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. Braga a throwback to the 50’s. Right back, left back and centre half miles apart .Wonder they didn t ship 5 or 6.Sevco now favourites to lift the trophy.Reports of scum behaviour on RyanAir flight.




    I put it to Alex Thomson that UEFA might have played a part in allowing the UEFA 2011 Licence to go forward unchecked to see if poor governance at a higher level might entice him to pick up where he left off , but once the SPFL resisted revisiting LNS in 2017 after the Supreme Court ruled ebts unlawful, he gave up on good governance in Scottish football and you can see why. Totally corrupt.



    Now if he widens his investigation beyond Celtic as it is not an issue peculiar to them alone Id think he was addressing the issue and not our club and if looks at what the SFA have done since the time the events in question took place then we might get a bit of balance to help reach a solution.

  3. glendalystonsils on



    I’ve turned over to Lyon Juve game . Can’t be any worse than the bore-nabeau.

  4. So is that the fourth club from the ‘greatest league in the world’ that could be in a wee bit of trouble in the champions league last 16 …..not a vintage real madrid on show either

  5. Tribute act song book suspect tonight.


    Got my jacket back from dry cleaners- thankfully in good condition- it took 3 pints when we scored in Copenhagen – what a waste of good Carlsberg guys….😜

  6. Going to Manchester for weekend, any recommendations for where to watch the St Johnstone game on Sunday? Thanks.

  7. Perhaps the simple explanation for the difference between TRFC’s performance v Braga tonight and St J on Sunday is down to the centre back pairing.



    The two on Sunday were woeful with Katic having a nightmare. Tonight George Edmundson got Man of the Match.



    This suggest injuries and availability can make all the difference game to game.

  8. Can’t say anything but that was a good result for Rankers tonight – slippy gets them up for the big games.



    Where we have to be different is that for us every game is a ‘big game’ – we win on a wet night in Perth – they can’t get it up for a cold day in Ayrshire



    That is what we must do for the next five years!



    We have been guilty of letting them out fight us in recent Glasgow Derby games – no more- we can still lose this league.



    Fight, fight, fight or they will come back

  9. Sid @ 9:56



    Can recommend both O’Sheas and the Station as per Gene’s link. O’Sheas is in the city centre with numerous TVs/large screens while the Station is in Didsbury in South Manchester (about 6 miles outside the centre) and is a much smaller pub. Both get busy when the game’s on and both also usually have live music afterwards. Something to bear in mind is that both Utd and City are also live on TV on Sunday at 2pm and 4.30 pm. Enjoy!

  10. Hunderbirds are Gone on

    Re FFP and viability. The Hun May have pulled the wool over our eyes. Perhaps the “all in” strategy that is clearly apparent for this season, was not set up to win the Scottish league, but was actually to triumph in Gdańsk. Automatic entry to the group stages of the Champions League and associated loot. That would sort their dosh issues.



  11. PHILBHOY on 26TH FEBRUARY 2020 6:58 PM



    Great result for the huns and good for co-efficient.



    *Stuff the co-efficient, why should we care about other teams, don’t forget when we were losing in Seville a young Scotland sides players were celebrating Porto’s win.



    Over on another site a game played n the old ECWC was being discussed it was a 1-0 win over Slovan Bratislava; we followed that up with a similar score over there with the “aye it’s Celtic Celtic that’s the team for me” side in both games.



    This followed a 4-2 aggregate score over Dynamo Zagreb and 10-1 over Basle although to be honest Swiss sides were a bit Raphael back then, not so Yugoslavia and Czechoslovakia.



    Wee teams sometimes have runs like this and 3 days after the latter game we were applauded on tae the park at hades by deidco and then brought back down to earth as they went out and thumped us 2-0 a scoreline that flattered us.



    Wee henderson tortured our defense and ran 40 yards to blooter home the 2nd which I was in line with behind the goal watching it fly home and wondering if I would ever see us win against them as this was our sixth straight defeat in a row by them.



    To further compound matters we would get gubbed 0-4 in the semis in Budapest after winning the first leg 3-0.



    As for this giving them a lift, aye like it did last Sunday after their comeback on the Thursday night.

  12. So you get €1.1 million for qualifying for the last 16 of the Europa League. Not a lot, and it doesn’t even cover the Memorial Walls claim

  13. Bhoylo83



    They’ll get more money for the full house and hospitality, approx 2M.



    Sid 1888 Thanks, nice to get a recommendation, going with a female non supporter (yet😊) so music might stop her falling asleep. HH

  14. You don’t have to be a tactical genius or a great team to beat a team like Braga, who hold such a high line. Balls over the top or through the massive spaces between the defenders to players with a bit of pace will normally provide some sort of return.


    If you watched that game at Ayebrokes last week had it not been for poor finishing sevco would have gone to Portugal with a greater lead. Also tonight their finishing was poor and sevco could have scored more. Braga are not a great side and I said to my youngest Bhoy if we both got through I would take Braga in the last 16. French Eddie would run riot with that defence.


    Braga must be buying Brazilians from the same store we bought Rafael Scheidt. 💩😉

  15. The hands cant hit what the eyes cant see on




    Braga are no mugs. 14 points in the group stages. They have beaten Porto (twice) and Benfica since the new year.



    Sevco have made a habit of getting good results in Europe against credible opposition. They also have a habit of making the opposition look bad, not by outplaying them necessarily, but by stifling them. Tactically they are a very astute (look at the last two Glasgow derbies). They keep their shape well, are well drilled, press when required and pose a threat (I think they have scored away from home in all games save for against Legia?).



    I am grudgingly impressed.

  16. The Hands,


    Braga have only won 12 of their 22 domestic games scoring 36 and shipping 24 goals. Porto have only lost 2 games so I assume Brags have been their bogey team. I watched both their games against sevco and they were there for the taking.


    I didn’t see the League Cup final as I was on a flight but I was at Paradise on 29th December and saw a team that took its chances and my team that missed a penalty and other chances to win the game.


    What I witnessed tonight were 2 less than average teams that were unlikely to win the Europa league. Whether we could go all the way is debatable.


    I, personally, don’t rate Braga or the huns.

  17. Paul67 – I admire the forensic dissection of Sevco’s financial state but articles like this are pointless as long as Sky have the Grip Hand. The SFA will never let Rangers/The Rangers/Sevco 5088 go out of business (again) and Peter Lawell will continue his mission of downsizing Celtic to make sure Celtic aren’t too far ahead.



    “Peter Lawell will continue his mission of downsizing Celtic to make sure Celtic aren’t too far ahead.”



    Thats nonsense.

  19. Hunderbirds are Gone on






  20. AIPPLE @ 1:06. Is it? I’m not so sure. Replacing Tierney with Boli, Dembele with Bayo? What’s the rationale for signing obviously inferior players? He is either gambling or it is a deliberate policy. We have gone from taking 5 off them at the Bigotdome to losing to them at home. Every time we have the opportunity to kill them off, we slow down and give them oxygen. We allowed them to cheat us in 2012 ( and many other years ) – the Res 12 lads gave Lawwell the evidence on a plate, and he squashed it. Why?

  21. Good morning CQN from a frozen Garngad



    Well how bad were Braga, that whole defence was pash.



    Anyway onto the champions elect, so Ntcham is injured and RC banned, I think we have adequit replacements, we should not underestimate this Copenhagen side, we still have a job to do here and it will be tough.



    Hail Hail



    D. :)

  22. Canamalar it looks like OCD obsession on



    Worse there is evidence the Celtic executive are party and support the corruption that is the 5 way agreement

  23. Good morning, friends and Happy European Match Day from a cold, snow covered but currently clear skied East Kilbride. Off to work shortly, my last working day in the next 12, woo hoo!

  24. macjay1 for Neil Lennon on

    BBC gossip.



    Tucked away unobtrusively two thirds down the list .



    ” Rangers face an anxious wait to see if they will be punished by Uefa for fans’ sectarian chanting during Thursday’s Europa League win over Braga in Portugal. (Daily Record, print edition) “

  25. Celtic aren’t too far ahead??



    We have won the last 8 titles and have a healthy lead going int the final stretch for a history equalling 9th.



    We have won a Treble Treble and the League Flag looks like joining the League Cup in the Trophy room.



    When have we ever been further ahead of the Ibrox club?




    We continue to assert “Downsizing”. When the term was first used, it was a predictive tool, telling us that these methods would see us lose out on 5iar, 6iar, 7iar, a couple of cups etc;. It has proven useless as a predictor of our unprecedented success.



    The only area where it has any traction is in the belief that we could have had some form of greater European success if we had followed some untried and unevidenced “speculate to accumulate” model. Look at Chelsea’s spend, which no one believes we could emulate, and they still lose 3:0 at home to Bayern a result that would have us in a mood to sack someone. The challenge is still there- who, as a real comparator club, is doing better than us? Which peripheral league club constantly outperforms Celtic? And do they use a speculate to accumulate model?



    Of course, our club custodians let us down with the events of 2012. That cannot be extrapolated to show that they have let us down in financial management of the club’s course. You know, it is beginning to look as though they might actually have been right on that particular matter. It is beginning to look as though we have a mix of exceptional domestic success and moderate to good Euro results, in line with the Anderlechts and Dinamo Zagrebs of this world- small countries with good football traditions. And we have done this, at a time, when the general Scottish national game has been much much much weaker than Belgian and Croatian football.