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. Reading through the posts on possible signings and what we need most – what has happened to Urhoghide? Saw him in the first friendly games then nothing. Not on subs bench.


    Looked a unit.

  2. Morning – really looking forward to CP tonight. A little apprehensive about a full house just at the minute but can’t resist taking my seat regardless- although I have been bumped out the main stand???


    All seems a little quiet on the recruitment front……slightly concerned that the good performance at the weekend and Sevco recent woes and the parsimonious board roll back the rebuild……..


    Please Celtic stretch ourselves just a little to be as good as we can be not to just get away with being a little ahead of them.

  3. Good morning cqn from a grey and wet Garngad.



    Still cannot get tickets for Hearts game through our season tickets or by calling the Mary Celeste I meant ticket office.



    Utter shambles.



    Got them no problem for tonight after logging in etc



    D :)

  4. Moisey17 – Good post also.



    We should have good news story’s abound when them’s are down and keep their nose in the dirt.



    D :)

  5. D


    I understand what you mean and of course that is a added bonus however I don’t want to have to think about them when building our team and club. Be the best we can be and the best we can afford to be every year and we will leave them well behind.


    I just don’t get the mindset that thinks 5% better than them is OK – you never reach your potential and things like last season happen.

  6. Lullabies and Battle Cries on

    A good Celtic man has been taken too soon


    A Troon Bhoy with a heart of gold






  7. squire danaher on

    MOISEY17 on 12TH AUGUST 2021 6:45 and 7:20 AM



    I wholeheartedly agree with you.



    But it’s not going to happen.



    Operation ShortHead is the business model and EPL riches is the goal.



    Neither are changing while the G51s Mark2 are in the financial state they’re in.



    We will chug along with the aim of doing just enough while ensuring our business partner’s survival.

  8. fourstonecoppi on

    Rumour has it that sevco are going to deny getting beat by Malmo and continue on to CL proper………………………….



    I believe it!

  9. Good Morning Celts,



    That’s an interesting lead.



    My opinion has always been Celtic should look after themselves and forget Rangers but it seems very, very clear that the Celtic Board are not going to do that.



    So how relevant is it that we have both sides of the old firm taking very different approaches to football finance?



    I think last season answered that, if Celtic supporters hadn’t woken up to the fact that Celtic were a very inefficient football Club evidenced by continually getting beat by smaller Clubs in Europe then getting trounced in the league by a smaller Club at home really brought it home.



    Let’s face it, Rangers threw everything, including the kitchen sink at the football team to make it more competitive and it worked, good runs in Europe (in old firm terms) in the last two seasons and a league title is testement to that.



    Sure they’re spending more money than the business makes in order to achieve that but not to the point of recklessness some would have us believe. Rangers debt is totally manageable.



    After all they always looked light in terms of this seasons UCL challenge but rather than splurge in the transfer window like they did back in the day with Jelavic, they pretty much went with what they had – the lessons have been learned, the largesse is no longer there, far from it.



    In the football World Rangers are far from unique in spending more than they turnover or carrying debt.



    It is the stark contrast between the way they’re run and Celtic are run that seems to be the issue.



    Well consider this; Celtic football club have been the elite sporting organisation that have been poorly run and are getting, in sporting terms, a very poor bang for buck.



    Domestically we dominated after the demise of Rangers Mk1, not surprising as we dwarfed every Club in Scotland, yet as soon as Rangers’ resources increased to the level of half that of Celtic, then they became competitive with us, totally in line with our European performances – we are hitting way below our weight class.



    Don’t look at Rangers accounts and think madness, look at Celtic’s accounts and think it.



    Let’s go back to the root of our current crisis. It was the summer of 2018:



    Celtic had a world class coaching set up



    Celtic had been making record breaking leaps forward domestically



    Celtic were easing forward on the European front.



    Yet rather than improve the squad or even consolidate the team, the Board did not back the football department’s plans.



    We know in broad brush stroke terms what the football ghuys had prepared and planned for that summer’s transfer window.



    It would have cost a net of about ten to fifteen million pounds and would have meant keeping their top striker, an additional “cost” (although the value would still be in the squad) of nineteen million pounds.



    Yet Celtic Board’s conservative and overly prudent approach meant those preperations were never actioned.



    Yet we must face this fact, Celtic’s interims of December 2018 had cash of forty four million pounds, yes CASHp sitting in the bank doing nothing.



    Now, that of course would have looked very different had the coaches plans been in acted but how different? Let’s see…



    We have 44 million in the bank, a sum boosted by the sale of Moussa Dembele (to balance the books we were told)



    Now Celtic were still owed 7 million for Dembele…



    So we are looking at 51 million.



    Now if we bought and sold in accordance with the football departments plans we may have been 15 million and the Dembele money worse off.



    So circa 35 million worse of in cash terms.



    We would still have had 16 million €A$H in the bank, a large sum for a 100 million pound turnover business.



    And an incredibly strong squad with a huge value in monetary terms.



    Also when you put value into your business you should reap the rewards. In Celtic’s case that could have come in terms of UCL qualification that season.



    Yet the value is there in more intangible ways, another example.



    Dembele stays, he partners well with the young OE. We score goals for fun with that pair, we go further in competitions, the supporters are delighted we are playing football the Glasgow Celtic way, the value of the two strikers soar, 50 million plus for the pair – value add.



    No, it’s not Rangers financial approach to football that is out of kilter, it’s Celtic’s.



    Celtic’s decade of underachievement led to a performance meltdown because Celtic’s financial approach was madness bordering on insanity. That’s the old firm financial story of the last decade.



    Hail Hail

  10. Squire – probably correct but hugely deflating thought. Honestly there is not a single slice of ambition about the club or the business if that is the case. What kind of business plan is that – let keep just a little ahead of our rival no matter how low the bar. They are neither business people nor supporters – they don’t match or satisfy their customers/supporters expectations or ambitions and they don’t have a business growth plan to provide increased investment or return for its stakeholders – so what exactly is that they do so well to be financially rewarded so handsomely?

  11. Chair – common sense as usual – it will never catch on while we have such parsimonious board that is shit scared of its own shadow never mind the shadow from G51

  12. squire danaher on

    MOISEY17 on 12TH AUGUST 2021 8:18 AM






    The custodians of the club ?? Their attitude reminds me of the old Glen Daly joke about the guy being nagged by his wife.



    “Celtic, Celtic, you think more of them than you do of me”



    “Listen, I think of the G51rs than I think of you”.

  13. in ither news…….



    “firebugs” ?



    …….Firebugs for God’s sake!



    Attempted murder, reduced, diminished….diluted to accommodate the hun palate.




  14. ALASDAIR MACLEAN on 12TH AUGUST 2021 1:21 AM







    You will never read this.





    I never met you but through this site I felt I knew you.





    To all who knew Robinbhoy, I just want to say how saddened I was to hear today of his passing.





    A gentleman has left us.





    He left a mark for me here.





    I’m not religious although I try, so all I can say is my thoughts are very much with his family and friends.






  15. The huns problem now if they go to sell is that as Jon Dahl Tomasson hilariously pointed out, everyone knows they need the money.



    Went to listen to sportsound for the day after the Malmö win but alas there appears to be no podcast for that day.



    Some people at the BBC are hurting very badly…lovely.

  16. MOISEY17 @ 8:28 AM,



    Ain’t that the truth, driving along with the Sevcovians in our rear view mirror trying desperately not to lose them…



    Hail Hail

  17. AN DÚN on 12TH AUGUST 2021 9:09 AM



    The problem they might face is that it’s not a great seller’s market right now as the post-covid economy takes hold. At the top end, for the top clubs there will still be money but for the price brackets they’ll be looking at, there aren’t many options out there.



    I was just reading an article about Everton who need to sell before they can buy. Problem is, they can’t sell. Eduoard hasn’t had the offers banging his door down…links with Brighton and Southampton that came to nothing.



    Imagine their prized assets, Morelos, Kent, Barasic running their contracts down. McGregor has been a good goalkeeper but won’t have many years left and won’t command a fee – he’ll need to be replaced with hard cash.



    They were probably banking on Champions League cash and a decent fee for Morelos – problems solved. However, neither have materialised.

  18. 403DontNeedNoHospitality on




    Indulge me.


    I’m curious on your position regards the oppression of the Palestinians.



    Or is this politics to you?



    Nothing to do with you or the Celtic board?

  19. GEEBEE1978 on 12TH AUGUST 2021 9:18 AM


    AN DÚN on 12TH AUGUST 2021 9:09 AM







    The problem they might face is that it’s not a great seller’s market right now as the post-covid economy takes hold.






    They must there was a Sounness type, EBT recipient manager somewhere willing to help them out in their time of need.



    But there isn’t.



    Oh dear, what a pity, never mind.

  20. Re Kitty Ramsay from yesterday.



    Apologies for the late response, was driving home in rain of biblical proportions.



    Better known as Katharine Stewart Murray., or The ” red duchess” due to her Spanish Civil war support for the Republican side.


    Actively served as a nurse during the Boar War and WW1 she went on to become the Unionist MP for Kinloss and West Perthshire. Indeed the first Scottish female MP.



    A strong anti fascist who defied her own party over appeasement of Hitler. ( Winston Churchill showed political cowardess by not supporting her )


    History has proven her right on this issue.



    Another on the list of strong, colourful and formidable Scottish females.



    Many clever people on here got it exactly correct.



    Mary Barbour,


    Flora Macdonald


    Jenny Cameron.


    Lady Agness Campbell.


    Elsie Inglis.



    Etc, etc



    I feel we should know more about our history, it is fascinating. I only found out about Mary Barbour a few years ago with the support from Alex Ferguson for her statue.



    Who knows, will Nicola Sturgeon join this list in the future.?



    Again, apologies for the non Celtic post, but the visit to Blair Castle was enlightening.



    HH to all.

  21. Celtic have not finish the rebuild and no one has indicated we have. If anything the celtic manager has been very clear we are looking to sign up more players. I would prefer they were here yesterday but I am sure they will be here as soon as possible.



    I dont know if sevco are in financial distress or if they need to sell, but see if you were a cynical ceo at a football club and wanted to buy something but knew that the person needed to sell to survive, would you look to pay full market price? See those we by any cars, we buy any home companies they offer vastly reduced prices based on need to sell, same rules apply in football.




  22. He’ll go for a song……



    just not the Boumsong thems need…………





  23. Good morning time the site has been excellent reading back,have me real guffaws. I’m in at Paul’s bay Malta ,and does any time know if I will get the game of I login to to Celtic tv tonight

  24. MURSHEEN on 12TH AUGUST 2021 9:47 AM



    I used to live in St Paul’s Bay.



    Look for a pub called Munchies in Bugibba….full of Celtic lads and almost certain to be showing the game live.

  25. Tom McLaughlin on




    Facemasks were required at Celtic Park on Sunday v Dundee but nobody wore them.

  26. Tom McLaughlin on




    You don’t require a paid subscription to watch the game on CelticTV tonight. It’s free to all UK, Ireland and Czech Republic viewers.










    Indulge me.





    I’m curious on your position regards the oppression of the Palestinians.







    Or is this politics to you?







    Nothing to do with you or the Celtic board?



    Wrong person to ask.I was in the IDF.Same regiment as my good buddy PL.