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. Glasgow City Council ©️



    Please be aware that an open top bus parade will take place today in the Ibrox area of Glasgow, the parade will commence at 2pm and will finish at 2.01pm, road closures, train delays, flights cancelled, an estimated 500 million “people” are expected to attend this historic event. Everyone, Anyone, is invited apart from Catholics, FTP!

  2. Siempre Celtic (formerly Traditionalist88) on

    Does reporting of the hun chanting come down to the sole discretion of the match delegate in the stands? Seems a bit arbitrary – I know loads of tunes of their having heard them hundreds of times but have no idea of the words but I have no doubt at least 75% of them are probably dodgy.




  3. Siempre Celtic (formerly Traditionalist88) on

    Any time a tactical debate comes up we’re often told we know nothing and to leave it to the professionals etc etc/



    Well last night on these pages, several comments directly alluded to the fact that Braga were playing with an unusually high line and it may cost them. Sure enough, one decent long pass dropped into a nice area allowed Kent to run on to it and score to put Sevco through.



    Seemed to be asking for trouble.



    I believe Braga may have been missing some players last night because I can’t see how that is the same team that bossed them at Ibrox for a long spell!




  4. Sevco deserved it last night. Braga could have been there all night and not scored. The game was well under control.



    Hagi looks like a player. He scored a great goal against Braga at Ibrox, got an assist tonight and should have had an excellent assist in the first half that Kent missed.



    Portuguese football seems to have taken a nosedive. No idea why.

  5. Celtic have a Europa League game at 8pm this very day. Doesn`t seem to have caught the imagination on here.

  6. Christie, regularly and Ntcham often are very good players for us but we have ample `cover` as both are out. Our squad is the reason we are twelve points ahead.

  7. as i said yesterday would not mind to much if the huns went thourgh as between the game on 15 march we go to ibrox it gives them more fixtures they will not be able to cope Braga where hopeless hh

  8. I obviously hope Celtic get through tonight, but I didn’t particularly care about the Europa League before tonight’s game, and them winning last night hasn’t changed that

  9. I’ll check in later when maybe the Sevco love-in is over and we can talk Celtic…



    Hagi looks a player?? FFS….

  10. Trincao played last night, a player that Barca have bought for 31 million and put a buy out clause on him of 533 million. And he couldn’t damage their defence?


    Braga had 70% possession, completed 592 passes to sevco’s 265, had 12 corners to sevco’s 4, yet only had one shot on target in 90 minutes. Very strange stats for a team that was on a good domestic run since their new manager took over.


    If we go through, I seriously hope we do not draw sevco, what a horrible prospect. But you know it is going to happen, don’t you? You just know it.

  11. CORKCELT on 27TH FEBRUARY 2020 9:30 AM


    Timalo. Thought Hagi was their worst player last night,






    Well, he did get an assist.



    He played 2 more Sevco players through and they fluffed their lines. The Kent one in the first half was a sitter.



    Make no mistake, if Klimala was already providing goals and assists we would be raving about it.



    I’ll always give credit where its due.

  12. Siempre Celtic (formerly Traditionalist88) on

    Big Wavy


    Hot Smoked



    Chill out bhoys, you are free to change the subject!



    If you’re in the pub later and someone says ‘that Braga mob were sh%&* late night’ thats quite a fair comment and fairly topical, no?!



    Some bhoys fancied a trip to Portugal in the next round! Its in the same tournament we are in, and whether we like it or not the coefficient affects us directly.



    Chat about Celtic formations, systems, players availability, player match sharpness etc etc has been done in some detail this week and I think we are all just ready now to go and see Celtic 4-0 FC Copenhagen.



    If you have anything to throw out there about Celtic tonight put it out there!




  13. last call on the huns hope they get ManUnt unt fans hate gerrard as when his team went there alaways got pumped im also sure when the Manchester police here the Rangers are coming will maybe fancy a rematch a doing for the huns off and on the field hh

  14. If we were to get through this round I’d fancy the winner or Istanbul Basaksehir & Sporting Lisbon or LASK & AZ Alkmaar or Malmo & Wolfsburg



    I would really like to avoid Getafe (assuming they get past Ajax). Dirty dirty anti-football team. It would be torture.

  15. The Battered Bunnet on

    When their players put in the shift, Sevco’s 4-3-2-1 shape is very effective against more technically capable teams. The 3 in front of the defence prevent the ball coming down the middle and wins the second ball time and again, while the narrow 2 stops the ball being played out from the back.



    It’s something Lenny needs to figure out before we head over to Ayebrokes.

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

    @ TIMALOY29 on 27TH FEBRUARY 2020 9:46 AM



    The signing of Hagi and (to a lesser extent) Kamberi proves that January signings can have an immediate impact if good enough. I’m not saying either would be good enough for our squad, but for Sevco’s certainly.



    This runs contrary to the narrative on these pages that January signings need months to acclimatise etc.

  17. The Hands Can’t Hit – For Soro it was time to acclimatize to Northern hemisphere . . . I think another one of our excuses for not playing a recent signing was lack of English.


    Soro came here match fit, in fact his signing was delayed while he played another game in Israel. The reality is far simpler, Neil isn’t ready to play new signings until injury forces the issue.


    He is loyal to those who are delivering for him. Common sense.




    The signing of Hagi and (to a lesser extent) Kamberi proves that January signings can have an immediate impact if good enough. I’m not saying either would be good enough for our squad, but for Sevco’s certainly.



    This runs contrary to the narrative on these pages that January signings need months to acclimatise etc.






    It’s a fair point.



    It’s important to keep in mind the overall picture since January though. There have been several poor Sevco performances and I’m sure Hagi has had a couple of poor games.



    It’s really really hard to get a look in when at Celtic. The guys who are tried and trusted continue to win. Continue to do well.



    If we struggled like they have you’d maybe see Neil Lennon give Klimala more of a run. He’s generally had a cameo role while Hagi has been installed as a starter immediately.



    I am seriously worried about the Klimala signing though. I listened to the scouting podcast put up by 90minutecynic. The polish football journalist they spoke to explained how Klimala had a really poor season last year. He said there has always been questions surrounding his attitude.



    The Celtic correspondent at The Athletic suggested people at the club are not impressed with Klimala so far. Which explains why he’d be behind Bayo in the pecking order.

  19. The Battered Bunnet on

    Klimala looks like he’s just too anxious and self-conscious. He’s worried about missing the chance before he’s even struck it.



    Bayo on the other hand is the opposite. He thinks he’s going to score with every chance and is completely unaware that his footballing skills are about to let him down.

  20. last coment on the huns both the monster munch and SEBO would look the part in that mob team not one player in there team would get a game in our first 11 can anyone think of any hh

  21. The reports mentioned on here about Klimala,are entirely the opposite of the ones I read.What I read was the boy was being tipped to be the next Lewandoski.His style,his pace,positional sense.The head of Polish football raging that he was transferred out of Poland too cheaply,and too early.Of course it suits the agenda for some on here to regurgitate trash stories a bout the coaching staff not impressed with him.If that were true,he would not be getting on the bench,but don’t let that stop you.


    Same with Bayo.In the very few times he has been on the field,he has scored 3 goals,ignoring the ridiculous OG decisions,and a lovely assist.Compare that to 7 million Kent.They are not getting playing time,as Lenny has switched to 2 up front,which is working beautifully ,before that,we played one striker.The wonder boy Hagi would not get on our bench with the midfielders we have,so is it any wonder Soro is just being nursed along.

  22. No Bobby Does It Petta on

    All on FF are in no doubt they are het for last night’s community singing. The debate is on the extent of the punishment for the next round – full stadium, or partial closure.

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

    @ TIMALOY29 on 27TH FEBRUARY 2020 10:16 AM



    It does make you wonder what was the point of signing these players then? We are all assuming that these players were properly scouted and brought into do a particular job/provide competition for a position. However, without either making any impact or looking likely to do so is worrying. It’s not a good policy to sign a player and then have him in the reserves for 6 months (I can understand if the player is young and in need of playing in the reserves/being loaned out- Ajer, Christie etc).



    However, a more sensible policy would be to maker fewer signings but increase the average spend on a player.



    Our most consistent players this year (particularly in the big games) have been FF, Jullien and Eddy- £10m (reportedly), £7m and £9m players. Added into that Broony has also put in some top performances (£4.5m in 2007).

  24. Looks like a big night ahead for Tom Rogic with Christie and Ntcham missing. Hope he can come up with a mom performance.

  25. I think I have read on here before that we need to sign players early enough in this season to be ready for the Euro qualifiers next season. Perhaps Lenny is ensuring they – Klimala, Soro, etc. – are well bedded into the squad before the critical stages early next season ?

  26. Again on the Bayo situation.We took young Weah on loan.He scored 3 goals,and a lovely assist,and was being touted as a “must buy “by many of our fans.Considering he done little else in his time with us ,and went on to be sold for around 10 million,I really find it hard not to make comparisons with the way Bayo gets berated .The boy needs a run of games,as does klimala.An example,recently,look no further than Ryan Christie.


  27. Hot Smoked,



    Our game tonight has maybe not caught the imagination of CQN’ers.


    Rest assured it has caught the imagination of the wider Celtic support.



    Compare and contrast : A complete sell out tonight with tickets priced uncompetitively.


    Would we have the same sell out on a Thursday night against St Johnstone in the Scottish cup.



    Now tell me the game that has the Celtic public voting with their feet.



    Cheers and HH.

  28. Timaloy29




    Let time take it’s course.a little patience ‘re Patryk me thinks.


    To be fair I am a wee bit suprised at taking the Meejah world’s point of view,ie 90 minute cynic said this,the ,athletics Celtic writer said that.sun says,rekkkord states etc etc.its definitely info age!!,what gets me is we are watching our club week in and out for years,do we not trust and have confidence to trust our own eye?What we see etc.its one of the joys of cqn the dissecting of a game post match,real fans explaining their point,(yirsel including u) of much more value and valid than someone of paid opinion who happens to be good at English/reporting


    Trust our own view,





  29. i think Klimala’s current strength is pace. packed defences are not his thing right now. Could be amazing on the break at Ibrox?

  30. Turkeybhoy well said , just read that The Battered Bunnet post again and imagine it came from F.F if hes a Celtic supporter I must be somthing else , makes my blood boil posts running down our own players .

  31. Klimala and/or Bayo would be getting much more game time IF Leigh hadn’t come back in style. I think they were bought for two reasons: One, to provide cover for Eddy and two, to to provide a replacement for Griff.


    The fact that Eddy and Griff are both fit and playing well has just made it that much harder for the new boys.

  32. TURKEYBHOY on 27TH FEBRUARY 2020 10:57 AM


    The reports mentioned on here about Klimala,are entirely the opposite of the ones I read.What I read was the boy was being tipped to be the next Lewandoski.His style,his pace,positional sense.The head of Polish football raging that he was transferred out of Poland too cheaply,and too early.Of course it suits the agenda for some on here to regurgitate trash stories a bout the coaching staff not impressed with him.If that were true,he would not be getting on the bench,but don’t let that stop you.





    It’s true that Klimala received a glowing recommendation from Maciej Zurawski who said he could be like Lewandowski.



    But to be clear, I’m referring to reports from a polish journalist and Kieran Devlin at the Athletic. Neither could be considered part of the normal Scottish press pack. They have no agenda against Celtic. A cursory glance at Klimala’s career stats would show you somebody who has generally struggled to find consistency. Not the next Lewandowski.



    That can change and by all accounts, he had an excellent first half of the season. I am concerned by things I have heard but I am nor writing him off by any means.