Newco interims, vanity projects and inevitable conclusion

Interim accounts for the 6 months to 31 December 2017 were issued by Newco over the Easter break.  Income was up £3.1m, due to the new merchandise deal negotiated (paid for) with SportsDirect, higher ticketing and hospitality revenue, although no mention was made in the notes of the progress the club made with its first foray into European football.

Costs were up correspondingly, by £3.5m, leading to a loss of £926k for the period.  The previous year, a corresponding loss of £238k led to a season-end loss of £6.663m.  We can expect something similar for this season, leaving directors to find an operating loss in the region of £7m.

The good news is that “penniless” Dave King has convinced a Trust to provide the £11m required for him to make an offer for shares his concert party do not already own.  The offer of 20p/share is likely to be accepted by some who have tired of the episode, including those who were ousted by King and colleagues in 2015.

It is likely all the money is in place to cover this season’s deficit and the share offer but the big question remains, how to breakeven?  Competing with Celtic is not even a question.

If expenditure remains at current levels, reaching the Europa League group stage would bring in enough money to remove the spectre of running out of cash, but that is a huge challenge.  Newco would need to overcome four higher seeds to get there (something I doubt has ever been achieved).

They could increase the football budget, but that would expose them to higher-still potential losses, with associated risks.  Or they could downsize.  Stick with Murty, get rid of the Portuguese vanity projects and develop a team from the ground up.

Downsizing also comes with risks.  Vanity projects sell tickets and merchandise.  A first team full of teenage graduates from Murray Park would be a hard act to ‘follow’.

In short, I don’t see financial viability in this club, never mind competing with Celtic.