Newconomics: Interest payments 75% above transfer spend


Celtic net financing cost £201k (interest paid minus interest earned), Newco net finance cost £2.997m, that’s 6.25% of their income paying for previous season’s spend.  This percentage is a key metric for distressed companies.  David Murray’s Rangers paid 7.7% of their income in finance costs 19 years ago.  That was clearly unsustainable.  Rangers subsequently converted loans into shares (sound familiar) but were unable to apply a tourniquet on the losses, which eventually led to liquidation.  Newco are walking the same path.

Celtic and Newco both had a reduction in income, minus the reduction in costs due to the lack of fans, of around £9m. Newco state this net loss at “over £10m”, which gives an indication of what they will present in reporting to Uefa.

If we correct the reported losses for the 2020-21 exceptional items, Celtic’s loss is reduced to £2.3m, Newco’s to £14.5m.  The sale of Bayo and Hendry more than covered that trend loss for Celtic, leaving income from the sale of Edouard, Ajer and Hendry for new signings.  Newco’s entire transfer income was £1.7m.  They pay 75% more than this in interest.

When I started writing here about Asset Management, the moans came back about becoming ‘a selling club’.  If you are not selling players at the right time, for the right fee, something else is picking up the pain and you are underachieving.

Signing the finished article is more likely to help you succeed in the short term (although loanee Shane Duffy was 28 when he arrived), but the return on your investment from players purchased at that age is likely to be low.  They have been around long enough for their perceived values to be fixed.  When performances drop, you cannot move them on at a profit and need to cut elsewhere to replace them.

Sales from a hugely underperforming Celtic squad took in £34m transfer fees this summer.  20 times more than Newco’s £1.7m from a title winning squad.  And let’s be clear: before the summer they acknowledged they needed to sell, an admission their accounts confirm.

There is a trade-off: the instant hit or a more strategic play.  Strategic players win more often, that £34m has been transformational to what Celtic have been able to do this season.

How much of your income to pay to service debts inhibits what you can spend going forward.  Not all spending is equal.  Some will perform long-term, providing reinvestment funds after the player has moved on.  Others not so much (we have been there, think of the £6m signings of Sutton, Hartson and Lennon and the chasm when they aged).

Dave King clearly felt slighted by the tone of Newco’s accounts and responded in The Herald today, when he confirmed his £5m loan, plus £832k interest, had been repaid a little over a week ago.  There was an insistence that despite King, Douglas Park and others (let’s call them the Concert Party) saying they would provide interest free loans to the club without taking security, the South African authorities would only allow him to give Newco loans if they were at a commercial rate of interest – 8%, if you don’t mind.

I have no reference point for this kind of insistence.  He does not elaborate on what “authorities” we are talking about, but he has a bit of form in South African, so is perhaps wise to not be too specific and do what he is told.  He also reiterated his pleasure that “the authorities” allowed him to make the loans unsecured.  They sure are involved authorities.

The secured, interest paying, loans from others in the Concert Party clearly irk King, always a man of his word.

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  1. I also remember a rumour they paid bonuses for last year in shares. If I were leaving I’d be looking for full contractual remuneration for my ‘achievements’ (cough) rather than confetti shares. More court action? 🤣😂🤣😂

  2. I have noticed that the two useless idiots that are supposed to be assisting Ange,have not been mentioned on here for quite some time.Very strange.


    I also read today,that accepting his MOTM award,he showered high praise on both.


    Obviously has not read CQN,and is clueless.Totally ignored the lists that were put up about who should be binned.Rogic,Ralston,Bit on,Taylor.Even had the temerity to give 2 of them new contacts


    Mans a fool.

  3. Hi All, with all the sad news recently and the funeral adverts that keep appearing for me I’ve not posted for a while.



    My news isn’t the best either currently attached to a machine in the Beatson for my first treatment for Lymphoma



    At least I’m enjoying the football this year and yes I know we are not the finished article but it been like a breath of fresh air compared to the last couple of years

  4. VALE BHOY on 10TH NOVEMBER 2021 2:02 PM


    How do they get to £832,000 on £5 million at 8% interest?


    What am I missing?




    Must have been over 2 years compound. 5m(*1.08) to 5.4(*1.08) then to 5.832m




    Very sorry to hear of your illness. Thinking of you. Best of luck with your treatment.



    Love your moniker. Great writer.

  6. Camusbhoy


    Yes it is much better, all the very best for your treatment hope it goes well for you .

  7. Go tell the Spartim on




    Good luck wit your treatment I hope it all goes well. Not sure if it’s your thing but I’ll add you to my prayers🍀

  8. Tom – Over on FF, their fans are dreaming of G Van Bronkhorst.


    Gary Mc as a caretaker or Alex Neil, Neilson, McInnes etc. are all being discussed as major no nos. They cannot believe they are going to be dumped by Gerard but most of them don’t appear to be quite as angry as we were with BR. I was expecting much more when I went for a peek.

  9. I think it’s a shame if we don’t see StevieG lose our league next May. I want him to stay.



    I don’t get the criticisms that we should not talk about Sevco on here and should limit ourselves to Celtic Talk, or that talk of player trading is, somehow, being disloyal to football operations. I thought we were past that stage.



    The finances at Ibrox, particularly the illegal and shady finances, are very important to us as a football club. They cheated us out of titles and trophies ( and yes, I know our Board did hee haw to protest this) for over a decade so I want a close spotlight kept on this rogue club. There isn’t a single poster on this site who does not possess hte wit or intellect to be able to comment on Celtic, politics, football finance, religion, or the correct terminology to us to describe the effect of heat on cheese. Talking about Sevco does not take the focus off our failings; we can discuss both.



    We are also in the middle of an international break with no first team fixture until the 20th November, 10 days time, so give us a break from a desire to limit discussion to Celtic only, or more precisely to moan when someone else, apart from you, introduces a “non-Celtic’ topic. Are you guys, casting the stones, sure that no topic but Celtic has been discussed by you in this hallowed place?



    As for Celtic and transferring players out being disloyal, capitalistic or harmful to football, I have to ask for some maturity to be shown.



    We need to work with the transfer market. It cannot be all buy and no sell. We cannot live by the principles of “just pay them what they want” and “get rid of him on a bosman/ Buy out his contract” being applied at both ends.



    We need to buy and sell our assets efficiently at a time of our choosing because



    a) Most of the wanted players want to move on to bigger and “better” clubs in order to earn better money and a bigger rep in a bigger league.



    b) If we make them play out their contract we risk them being disgruntled and affecting their play and we risk other players refusing to sign for us or stay with us (Leo Hjede) because we don’t cooperate with them on their player development. That doesn’t mean we sell each one every time a satisfactory bid comes in but it does mean we have to consider selling within 2 years or 18 months of their contract end date if they refuse our terms to extend their contracts, when they are wanted.



    c) We also need to sell the players who have proved unsuccessful at our club. They may prefer to see out their contracts and be more attractive as a free agent to their next club but that does not suit us. If we take a bath on every unsuccessful player and don’t even get a fractional return on our original investment, there will be less money to buy needed new players.



    d) We won’t survive on player trading just by selling our duds and keeping our good players hostage to their contracts. We must try to persuade our best to sign on again with us but, after a period of trying without succcess, we then have to consider selling them anyway and getting best price possible, for reasons already mentioned.



    So far, this is Transfer 101 for Dummies. There is nothing controversial and very little that is disputable in what I have written, so why do we decry the Transferring Out of players who want to go?



    The only downside to all of this is where:-



    We sell players because our side gets a bonus for player trading figures. That should be seen as a commercial disincentive and not used by our club. I live in the real world and I know that player agents get a slice of the action and sometimes agents acting for the club get a slice too. But the CEO or a DoF should not be incentivised as such; they should be able to obtain a maximum transfer fee for a sold player and a sensibly reduced or appropriate transfer fee for a bought player because it will help our Football Operations. That should be their incentive in a job where they are already handsomely paid. Their position exists to help the Football side be as good as it can be. If they are incentivised to do something that could be of detriment to the playing side then Football and Commerce are not aligned in our club.



    If both sides , commercial and football, are rewarded on the basis of League position, Trophies won or progress in Europe then the departments align.



    There is room for some incentivisation on the commercial side for obtaining increased sponsorship, or TV deals, or shop and retail successes, so long as the slice taken does not unduly reduce the money available to the football side. But Transfers need to be taken out of that section.



    The problem with modern Capitalism is everyone wants to raid the trough when the income is flowing but nobody suffers equality of disincentives when there is a bad year. Success has many parents (and Dividend pay outs) while failure is an orphan (or a conveniently sacked manager).



    We need to kep all monies associated with transfer activity firmly in the Football section of the Accounts.

  10. What is this Dave King busies all about, something rotten. Feels like arse covering for somehtin muchbigger.



    Hes deliberately misleading when says “”I also confirmed that I expected that interest would still be required by the authorities.The Club never took me up on this offer, which is completely understandable given that Douglas and JOHN have again reconfirmed their prior commitments (as I understand it) to providing unsecured interest-free loans.”



    and yet in the accounts it states



    “A facility provided by Mr (JOHN) Bennett, Mr A Johnstone and Mr J Wolhardt to the Company of £5.25m is being charged interest at 6% on an ongoing basis. Repayments of this, over a 7 year period, commenced in August 2021”.



    King took almost £900,000 interest on a 5 years loan and yet blames it on unspecified SA authorities.



    Its Charlie Green territory we are heading into to.




    All the best, the best place in the world to be for your treatment, get well soon bud, por cierto.

  12. Camusbhoy- All the very best, you are in great hands there. Keep on fighting Amigo.



    Your post whilst sad puts all our squabbles in perspective.



    Hail Hail



    D :)




    Sorry to read your news.



    Hope you get better soon!



    Wee prayer said to hasten your good progress.




    Wishing you all the strength in the world, pleased the Tic’s style is a helpful motivator. All the best of luck🍀

  15. Thanks all, think the first treatment is the worst as connected up for about 7 hours, staff couldn’t be better and it’s only been a month from diagnosis to treatment I feel lucky

  16. Camusbhoy. Very best wishes on your recovery.


    Its been a very sad week on the blog so make sure you bring back some good news.



    My brother was a research scientist in the Beatson for years they do incredible things.



    Good luck.

  17. Camusbhoy, hope your treatment goes very well and you make a full recovery. You will be in my prayers, and good luck.

  18. Camusbhoy. Prayer said and hope that all goes well with your treatment. May St Peregrine intercede for you.

  19. Dear Viz, Financial correspondent




    I am going to loan my brother a few pounds to put a deposit on a car, he will pay me back when he gets his christmas bonus. We have done this before, and seen as I have the cash sitting, its no big deal, hapy to help him out.



    Imagine my dismay, when “The Authorities” insisted that I should charge him 8% interest on the loan,



    your in JoBurg, Clarence House

  20. glendalystonsils on

    Camusbhoy , you are in the thoughts and prayers of a lot of people on here . I hope that thought helps you through your treatment .

  21. TINYTIM on 10TH NOVEMBER 2021 1:16 PM


    Their financial situation is turned on it’s head , IF they win the seasons SPFL and get the guaranteed income for next seasons CL qualification.










    No way is it turned on it’s head.



    It at best buys them another season or two to scale things back. Downsizing over 4 years instead of 1 or 2 years.

  22. Ange The Hoops chief added: “I like to work pretty methodically. I don’t like to rush into things, whether that’s decisions about current affairs or future affairs.



    “That’s why the summer transfer window, for me, was way too chaotic, but understandably so because of the situation I was put into.



    “I don’t want that to happen in January and I don’t want that to happen in future. That won’t happen if we start working methodically from now

  23. I think SG’s move to the EPL will be the start of them living within their means. Him moving along with his backroom staff will remove a sizeable chunk from the wage bill and it won’t be the same financials on offer to the next manager. They don’t have to, they’re not trying to sell ST’s at this time of the year and can roll along to next summer hoping to persuade the masses to re-buy, with something promised, if they’ve not won the league that is, to entice them to renew. Maybe even a Scottish Cup win could be the lever that gets them to go into their pockets being the last trophy on offer and a reason for saying they are on the right path and the league will come the next season. Also, Davidson did win 2 trophies last year and knows how to win cups, more than SG ever did, por cietro.

  24. Also, love the way Ange speaks to the media, does remind me so much of Jock’s way of dealing with them, por cierto.