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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CORKCELT on 11TH AUGUST 2021 3:00 PM
‘Red Duchess from Spanish Civil War was a totally different person.’
###
The Red Duchess was Spanish. This wummin was Scotch.
https://www.thecourier.co.uk/fp/news/local/perth-kinross/863331/perthshire-castle-honours-duchess-who-was-scotlands-first-female-mp/
!!BADA BING!!
Itakura? Is it a loan or are we buying?
In keeping with the upbeat mood of recent days I have decided to write my first ever song. It is dedicated to our new manager and although the lyrics might need some tweaking , it is quite hard to get it out of your head
It is to the tune of Waltzing Matilda and goes like this
Ange Postecoglou, Ange Postecoglou
Ange Postecoglou deda dadidum
Dadidum dadidum dadadadadadadidum
Ange Postecoglou deda dadidum
HERE WE GO AGAIN [crescendo]
ANGE POSTECOGLOU ANGE POS………
SOCRATES MULLIGAN
No need to tweak…….it’s perfect!
The Huns took out the Income Tax relief offered to businesses during Covid.Not sure if it was a 3 or 6 months amnesty,where the claimant was allowed to withhold Income Tax due for the period.It then had to be repaid.
Cheers Ernie,
That makes sense now.
I’ll dial back my Paranoia Monitor to “standby”
The Onlooker
THE BLOGGER FORMERLY KNOWN AS GM on 11TH AUGUST 2021 3:36 PM
…..
I suspect your right re funding of players it’s a bag of spanners …. there will be multiple rule breaking going on ,
They will just carry on spending and at some time just before they run out of cash , they’ll start sacking folk , no one wants their players as their playing style does not suit many other teams …. all good news.
itikura was be an inspiring signing for us!! give is height and strength at the back and would be good for Kyogo.
The big lad is fast , technically gifted and plays with heart.
Rangers died chasing Celtics European cup dream. Sevco on life support to stop the 10 at the expense of the future of the club.
On the latter – I’d hope Celtic would do the same to stop 10 but I doubt they would! Sevco will take the hit for a few seasons and rebuild.
Celtic need to put the foot down and sign defenders – not enough chat about a left back for my liking!!
When this business properly runs out of any soft loan investors, which it will, then this version of Administration with a real sale of assets, players and buildings, contracts and machinery, goalposts and nets will be the outcome.
It will be a real admin, not a corrupted and influenced one.
ST STIVS
We could buy their toilets for the South Stand.
We’d still be peeing on them!
;-)
Itakura is right footed.Aarrggghhh.
Welcome back Gordon.
So,after all the talk of Huns debt,no one interested in my revelation about the Income Tax.
Oh well,carry on regardless.
my reading of today’s leader is that Paul is saying that it will be difficult for The Rangers to get around FFP and be allowed to play in European competition next year. I don’t think he implied at this stage that they would go bust – as others have said, it’s not in Bennet or Thompson’s interests to allow that to happen. Their hope would be that they can delay and appeal and hope that any punishment comes the following year, or that UEFA give more slack due to COVID. I don’t see UEFA indicating that is likely just now, but you never know. They would then hope to reap the rewards of champions league money next year to keep them afloat during the transfer ban year(s).
Is that about the jist of it?
Just read a story on my hometown, Bo’ness, Facebook page.
Police say they have found £3m worth of drugs, various handguns and a number of assault rifles,
and two crates of dynamite, in a flat behind the library in the town centre.
Locals are shocked as they didn’t know there was a library in Bo’ness!
When doing all the conspiract theories, why didnt celtic just buy a Rangers player directly from them ?
hahahhahahahahah, laughing to myself here, the absurdity.
I have their game on again, in the background.
The haunted faces at the clock ticks down. Jimmy Bell, lol.
Alfie, back to Stevie G, the loyal fans accelerating up the stairs to get out.
Battle fever turns to Shellshocked ( to use a good old militaristic reference that they enjoy so much)
searching down the back of the couches for a charity to rob.
Good article Paul, I salute your economic credentials I really do. Notwithstanding, your sporting credentials are not in the same league. Over the last year you have distanced yourself from Fraser Foster, Ryan Christie and Leigh Griffiths, not to mention Jeremie Frimpong. You support Celtic Football Club rather than Celtic and it has been showing. Celtic Football Club are the greatest underachievers going, Celtic has potentially the greatest fan base in the world. Villareal are playing Chelsea tonight, but as long as Rangers implode we are ok. What do you think of Strachan getting a 3 month gig when he’s clearly past it? In your article you also display the ignorance and shallowness of the Celtic money men by saying Rangers would ONLY have had to beat a Bulgarian team to get into the CL groups. That Bulgarian side is Ludogerets, who not only play in green and white but who unlike Juventus or Celtic won their TENTH LEAGUE title in a row last season. Bulgaria of course played in the 1994 World Cup semi final.
TURKEYBHOY on 11TH AUGUST 2021 4:38 PM
So,after all the talk of Huns debt,no one interested in my revelation about the Income Tax.
Oh well,carry on regardless.
————
Phil mentioned £10m deferred outstanding and now due.
Lost to Malmo once, shame on the rangers,
Lost to Malmo twice, nope sorry that is a different club.
GLENDALYSTONSILS on 11TH AUGUST 2021 2:53 PM
GREENPINATA
Was she that Jacobite wummin? There was a programme on telly about her not so long ago .
Anything but a Jacobite.A remarkable woman nonetheless.
There were a good few heroic Jacobite women.Unusual in an age were women were not thought of as “Martial” in any way.
I would not be surprised if Ibrox has taken the opportunity to defer HMRC obligations for 3/6 months in addition to obtaining the maximum Covid loan from the Scottish Executive – we know definitively about the latter, not the former.
Necessity is the ‘mother of invention’ – Ibrox has always been very inventive in financial matters, still is apparently, although it killed the previous club. I don’t see the current club dropping down dead, however they may have a ‘long Covid’ type financial sickness, now that the CL vaccine has been withdrawn.
Ah well,temperature dropped,into the pool.
Which is not very cool.Bloody heat.
Note to shooting at Snake Mountain on the 29th…Whist McGregor may still be able to pull off miraculous saves destined for the top corner father time is now making him very vulnerable down low.
Celtic v Jablonec ……..sold out
Hi, I’m only on to ask a question that I regularly get from a lapsed Celtic supporter like myself, we both no longer attend games because of the stench of betrayal from our leaders at Celtic.
We’ve both been very suspicious of our club’s lack of clarity over let’s say, the last 12 years.
But this question really annoys me. I’m asked why when Brendan Rodgers was our manager and left us during his last season, that the balance sheet was £178 million. Yet at the start of the following season, six or eight months later, it was announced that balance sheet for the start of the next season was £43 million. Are these figures correct? If so, where did all of the £100+ million disappear to?
This is very disconcerting for us, and if these figures are true, I stress “IF” this is true, this has to be a scandal surely.
Hopefully someone could put us right as this surely has to be unacceptable.
mm.
Paul67 et al
Of course some of us, more familiar with the work of Alf Young, might have been aware some ten years earlier, 1993-4, that David Murray, his companies, and RFC as was, were heavily reliant on loans from the Bank Of Scotland, at around the same time said Bank was in the process of pulling the plug on the old Celtic Board. Rangers most successful period in their history, incredible if you looked at the period 1965-1995. No Bank of Scotland around now though, but, that said Lloyds Bank threw a drowning man a lifebelt, via debt write offs, debt to equity scams, none of which ever seriously investigated, and not likely to be given that the baled out wracked up bank, now back in the hands of friends in the City, racked up some $5.4 bill profit in its’ most recent half year period. Point being, the World as we know it did not begin in 2004. Though it did end in 2012, to be fair.
pabrooncsc
Malmö are the only club to have knocked Rainjurz and Sevco out of the Champions League.
JHB on 11TH AUGUST 2021 1:51 PM
In comparison with the likes of the top Italian clubs, Real & Barca, PSG…etc, will the relative “paltry” sums from down Ibrox way even register on UEFA’s radar?
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Definitely. In fact, one of the main criticisms of FFP is that it seemed to punish Eastern European and Turkish clubs while the bigger clubs were able to be a bit more “creative” with their funds and legal work.
Covid will ‘muddy the water’ in the next few years – relying on a ‘significant’ event at Ibrox is more wishful-thinking than reality…..in my opinion.
Remarkable rise to the very pinnacle of European football.
Domestic honours
Scottish first-tier League Championships: 1 2020–21 [behind closed doors due to COVID19 restrictions]
Scottish second-tier League Championships: 1 2015–16
Scottish third-tier League Championships: 1 2013–14
Scottish fourth-tier League Championships: 1 2012–13
Scottish Cup: Runners Up – 1 2016.
Scottish Challenge Cup: 1 2015–16 Runners Up 2014/15.
MACCARGO on 11TH AUGUST 2021 4:58 PM
Note to shooting at Snake Mountain on the 29th…Whist McGregor may still be able to pull off miraculous saves destined for the top corner father time is now making him very vulnerable down low.
————–
i thought the same, slow reaction to get down to the 2 shots to the right corner of his goal, also didnt seem to get the full stretch/reach either.
My difficulty with Pauls post is that Sevco and their earlier entity do not receive punishment. In fact individuals they have received over £30m in compensation from the Taxpayer. The same Taxpayer who got cheated out of almost £100m when they Liquidated.
SFA would need to support UEFA which they will never do. They still never got any punishment for their crimes. The FFP regulations will not e applied to Sevco. AC milan dont have the influence in the Italian FA which Sevco have here.
I have no confidence that the SFA and UEFA will hold Sevco to account
Away to make the dinner.
Behave now.
TURKEYBHOY
Anne MacIntosh was the Jacobite wummin I was thinking of .
MYSTYFIED MERCHANT on 11TH AUGUST 2021 5:03 PM
Hi, I’m only on to ask a question that I regularly get from a lapsed Celtic supporter like myself, we both no longer attend games because of the stench of betrayal from our leaders at Celtic.
We’ve both been very suspicious of our club’s lack of clarity over let’s say, the last 12 years.
But this question really annoys me. I’m asked why when Brendan Rodgers was our manager and left us during his last season, that the balance sheet was £178 million. Yet at the start of the following season, six or eight months later, it was announced that balance sheet for the start of the next season was £43 million. Are these figures correct? If so, where did all of the £100+ million disappear to?
This is very disconcerting for us, and if these figures are true, I stress “IF” this is true, this has to be a scandal surely.
Hopefully someone could put us right as this surely has to be unacceptable.
————————–
dont know where you get the figures from.
Balance sheet values for 2017, 2018, 2019 are all similar around the £140m mark.
Just to highlight the final sentence in Paul’s excellent piece.
“A decade on and again, the mainstream are sleeping while the biggest story in football unwraps”.
Of course the mainstream are not “sleeping”, they are looking the other way, on purpose.
Let’s see how the Sevco v Cinch ‘fight’ goes and if it is, as I believe, their first battle in the war with authorities to eventually wrest control of their TV rights and to sell them direct for more than the SKY “paltry” amount. Of course the ramifications for Scottish football would be far-reaching, some may say dire; however during the Covid ‘calling of the season’ debate, it seemed to me that those at Ibrox were contemplating ‘bringing down the house’ to get their way – another version of Armageddon, one might say.
Robinbhoy was a poster I cherished reading and responding to occasionally. He will be missed form here but most of all, condolences to his family and may he Rest in the Peace of Christ.
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BOURNESOUPRECIPE on 11TH AUGUST 2021 5:03 PM
Celtic v Jablonec ……..sold out
Ange and the new bhoys will taste the real Celtic Park tomorrow.
Worried that Ange is still talking of a couple signings over the next few weeks. That has been the party line for a while now.
Notwithstanding our new found confidence, Taylor and Ralston are the only full backs at the club with a look in at the first team.
Hopefully our signings are not continent on selling Eddy…