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!

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  1. Scotland v Ireland was postponed for about 6 months in 2000 due to Foot and Mouth (Jabba still has it).



    Ireland could have won the championship but were surprisingly gubbed. Still moaning about it.



    Sets the precedent for a delayed game during Autumn window. Interesting if it is left 6 months and Ireland need a bonus point win to win the championship while everyone else is playing friendlies/tests

  2. CELTIC40ME on 26TH FEBRUARY 2020 2:31 PM



    Watch absolutely nobody anywhere else pick up on this



    Indeed.just like they are not picking up on the name change of Murray park(again)


    It used to annoy but the placing of tales and meeja complicity is there for all to see.





  3. All their titles were by tax evasion. not just EBT years. the minute Murray took over he cheated. int’s in his blood. Judas switchedas they said “Don’t worry about the tax, we will take care of it”. I also remember a few of their players being fined in court for motoring offences etc. They gave their wahe as £2-3 K a week . when Celtic players were earning £10k

  4. Egg chasing Italians , they have tickets so will fly over anyway! I am sure they won’t pass on bug in a packed pub

  5. I remember when Goram got done for drunk driving in Linlithgow 2 days before a Euro cup match he told the court his wages were £1000 per week.



    Coodny believe it!

  6. ERNIE LYNCH on 26TH FEBRUARY 2020 2:28 PM



    To do what they were supposedly going to do before Ofcom were involved.



    Demand a detailed explanation about what happened, insist that the individual(s) involved are identified and disciplined appropriately, and assurances obtained that there will be no repetition.



    Failing which no cooperation whatsoever beyond what is contractually required, and lawyers to review whether Sky’s behaviour justifies breaking all ties.



    Sky are not in a strong position here. They’ve paid over the odds to get exclusive rights to a one horse race. Probably not what they had bargained for. The last thing they need is for the dominant club to be refusing to play ball with them.









    On your first point, Celtic did request an explanation from Sky Sports. They asked them to conduct an internal investigation.



    They refused to.



    So Celtic went to Ofcom who have decided they cannot act.



    Unfortunately, I’m not privy to the details of the TV deal so I do not know what the minimum contractual obligations are.



    The club have given post-match interviews and even filmed some stuff for Soccer AM (though I am not sure when that was actually filmed)



    Time will tell. Think the club need time to digest the response from Ofcom

  7. Siempre Celtic (formerly Traditionalist88) on

    ‘Around 160 British tourists stuck in lockdown at a Tenerife hotel over coronavirus fears will have to stay in isolation for 14 days.’



    Some of them are out swimming in the pool ffs




  8. Now we know Ntcham won’t make it and Christie is suspended my team is:














    Bench: Bain, Simunovic, Boli, Hayes, Bitton, Grifiths, Bayo

  9. Trevor Steven , Arthur Numan ,big Butcher and others all stayed in Scotland after they finished playing. All sorts of dodgy stuff going on during their nine. Maybe one day someone will break ranks and spill the beans. The scars from that time run deep .

  10. Fantastic article ,Paul,the print out needs to be sent to UEFA.Its amazing what people power can do.Re,the Huns bombarding every media outlet in the country,about abuse at Celtic,hoping,someone,anyone would bite.Step up,Channel 4.Might not be highest profile,but our media will make sure it is.A couple of hundred letters of complaint sent to UEFA,with a similar amount sent to friendly,journalists,probably not our mainstream mob,could maybe give a journalist with a view to making a name for himself,a wee story to break.


    Man City,should also be contacted.They do it,why should’nt we.Probably far too many more concerned with Res 12,instead of attacking the REAL enemy.

  11. timaloy29 on 26th February 2020 3:27 pm



    Ofcom are now irrelevant.



    Celtic should simply revert to the course they were on prior to Ofcom’s involvement.



    Given the state the huns are in, and the effect that will have on next year’s league (ie it’s over already) Sky need Celtic’s full cooperation if they are going to make anything of their newly acquired SPFL rights.

  12. TURKEYBHOY on 26TH FEBRUARY 2020 3:40 PM


    Soccer AM,filmed weeks before it was aired.FFS,use your head.






    What I said: “filmed some stuff for Soccer AM (though I am not sure when that was actually filmed)”






    “If that’s tomorrow nights team I will do Bart Simpson,and eat my shorts.”





    What’s so wrong with that lineup? Christie & Ntcham are not available.. Maybe Johnny Hayes plays ahead Taylor.



    I don’t see him going 3 at the back. The only way it works is if Forrest plays in behind the strikers as a 10.

  13. My old man told me not to believe what it says in the papers and the TV and Radio. Now we know that the media continually lie about Rangers of whatever vintage, they misreport stories and we have such evidence as Jabba and Michael Stewart, also Sky and Morelos, Kris Boyd etc. Why do Ofcom think they have no influence in this case? We know and have proof of Media bias. However, this media silence does then no favours.



    My old man told me the referees were biased and were all Freemasons. Fast Forward past the after Dinner speaker circuit where Bobby Tait, Kenny Clark, Stuart Dougal etc boast how they helped the Rangers and hammered the Celtic. We had Dallas junior, Beaton, Clancey, Muir, Collum etc all showing their colours over the last 2 seasons, it’s bad when Bobby Madden is preferred as despite being an Ibrox season ticket holder he seems to at least give a little balance.



    My old man told me the SFA and the League were anti Celtic telling me about the Tricolour story and the ground closure threats. Now we have had Gordon Smith, George Peat, Campbell Ogilvie, Stewart Reagan, MacRae, Petrie and the debachle of twisting the rules to sort one team and one team only. 5 way, LNS etc



    The Referee and Disciplinary Committee and the Compliance officer full over themselves to help Rangers at every step. It is hard to imagine how they can be more biased against us. Peter Lawwell was instrumental in backing change for the modernisers who have turned out to be anything but Maxwell and Whyte are incompetent but still protect the Establishment club..



    The SFA would risk all Scottish teams having UEFA sanctions rather than enforce any measures against Rangers



    My old man might have been pessimistic and Paranoid but the last 8 years have shown that he underestimated the cheating involved. Next season will see attempts being made to apply points deduction to Celtic



    In fact, this bias is a factor driving Celtic fans to support the club in greater numbers and 10 in a row is our target.

  14. Siempre Celtic (formerly Traditionalist88) on

    TIMALOY29 on 26TH FEBRUARY 2020 3:59 PM



    I don’t see him going 3 at the back. The only way it works is if Forrest plays in behind the strikers as a 10.





    Not necessarily. He can play right or left side with overlap from Frimpong or Taylor.



    Its not symetrical but there are no rules about that!



    Frimpong and Forrest loose on the right will be enough to terrify a lot of teams, Griff and Eddy would be in their element.




  15. CONEYBHOY on 26TH FEBRUARY 2020 2:26 PM






    The hun 9iar was not during the tax evasion period.





    Just my view mate but I would question that line.


    Mintys tax dodging exploits were literally in his DNA,his da was a tax cheat.Ok that’s not a reason to question the deid club’s 9 but if you look at the circumstances it points to a ruse.



    When Minty started to use Ebts he done so only because the legalities/rules of using the DOS scheme were closed off,my contention is his use of Dos was introduced as there was a previous ruse going on.


    Culturally imo,Minty would be moving from one ruse to another,I don’t think he happened to come across DOS and EBTs in 1999,characters like him funnily enough are identical in thought as far as paying tax to wee Craigy,my bet is true to form he would have been paying ‘offshore’ to many of their signings,esp players coming from abroad during their 9,It then got closed off hence dos was introduced


    Imo Mr Black goes back a long way




  16. T29


    Thanks for your reply earlier- I was ‘aff Oot’ and missed it.



    Had forgotten about Ryan’s card.

  17. Siempre Celtic (formerly Traditionalist88) on

    TIMALOY29 on 26TH FEBRUARY 2020 3:59 PM



    I get that Frimpong is on the RB slot in a 4-2-3-1 as well but with a lot less licence to get forward (not that that stops him tbf) and a deeper starting position than as a WB with 3 CB’s supporting.



    Back door closed and those two linking up with Eddy and Griff is the way to start the match. Get at them early and set the tone.







    Not necessarily. He can play right or left side with overlap from Frimpong or Taylor.



    Its not symetrical but there are no rules about that!



    Frimpong and Forrest loose on the right will be enough to terrify a lot of teams, Griff and Eddy would be in their element.






    Technically, he could play 343 like he did in Rome. Either Moi/Leigh off to the left and Forrest to the right.



    That seems possible but less likely than the usual 4231 with Rogic in behind.

  19. `…. they even have the same compliant media fearful of running the Hummel story.`



    This would suggest that Paul is standing by his original story on this matter.If so, it is a worrying confirmation of just how much the MSSM fail to report honestly on Sevco.


    Cheerio for now.

  20. I thought it was really suspicious that of the excellent Dutch team of WC 1998 -knocked out on penalties in the SF against Brazil – Rangers were able to sign a few of them – the de Boers and Numan for starters.



    I think Ronald de Boer said he turned down an offer from Barca or something to sign for Rangers.

  21. jc2 on 26th February 2020 4:02 pm


    Sure i have had debate about squirrels and Pine Martins on here before



    Ive always been told Pine Martins targeted grey as bigger and slower







    The notion used to be that the reds were better able to escape because they are lighter so unlike the greys could get out onto the outer branches of trees where they were safe.



    Never seemed very plausible to me. This explanation seems more likely.

  22. BORGO67 on 26TH FEBRUARY 2020 4:20 PM


    A bit concerned about both Mo and Tom starting tomorrow, neither looks up to speed yet.






    It’s possible neither will start and we will play 352 with Forrest playing a free role behind the strikers.



    Neil still has options

  23. ‘ I was genuinely scared. I wear a crucifix around my neck, and had to hide it under my t-shirt.”



    Terrified passenger feared for her safety as Rangers fans chanted ‘we hate Catholics’ on flight to Portuga

  24. Can we find places for Jozo, Julienne and Kris at the back?



    Wee bit concerned about the height of Taylor and Frimpong. Or Hayes if selected.

  25. Because they were on a flight to Portugal and because they were singing disgusting anti catholic songs does not mean they are ran*ers supporters.



    It cooda bin anyone ffs.

  26. Ernie



    Res12 isnt over.



    The handling of it by Celtic and why they had to handle it in a way that required them to mislead shareholders, caused by the cheating of RFC on such a scale it should have meant nothing but a fresh start as a new club , is something that shareholders (and there are enough) will want answers to.



    If they do go bust again adhering to financial sustainability must be a precondition of their being allowed to continue as a member club.