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. thems have bullied their way through this game , don’t think the home team are used to all this rough and tumble tactics.

  2. Der Hun seem comfortable in Europe but not in the league. Big time Charlie’s?



    Looks like they are through, I really think we will too. Pretty mad to get two teams in last 26 if it transpires

  3. In years to come …a quiz question…


    Name the team that played at home in a European tournament and never had a shot at goal…..?

  4. I am as guilty as anyone of wishful thinking, but the rumors of the imminent demise of Der Hun always seem grossly exaggerated. If Seethin’ G doesn’t lose this one in the next 15 minutes, he will have lost 3 out of 30 European ties. Not to be sneezed at.



    I didn’t see the first game, but checked out today’s, hoping for a Braga result. I was shocked at the ineptitude of the Portuguese.

  5. Trying to be objective here, but my god Braga haven’t a clue,



    Floaty high balls into the box for the Orcs to head away.

  6. Celtic the team they cannot catch.That’s hurting them big time.They know,we know ain’t it wonderful.

  7. Would it be a fair assumption to say that this team Braga have not gone out there to win this game?



    I am as guilty as anyone of wishful thinking, but the rumors of the imminent demise of Der Hun always seem grossly exaggerated. If Seethin’ G doesn’t lose this one in the next 15 minutes, he will have lost 3 out of 30 European ties. Not to be sneezed at






    The devil is in the detail. The teams they’ve played have, generally, been poor.

  9. The better team are in the lead. They have played well enough and defended when needed. It would be churlish not to acknowledge that. It is never easy to win in Europe so well done to them. We’ll take the co-efficient points tonight and hope we get them in the next round, should we proceed tomorrow.


    In light of recent speculation and to seek to avoid any confusion, the Club wishes to confirm its position regarding the historic abuse that took place at Celtic Football Club and Celtic Boys’ Club. Celtic Football Club is appalled by any form of historic abuse and has great sympathy for those who suffered abuse and for their families. The Club is very sorry that these events took place. The abuse of young people is an abhorrent crime. Unfortunately it has affected many areas of society.



    With regard to the allegations regarding historic abuse at Celtic Boys’ Club (which, so far as we have been made aware, relate to the period prior to 1997), although Celtic Football Club is a separate organisation, we take these extremely seriously because of the historic contacts between the two organisations. Police investigations were given support, so as to seek to ensure that those individuals who abused young people were brought to justice.



    The Club has been at the leading edge in Scottish football of putting welfare and safeguarding protections in place for our young people and continues to work with Scottish football to make it a safe place for young people.



    These are very sensitive matters. There are ongoing legal proceedings which prevent us from discussing any case in any detail. It would not be appropriate for the Club to comment in the media about any individuals or events. Also we would point out that LORD LOUIS MOUNTBATTEN was never a season ticket holder at CELTIC PARK.ANDREW WINDSOR has never been to CELTIC PARK .



    In summary, these are historic issues, which the Club is dealing with in a responsible manner and in conjunction with its advisers. The Club reiterates its sincere sympathy, regret and sorrow for those affected. As we have said repeatedly, the Club will stand by its responsibilities, respecting the due process of law.

  11. I don’t watch any of their games but surely Sevco cannot be as bad as people say if they keep beating these European teams with relative ease.


    Do we always get the difficult games and they get the easy touches? Surely not!

  12. We’ll make the CL group stages automatically at this rate :)



    There’s nothing to fear in the Europa. That game tonight was absolute muck.

  13. Didn’t see that result tonight. I reckon if you asked any huns if they wanted to get to the latter stages of the Europa League or to stop us doing 9 they would have bitten your hand off to stop us.



    How can a team be so effective in Europe but so dismal domestically.. answer, a complete inability to break down a defensive opposition.



    They (obviously) won’t win the Europa league, they won’t win the Scottish League and all being well they won’t win the Scottish Cup either.



    What’s not to like



    Robert, they took 7 off FC Midtjylland, who are 9 points clear of FC Copenhagen. Who can explain that?

  15. You can see why Slippy is unhappy, his team can peak in Europe and vs Celtic but the ‘resting’ level in the league is gash. They should have dropped at least 6 more points this season

  16. macjay1 for Neil Lennon on

    Huns played very well and deserved that result.


    May well put a spring back in their step.


    Strangely puts a bit of pressure on us for tomorrow night.



    The league is over ?


    No way .

  17. Huns played well. Well organised and when they had the ball, mainly kept it. Braga kept punting high balls into the box, usually for Goldson to head clear. Braga way ahead in possession stats but very ineffective in the last third. First half in particular, Braga defence was very poor, especially Silva. Still work for us to do tomorrow.

  18. Coefficient points in the bag. Said last week that Braga were highly suspect at the back and only for their keeper to-night would have suffered a heavy defeat.

  19. Of course the last time we played Braga over there we lost 3-0 under Lenny. Then again maybe they are not the team they were then, or even in the first half at Ayebrokes last week. Like it or not that puts us under a bit more pressure tomorrow night. Maybe best to forget about playing in the Scottish Cup at the weekend, and concentrate on trying to get into the next round of the Europa Leaguo? No?

  20. The huns record in Europe under Slippy G is exceptional. It really sounds silly when we state every team they play are crap.


    Under Brendan Rodgers we would have bitten your hand off for such a European record.



    Anyway, I’m confident but in no way complacent for a result tomorrow night. Our players will have watched that game and hopefully it just gives them that wee bit of additional motivation.


    ” We can’t let this slip” Celtic.



    HH and COYBIG.

  21. A lot of posters with very short memories. Watch a re-run of the league cup final, oh I forgot we’ve got an excuse for that.



    The truth is this, Sevco team on a good day can reach a high level.



    Thank God Sevco have blown their league chances.



    As for their fans, total scumbags, throw the book at them UEFA.

  22. Any kind of competition is always good for you.


    Sevco deserved to go through….it only bodes well for the quality of us who are 12pts clear of them.


    Braga unfortunately got built up by the scottish media but they are no barca or bayern.


    Indeed they sit 16pts off second place in portugal.


    That said I thought sevco played a really smart game tonight and they always looked too good for Braga.


    More co-eff points for scottish fitbaw…take the positives boys.


    It also keeps the ‘gerrard out’ brigade at bay…which of course we would prefer he continued his excellent trophyless spell.


    Tommorow will be a huge night but I will not be slating anyone if we fail to go through.


    I am pretty confident we can progress but I cannot get past my feelings that this season the title is EVERYTHING.


    Those sevco fans know it only too well.

  23. Any win away in Europe is a good result.In saying that,for a team not too have a shot on target,at home,takes some doing.Even in attempts,I think only 2 or 3 headers.Got to be on of the all time poorest performances,at home in Europe,by a club rated so much higher than their opponents.

  24. I agree there really is no need to downplay sevco all the time.


    Their results and progress ONLY underlines the quality of team we have.


    We have completely locked them out of titles and cups yet they are good enough to become a good solid european team.


    People who slate the quality of our league and domestic honours really need this ramming down their throats.


    Winning the scottish league is not as easy as many many people think