we don’t highlight any cheating the Scottish media will look away



    Timely article Paul which is much appreciated.


    Did you prepare two articles to account for whoever won last?




  16. JHB on 11TH AUGUST 2021 1:26 PM


    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.










    Far from interesting… technically you are shit stirring …. but nothing will come of it shit stirring I mean …

  17. The Huns in their ” LILAC” Strips last night……


    It reminded me of some of the wummin that I have met over the years…MUTTON dressed as Lambs !

  18. Big Jimmy



    If you allow me to make an estimate



    I would think that 100% of the crowd at Ibrox last night were


    Unionist Orange Scum, UNintelligent, Racist and Bigoted ?

  19. PHILBHOY on 11TH AUGUST 2021 3:00 PM









    I make up nothing.












    You posted a while back that “every young golfer to a man” was for allowing past champions of the golf majors to participate in those tournaments no matter their age, physical condition.







    You made that up.







    Now your telling lies




    PHILBHOY…This JHB Chump has PREVIOUS for telling lies.


    He claimed on here a wee while ago that HE would repeat anything he Posts on here to ANYONES Face…Man to Man like ?


    I would doubt that scenario EVER happening….!


    HH Mate.

  20. CELTICFOREVER on 11TH AUGUST 2021 3:43 PM


    Big Jimmy







    If you allow me to make an estimate







    I would think that 100% of the crowd at Ibrox last night were





    Unionist Orange Scum, UNintelligent, Racist and Bigoted ?




    Well done that young Man…You are Correct and you can a have a Pint or Two on me if we ever meet up.


    I cant promise you a Coconut….sadly.


    HH Mate.

  21. CELTICFOREVER on 11TH AUGUST 2021 3:43 PM





    Funny how the ” Percentage Expert” FAILED to have a guess…..I would wonder what was the Percentage/Chances of that happening ?


    HH Mate.

  22. Am i being paranoid or is it just coincidence that every time the wheels fall off the Huns bandwagon ….


    BBC Scotland rehash paedophile Priest , Catholic school scandal?



    Today is no different ….. a story that they have worked on since 2013 about occurrences more than 30 years ago… gets headline billing, and will, no doubt, lead tonight’s news




    praised the BBC for bringing the issue into the public domain.”







    The Onlooker

  23. The Battered Bunnet on

    I wonder, given a choice between:



    Winning the league last season but being knocked out the the UCL as they have been;



    Or coming second last season but qualifying for the UCL group stages via the non-champions route,



    which the Rangers directors would have chosen, and whether the supporters would have chosen differently.




    It may be a coincidence but it was the same reporter who highlighted both. He produced a programme called They sold the jerseys. He never followed it up. I wonder why.

  25. The Battered Bunnet on

    On suggestions abroad today the Odsonne might elect to stick around this season and leave on a Bosman next summer…



    …I’m not sure his advisors would be so keen. It’s unclear to me if he fits comfortably into the system Ange is setting up. Certainly he doesn’t have the mobility of the other forwards at the club, albeit he has a shed load of talent. Staying might serve only to give him a lot of time on the bench this season to reflect on how much his value to potential employers is diminishing.



    I doubt this past year has enhanced his value any, and I think I’d be inclined to sail before the tide ebbs.

  26. THE ONLOOKER on 11TH AUGUST 2021 3:59 PM



    ‘Am i being paranoid’






    Yes, looks like it.



    The report was issued today, so the BBC reported it today.



    ‘The Scottish Child Abuse Inquiry has today, Wednesday 11 August, published Lady Smith’s findings into residential care institutions run by the Benedictine monks of Fort Augustus Abbey between 1948 and 1991.’




  27. Kitty Ramsey was the first Scottish woman to hold a seat at Westminster.An outspoken critic of Fascism,and later Communist Russia.

  28. 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.



    I think Super Joe Miller.Looks like him as well.