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. Balance Sheet at fiscal year end 2020 was £144m. nearly the same as the previous 3 years.

  2. JHB on 11TH AUGUST 2021 5:17 PM



    “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”



    Interested to know how you get to the £40m figure that the Huns can earn annually from media rights.



    How does selling rights to Sevco games actually work? Yesterday you suggested that they would do it themselves through Rangers (sic) TV

  3. TURKEYBHOY on 11TH AUGUST 2021 4:15 PM


    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”


    Aye, that’s a good shout TURKS! por cierto.

  4. Paul The Spark on

    It’s amazing how quickly the SFA can look into Gordon Strachan appointment regarding conflict of interest but they go at snails pace when investigating the Huns

  5. Tom McLaughlin on

    If Celtic progress tomorrow night, both Glasgow clubs will be at home next Thursday in the Play-Off first leg.



    Kick-off times will need to be staggered with one tie possibly kicking off as early as 4pm.



    Alternatively, could UEFA order one of the ties to reverse venues?

  6. Rock Tree Bhoy on

    This sounds great…



    “Postecoglou, speaking to the Daily Record, added: “When the whistle goes, I want us to show the same intent we showed at the weekend.



    “Irrespective of what the opponents may or may not come up with, it is important we set the tempo right from the start and let them adjust to us.”



    C’mon the big Ange!

  7. 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.






    Back from the real world… I have a vague memory that they owed HMRC £7m last 30 June 2020 … could be they’ve deferred another pile of money getting you to nearer £10m …



    Every pound will be a prisoner for HMRC just now so can’t see them being too accommodating … they were constantly faxing the Jambos for much less … this debt and their football debt will need to be paid … limited wriggle room



    Transfer monies in will be limited … Fatty Morelos is going nowhere completely out of shape , Kent flash in the pan merchant , Barisic toooo slow , Tav shite bag… possibly Kamara and Jack but for very modest sums …. Goldson if he wants back to the south coast could end up at Bournemouth … all in all 2 lucky bags and a bazooka joe in the grand scheme of things

  8. Rimtimtim @ 4.48



    “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.”





    My initia reaction was that you had misread the article as dissing the Bulgarians, Ludogerets. I thought the reference to “ONLY” as highlighted by you was referring to ONLY one round away from qualifying for the league and not referring to Lufogorets as only- it is not pAul’s style to dismiss these teams as pub teams- he has no record of doing so.



    However, I re-read the article and I cannot find any reference to the word ONLY in that context. The sentence as I read it says:-



    “blew their chance of competing for a £40m lifeline tie against a side from Bulgaria.”



    The verb used strongly suggests there was competition involved in potentially overcoming the Bulgarian side, so it does not support your interpretation that he dissed the quality of the team, merely that beating Malmo, which was strongly on the cards at the time Paul referenced (even score against 10 men and at home), left them one knock -out tie away from riches.



    Unless Paul jas re-written the article, I think you may have crossed the road to take offence at something which was not implied

  9. Very sad news about Robinbhoy. May he Rest in Peace.



    Condolences to his family and friends






    A good, detailed leader Paul, cannae wait for the morra night after Sundays game, oh and last night was alright too.

  10. I am a STH in FS5 but have no ticket option in my box for the Hearts game on sunday. Does anyone else have a purchase option?

  11. Watching the highlights from last night’s UCL qualifier in Glasgow…


    The 2nd yellow for Innocent was a travesty…


    Both players went in studs showing but it was Goldson who connected with Innocent’s shin not the other way around.


    However, Goldson was quick to react as the injured & therefore the fouled player. That combined with the howls from the hordes was enough to persuade the ref that Innocent was guilty.



    Is this Goldson/Morelos response something that the squad practice on the training ground?



    It was reassuring to see it all blow up in their faces.



    As one wag put it on Twatter today…



    “Imagine waiting 18 months to watch your team play a live match – and then booing them off the park.”




  12. Rest in Peace Robinbhoy


    may you rest in peace.


    God bless all tims.



    Special prayer offered in support for his wife


    and family







  13. Useful or useless stat ?.



    In the 12 days since @CelticFC launched its official Japanese-language Twitter it’s grown to 19k+ followers, cracking into the top 10 of European clubs w/ 🇯🇵 accounts.



    Just 11k more needed to overtake @PSGJapan and @Inter_jp – and get halfway toward matching @LFCJapan.

  14. Copenhagan, Midjiland, Ferencvaros, Cluij, Sparta Prague, Malmo, all once considered easy draws now all difficult to beat and all teams mostly on low budgets . how Football has progressed in these countries.

  15. so, all the rangers need to do is –



    win back to back championships – $3m.



    qualify for ECL twice – £70m



    do their own tv broadcasting – £40m



    sell stadium namind rights to a company called Ibrox – $`10m



    sell Alfie – £20m



    open up new debenture scheme – £10m.



    just get malmo out the way for steps 1.

  16. that paddypower skit is brilliant






    The Scottish champions, playing the biggest game in their ten-year history, were dismantled like a cheap Ikea shelving unit by Malmo in their 3rd round Champions League qualifying tie despite the Swedes playing much of the second leg with only ten men in front of a ferocious home crowd.

  17. Moravcik on 11th August 2021 6:22 pm



    Has anyone else not had their account debited for the Hearts ticket ?






    We are on the HCTS and 2 x £17 has came off today – I’m assuming this is the Hearts game. No email or anything to let us know whats happening.

  18. Celtic FC SLO





    Confirmation that concourse kiosks will be open again from tomorrow evening, please note that all kiosks are now cashless



    also note our popular kiosk specialities



    lower jock stein will be pieless 13 minutes before halftime



    lisbon lions upper will be pizzaless from around 10 minutes before kick off






    north curve kiosks will be handing out free sauces , salt, pepper and straws.



    and remember and watch yir hands, at our award winning gentlemans conveiniences.



    welcome home.

  19. The kiosk outside section 122 does good soup.


    But i future predictive software enhancement, whatever my nephew wants will become unavaialble between leaving our seats and getting to the front of the queue.

  20. SFTB



    Point taken, it is not Paul’s style to diss opponents. But he doesn’t mention this Bulgarian team’s name, or refer to their achievements. 10 in a row! Credit where credit is due.



    I hope this is Paul’s last Rankers piece for a while. Postecoglou has stressed the need to think about our own performances and to forget the rest.

  21. Great post Paul67



    Where could I find Tom English’s email address or postal address ? Tried to google it but I’m not great at that stuff.

  22. Condolences to family and friends of RobinBhoy


    An undoubted loss here


    A far greater loss there



    RIP Robinbhoy

  23. mazonic pennies are dropping all over their arcades.



    phone is raising the dreaded “were ir wee goinnies gets monies frum”.

  24. we won’t be gubbing ant decent team with that defense – sorry!! the board have had PLENTY time , not only to buy the 2-3 defenders we need , but to get them in in time to adjust and be ready for those big games!!



    loved the way celtic destroyed Dundee – but only days before we were leaking goals and it will happen again and again until there board get deals done!!



    Priority is left back and center half

  25. Back to Basics - Glass Half Full on

    So our balance sheet isn’t a yo-yo?



    Phew. What a relief.



    Imagine the angst such a reveal would have generated on here … and while we were all having a day off laughing at Sevco.



    I’m sure that wasn’t the poster’s intention.




  26. Hundreds of Rangers fans were locked out last night when their tickets wouldnt scan at the gates,


    Watching the tv pictures, there were lots of areas overcrowded and stairs blocked.



    Is someone issuing duplicate tickets ? Then first one works, and next one wont.



    That really does need a proper HSE investigation, Surely also match commander should be in the know.



    Something smells rotten, and dangerous.