Newco FFP and perilous finances. Here we go again


In  light of Manchester City’s ban from Uefa competition for breaching club licence and Financial Fair Play Regulations (FFP), I thought it was time we visited a related issue closer to home.

In June last year, Rangers International Football Club (RIFC or Newco) held a General Meeting to approve the conversion of shareholder loans into RIFC shares.  Page 10 of the subsequent prospectus noted, “The Loan Conversion will significantly improve the balance sheet of the company and ensure it complies with The Uefa Financial Fair Play Regulations.”

The debt conversion was necessary for the club to comply with Financial Fair Play Regulations.

What is allowed under FFP?

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) can be deducted from your 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 covers the three seasons before the most recent, or current, season.  This summer, clubs under monitoring will submit information on seasons 2016-17, 2017-18 and 2018-19.

In their most recent annual report for the year to 30 June 2019, Newco reported two share issues during that period.  These allowed £16.6m of investor loans to be converted into shares and raised £1.6m cash.  The report noted that after the year-end, “£17.2m of investor loans were converted” to shares.  That is a total of £33.8m debt converted to shares, or €40.4m.

While this helped Newco pay bills, only €30m of this loss-fueled debt-to-share conversation can be considered for Uefa Financial Fair Play purposes.

Newco have run an operational loss for each of their seven years.  That loss has been substantial for the last two seasons, 2018: £14.341m, 2019: £11.277m.  It is very likely they will return another significant loss this season, however, they have little headroom if they want to comply with Financial Fair Play regulations.

In the graph below I have noted Newco’s financial position for the two seasons to June 2019.  Figures for net loss and depreciation are in their accounts, I have (generously) estimated their spend on youth development at £1.8m.

After depreciation and youth development costs are subtracted from losses, Newco made an FFP loss of £18.860m across these two seasons.  This converts to €22.531m, which, after the maximum allowable debt-to-stock transfer, leaves them headroom to run a loss for FPP this season of €7.469m, or £6.251m, lower than the £7.942m FFP loss they made last season.

There are a few items to consider when comparing last season’s position to this season and any on-going matters:

This season has at least one more Europa League home tie.

Ryan Kent and Filip Helander deals make this season their highest ever transfer spend.

In July, Sports Direct won a court case against Newco.  The liability could be anywhere between £5m and £10m.  This ruling happened post-year-end and no contingent liability was not noted in the accounts.

They have a liability for breach of contract, which they admit, over abandoning plans for a Memorial Garden for the Ibrox disaster. The hearing to settle the £1.3m claim is due in court in March.  Again, no contingent liability appears in the accounts.

As CQN reported last week, Hummel rescinded their agreement with Newco (resulting in the Hummel Training Centre branding disappearing this week) and commenced legal proceedings.

By the time Newco report on season 2019-20, which will not happen until July 2021, the costs to settle these legal claims will be established.

A few points are clear:

Newco face a serious challenge to meet Financial Fair Play regulations for their trading during the current season.  It is likely they will need to sell players, possibly before their 30 June year-end, if they want to avoid punitive repercussions.

Rumours have existed about fresh investment from the Far East for many months without anything so far materialising.  There is nothing to stop fresh investment to fix the roof or install a hover pitch, but new share capital cannot fund more football costs and count towards their FFP trading position.  There can be no new money for football purposes.

This is the end of the road for debt-fuelled football for Newco.  If they want to compete in Europe, they have to live within their earnings – that means significant downsizing – without delay.

At the AGM on November, Dave King alluded to fresh investment, in part to assist during the January transfer window.  Any prospectus would need to acknowledge the various contingent liabilities facing the club, as well as the reality that they have run out of road when it comes to investing debt or share capital in the playing squad.  The phrase, ‘Rangers International Football Club PLC Prospectus’, which I think is Ulster Scots for ‘Bend over and touch your toes’ has not been uttered since the AGM.

What is likely to happen?

Clubs that are not compliant with FFP are not automatically excluded from European competition.   Uefa state: “Non-compliance with the regulations does not mean that a club will be excluded automatically, but there will be no exceptions. Depending on various factors (e.g. the trend of the break-even result) different disciplinary measures may be imposed against a club.”

The governing body recognise the variable nature of football revenue and, as long as the “trend of the break-even result” is consistent with FFP, they can “take a rehabilitative approach… with numerous restrictive conditions”.  There are seven lesser disciplinary measures open to Uefa than exclusion from competitions.

Newco’s trend has been consistently loss making.  Even if they were given lesser punishments, such as a fine and agreeing to take rehabilitative action, the consequences on the football field will be the same: this is the end of debt-fuelled football, the party is over, get rid of your high-earners and live within your means……as it should have been from the start.

What living within their means looks like, when the various legal liabilities have to be paid, is difficult to imagine.  Dave King got a standing ovation when he gave his valedictory statement at November’s AGM.  I cannot help but think he somewhat underachieved.

I started CQN 16 years ago to explain football finances, why Rangers spending was unsustainable, that they would inevitably crash and burn, and that Celtic needed to follow a different path. Eight years later, Rangers were liquidated, predicted on these pages before anywhere else.  The prognosis for Newco is perilous, they even have the same compliant media fearful of running the Hummel story.

Here we go again!

Click Here for Comments >

About Author


  1. Silver City 1888 on

    We are giving thought to the Corona virus stopping the nine. It just occurred to me that the SPFL are going to be like the mayor in Jaws when it comes to cancelling games in the League. Did you see how desperate they were not to delay the income for their last domestic home game? What would an extended period of no income do to a beyond shaky business?

  2. P67 …you angling for a job over at Ayebrokes?



    smiley could they afford not to have ye thing



    16 years putting up we us lot …sweet sixteen ….hahahahhaha



    yours ever respectfully Herr Braw.

  3. “The prognosis for Newco is perilous, they even have the same compliant media fearful of running the Hummel story.



    Here we go again!”



    Get in!




  4. Paul67



    One of your finest fella. Cap doffed. This is what drew me to this great place and in the early days the battles with the net spend nutters was great entertainment. Nerve was held and the rest was history.



    The supramecist mindset won’t accept ‘living within their means’ and the continuation lie has been a curse for them in the long run. It will end in tears again. I can see a couple of versions of Sevco emerging in years to come, one a slightly more pragmatic one and the other setting up from scratch and bringing with it the worst of its kind, clinging onto the past like a lost tribe…



    Bye Bye Rangers (Sevco)…..

  5. Yo ho ho, off we go


    What do you know, it’s nine in a row


    Bye bye Rangers


    Celtic’s on the ball again, on the way to make it ten


    Bye bye Rangers



    You can talk about your great defenders


    Sing and shout about your No Surrender


    But let us give you this wee tip


    We’ll be there for the league and the cup


    Rangers bye bye



    Yo ho ho, off we go


    What do you know, it’s nine in a row


    Bye bye Rangers


    Celtic’s on the ball again, on the way to make it ten


    Bye bye Rangers



    You can talk about your great defenders


    Sing and shout about your No Surrender


    But let us give you this wee tip


    We’ll be there for the league and the cup


    Rangers bye bye



    But let us give you this wee tip


    We’ll be there for the league and the cup


    Rangers bye bye

  6. GlassTwoThirdsFull on

    Awful lot of articles lately about an eight year old club who we have only been playing against for four years and who have never won a competition we have been in. You would almost think it was our big old firm rivals/partners Rang…… Nah – that’s silly; they don’t exist anymore. Keep forgetting. Can’t think why!


    Although even if they did I don’t see why we would need to be constantly referring to them and allowing them to have the relevance and prominence that this “rivalry” gives them when it massively benefits them and does nothing for us. So it’s a good thing we want absolutely nothing to do with them, otherwise it would be really self-defeating…..


    Sigh, if only there was a Celtic site somewhere that was actually about Celtic and not Rang – oops there I go again!……..

  7. I suspect the sevconians are going to use all their dark arts in the oncoming months before their inevitable collapse.



    Thank God we have Neil in charge who has seen it all before and will treat their antics with the contempt they deserve. A lesser man (or manager) could easily be spooked… but not our Lenny.

  8. Paul 67 et al.



    I’m still awaiting the mega “breaking” story that was intimated by a few CQN’ers.



    Rumours, rumours and more rumours.


    All is not happy in the hun camp. Some might even think that Ladies of the night and seven players would be a good tale. But where does Neil Warnock fit in ?????



  9. That is one hell of an article. A sobering wake up call for any of our (ahem) friends who lurk on here.

  10. because if it was through FA then no way will SFA put it forward… and no BIG teams in Erope care about Scottish football..they are hardly a threat. Nothing will come of this.




    You could always set one up fella with a clear editorial policy that ‘they’ shall not be mentioned. I won’t be near it as I love a bit of karma on a daily basis about themuns….



    Bye Bye Rangers…….

  12. The thing about investment for me is that there is no money to be made in Scottish football. Scottish teams are generally well run and stay solvent. Any profit is from player dev/sales usually.



    The benevolent , rich Newco fans have already taken a bath by converting loans to shares.



    The only way a big investor can make money is to wipe all debt and inject massive money to make them a superteam who can make the latter stages of the CL and then stay there.



    You are not allowed to do that under FFP



    The bit i don’t get Paul67, is why did the rich fans keep it as loans for so long, then flip anyway? Were they waiting to see if King could turn it around before committing and then had to convert to save their club/company/holding company etc

  13. GlassTwoThirdsFull on

    “I started CQN 16 years ago to explain football finances, why Rangers spending was unsustainable, that they would inevitably crash and burn, and that Celtic needed to follow a different path. Eight years later, Rangers were liquidated”




    So what exactly is this “different path” and how do we get there when the people at the club can’t see beyond the old firm?


    As for Rangers getting liquidated – does anyone actually even bother anymore to pretend that they don’t see Sevco as being the same club?


    Is everybody so excited about 10 in a row to beat a dead club’s record? Maybe it’s all about the bragging rights over a club with NO titles? Or over the Celtic supporters from the seventies? Hmmmm….


    “Here we go AGAIN”????? Says it all!

  14. I’m hearing that fat Charlie has spat the dummy out at Ipox since he never got his January move, as promised.


    Slip sliding away with slippy 😀




    We were ” advised ” of a mega breaking story by a few prominent CQN,ers. It never materialised , but we eagerly await. 😀😀

  16. macjay1 for Neil Lennon on



    Tour de force , blogmeister Pablo .



    Unlikely I know , but I wonder if the occasional CQN ingrates will now have pause for thought before biting the hand that feeds them.

  17. GreenPinata



    I may be wrong but I thought it was the Hummel story. The slow ‘now you see it, now you don’t’ approach by Sevco with their website, social site, merchandise and training centre is a clear sign that something is afoot.



    The fact that the MSM lackeys are saying nothing means it doesn’t get the wider scrutiny it deserves.

  18. PAUL67



    Great article and glad you mentioned the Hummell story.



    So many on her doubted the veracity of your recent post.



    C’MON THE REAL CELTS!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

  19. Any update on what is happening regarding Sky?



    Or is that all finished with, like Res12, the 5 way agreement etc?




    I don’t think it is worth the risk. We have the advantage int he tie. We shouldn’t be starting a guy who is still getting up to speed having played 100 minutes in the last three months unless there is no other options. The 3-5-2 provides that other option, even if the midfield 3 is Bitton, CMcG and Rogic- hopefully Ntcham is fit enough to make the bench.



    Plus, we looked more comfortable in a 3-5-2 in the 2nd half v Copenhagen, so would be happy with that option again.






    If Brown and Ntcham are fit enough to play that changes things.



    But if they aren’t you are talking about Robertson, Henderson, Soro or Bitton lining up beside CalMac & Rogic



    Out of that lot, I’d pick Bitton. He has the most experience and has been involved in first team action recently.



    So if you have to start with Bitton, McGregor & Rogic what’s the best system to implement?



    Rogic doesn’t give you much of a defensive shift in the same way as Ntcham & Christie. So I believe Griff has to be sacrificed for Elyounoussi (who does press well).



    So that’d be: Forster, Frimpong, Ajer, Jullien, Taylor, Bitton, McGregor, Elyounoussi, Rogic, Forrest, Edouard



    If everybody is fit, you can opt for a 3-5-2 but there will be the question of what to do with Frimpong and Forrest. Do you play Forrest as a number 10 behind Griff and Eddy? Do you play him off Eddy?