The problem of relative poverty


A CQN’er prepared this forensic analysis of the relative poverty of Newco (formally named for analysis) compared to Celtic.  It covers where they currently are and, more importantly, brings into sharp focus their financial projections for next season.

A storm is coming.

It’s International week, so it seems like a good time to look forward. Whilst most fans will be focusing on the matches remaining between now and the end of May, Managers and Football boards have to look further ahead. Budgets are being planned, appointments being considered and money, as always , is foremost in the thoughts of Directors and Managers.

Money, if you have it , can solve short term challenges, set in place long term strategy and is a mechanism to energise the fanbase. When you don’t have money, the problems and challenges are of a completely different nature. Celtic have money, a lot of money.

The cash balance on 31 December 2018 was £44m. Of course, some of that money has to be spent on wages and suppliers before the year-end. However, Celtic will also receive stage payments on Dembele sale circa €7m before 30 June (it’s common for large fees to be spread over 2 years), management team contract buyout of £9m, SPFL final distribution for 2018-19 season £2.2m, Valencia gate receipts and Hospitality £2.2m, and close to another £2m in match day ticket sales for the 11 SPFL home games taking place since 1 January.

None of this cash was shown in the Interim accounts. Payments will be received for players sold as well as payments made for players already purchased. The Year End cash balance will be a record high beating last year’s figure of £40m.

Everyone will have an opinion of where and how much we should invest, and that will be the subject of another article nearer the season’s end.

The challenges across the City are of a completely different nature. As always the demands there aren’t supported by financial reality, and having gone all in on Caixinha and Gerrard, a new and more challenging reality is looming.

Rangers posted an operating profit of £3.8 Million in the 6 months to 31 December 2018. The Rangers Chairman in his financial review that accompanied the interim accounts stated, “the Club is forecasting to be close to break-even for EBITDA for the year”.

I’m sure that was designed to provide comfort to shareholders and fans alike, however some context is required.

In the full year to 30 June 2018, Rangers produced an EBITDA of a loss of £4.18m. I guess that’s close to break even in some eyes. In the full year to 30 June 2017, Rangers produced an EBITDA loss of £105k. There is no question that is close to break even.

The problem though is that EBITDA (earnings before interest, tax, depreciation and amortisation) is only part of the picture. The more relevant numbers relate to Operating Profit. That and Cash Flow tell a more complete picture on financial health.

From a 2018 EBITDA loss of £4.18 Million, Rangers produced an operating loss of £13.16m and from a virtual break-even 2017 EBITDA, Rangers produced an operating loss of £6.3m. The 2019 Operating result will be another significant loss.


·      Rangers had Revenue of £35m in the first half of the current financial year

·      Much of that Revenue will not recur in the second half of the year

·      There were 7 home games in the Europa League that will have generated close to £9.6m in gate money

·      Rangers earned £4.4m in Uefa prize money in the first half , nothing in the second half

·      Rangers will play 3 less home SPFL games in the second half resulting in a £3.1m reduction in gate revenue, as season ticket money is allocated to each individual game

·      With 10 less home games in the second half , Hospitality and Match day revenues such as parking, catering and programmes, will be down by possibly £3.3 Million

·      Other less significant revenues will reduce in line with less games played at home in the second half

·      It’s estimated Rangers will have revenues of close to £14.9m for the second half which is 12% growth on the second half of the financial year to 30 June 2018


·         Rangers won’t have the cost of travel and accommodation for European away games. This should deliver a saving of around £1.5 Million

·         There are 10 less home games, which will deliver savings on part time staff, security, Police and utility costs. Should save around £400k

·         Pena is now gone. It’s unknown if he was paid off or fired without any contractual settlement. It’s anywhere between a £340k saving or if paid in full (unlikely) an extra expense of £2m. Assumption is he got nothing, so a saving achieved

·         Defoe and Davis won’t be cheap, and even Kamara will add a significant amount compared to the first half. Estimate an increase of £1.1m in player wages for these 3 for 6 months

·         The first team squad and the management team will have earned bonuses for Europa League Group entry. That won’t recur in the second half . Estimated at £1.5m

·         Nothing much happened in terms of players being bought, only Kamara for a small fee. Amortisation charge should be similar to the first half

·         All in all, expenses will have reduced by around £2.65m to £26.4m for the second half, making a full year total of £55.5m

The second half of the Year will deliver a large loss of over £14.5m, unless significant player sales are undertaken in June, making an annual operating loss in excess of £11m.

“Be moderate in prosperity, prudent in adversity”, Periander

Nobody could argue against the reality that Rangers have had a mountain of adversity to deal with since 2012. Equally, nobody is ever going to claim they have been prudent. They have borrowed money from the likes of Mike Ashley, raised significant sums in multiple share issues organised by

Charles Green and Dave King, been loaned large interest free sums by shareholders and borrowed at ferocious rates from Close Bros.

What they have never done is provide funding through operational profitability. They are now on their fifth manager since 2012 with none of the major trophies available in Scotland to show for all of the debt and losses incurred. They have only managed to reach one Cup Final in 21 attempts, and even then lost memorably to a Hibernian team inspired by individuals with strong Celtic connections.

The question for Rangers now is what appetite do the shareholders have for risk? There is very little opportunity to grow revenues. Ibrox is full for every game, season books are maxed out. It would take Champions League Group revenue to be a game changer. Celtic are 1/100 to win this year’s SPFL. Rangers are 25/1.

It’s highly unlikely Rangers will even have an opportunity to qualify for the Champions League Group stages before season 2020-21. Even that remains a long shot. In the meantime, the Rangers board have to decide how much appetite they have for risk.

This season is likely, as shown, to deliver an operating loss of £11.2m, which will be reduced by the £2.8m already banked as profit on the sales of Windass and John. Give Gerrard the same budget for 2019-20 and if he delivers the same result, then another £11m operating loss will be the outcome.

Selling Morelos for £20m is the stuff of fantasy . His record pales next to Dembele’s . In fact his record isn’t as good as Leigh Griffiths and we weren’t fending off bids for even 30% of what it’s claimed Morleos will be sold for. Fail to qualify for the Europa League Group Stages and the operating loss will be rocketing towards £22 Million. Who is going to cover that? Will the shareholders continue to fund ever increasing losses for no silverware, or will they prudently use whatever they raise in asset sales to fund some of the losses, and take a long term view by living within their means.. History would suggest they will roll the dice yet again.

As noted earlier, Celtic have very substantial cash reserves. Rangers do not. They effectively have no cash. They exist on Close Bros debt and shareholder loans once the Season Book money runs out, which with the significantly increased budget given to Gerrard, happens earlier than ever and without Europa League Group Revenue, could happen well before the next winter break.

Gerrard improved the European record significantly; he was aided though by as soft a draw in the qualifiers as was possible. There is a strong chance of much better opposition next season.

The Rangers Directors have provided the funds to cover shortfalls up to this point. They are now facing significant challenges. They have seen Gerrard in action for a year. His League and Cup record is no better than Pedro’s. The money from shareholders has all been spent. The Close Bros money will be gone in a few weeks and will then have to be repaid.

Celtic will rebuild in the summer. No guarantees it will be successful, but it will be funded by our own resources and financial reserves. Rangers have no resources of their own and absolutely no financial reserves. At some point those lending money and buying shares will realise this isn’t a calculated risk, it is extreme rashness.

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  1. MIKE IN TORONTO @ 1:36 PM,



    “I was one of those who advocating, as much as possible, burying Rangers, and going it alone. Clearly, I was in the minority….



    Yes you were, my thoughts were, we don’t want to make the great footballing swindle an old firm issue, thereby polarizing the Scottish populace and I believed we should have kept our powder dry.



    Of course, by leaving it to the Scottish administrators and officials Rangers got off the hook. I’m sure not many of us saw the almost exoneration of Rangers old board and the coronation of Sevco to King’s apparent of Scottish football.



    Also, it’s all well and good keeping your powder dry but when you have no intention if shooting then the condition of your powder is irrelevant.



    Most of us did not realise the Celtic Board were not only going to let Rangers off Scot-free but we were going to take the foot of the gas and let them catch up to make the Old Firm relevant again.



    Some predicted this but I thought it unimaginable. I now have zero trust in the Celtic Board… which personally for me is dire… the aul appalling vista comes to mind:(((



    Thanks for the heads up on Edwin van see Sar t’uther day, I also noticed Arsenal were trying to head hunt Ajax Technical Director – Marc Overmars.



    So looked up the Ajax Board and was pleasantly surprised to see their Board of Directors who run their very successful football club is distinct from the club’s executive.



    I’ve been espousing this for Celtic for sometime now and seeing as our closest European rivals are excelling with this set-up it has made me all the more convinced that Celtic are going nowhere until we seperate our Clubs Board of Directors from the executive.



    Hail Hail

  2. DontB @ 4:06 PM,






    Actually, Ajax has a third Board, the supervisory Board… so can you be a bit more specific..;)



    Hail Hail

  3. glendalystonsils on




    This international break has a lot to answer for.



    It was funny all the same! -))

  4. It boils down to……



    Sevco are spending money they don’t have, while we are not spending the money we do.



    Result is a closer position between the 2 than there should be. I’d be much happier with a genuinely competitive Dons, Hibs, killie at al.

  5. Written on a page of the new Irish Passport



    ‘The Irish Nation cherishes its special affinity with people of Irish ancestry living abroad who shares its cultural identity and heritage’



    Obviously had the Green Brigade in mind.



    Diaspóra na nGael CSC

  6. I see the Sevco obsession continues. Pointless really unless that’s your thing. They will do what they want for as long as they can get away with it because the authorities will do nothing and the folk within Scottish football in a position to influence will stand idly by. We already know this, the facts have been laid bare in front of us in recent years.



    The real question is what steps are Celtic taking to maximise our potential to ensure that we remain relevant on the European scene which is crucial in that it gives us our competitive advantage at home and helps attract and retain top talent. In recent times we have been unable to retain the best manager in our recent History and possibly top 5 ever. It is a concern if one has an eye on the bigger picture and can see beyond Brendan Rodgers personality. How bad must things haven been for him to walk when he did? Simply blaming him and failing to look inwards would be a huge mistake.



    The support obsesses over Sevco and the Club give them what they want. But the sad truth is that there is something much better out there for us. The real question is where do WE go from here.

  7. We dont need a complete rebuild next season we need a first choice rightback and a centreback to partner ajer.



    Ralston can play back RB.


    Hayes can back up left back









  8. STEPHBHOY @ 5:20 PM,



    Two player eh! That’s it…



    Are we going to qualify for the UCL with that squad? For me we need to strengthen, it’s been apparent for a couple of seasons.



    While we have a good solid core of players who have signed contract extensions there is no doubt we need several quality signings that can come straight into the first team.



    Players that have the technique, athleticism and experience to play 4-2-3-1 in Europe.



    Hail Hail

  9. Reprazent right enuff.



    We are small as a Nation, I personally really like that. When we achieve it means so much more.



    Big unaccountable Governments are really not good.



    Iceland is now really achieving fitba wise.



    Coolio is on it. It’s a shame you couldnae bring Michelle along with you.

  10. David17 @ 5.08



    Board still getting in the neck because you always blame the board for everything anyway? ;-)



    If he’d had the good grace to wait until he had finished the season, let alone his contract he’d have been


    exempt of any criticism from anybody in the Celtic support, fact is ‘he brought it all on himself’ like his successor ‘brings it all on himself’ on CQN for having the audacity to change the playing system, and pick his choice of player from BR squad ;-)



    12 games to go and on the eve of a crucial league game was the big issue, and no amount of loggerheads with ‘the board’ excuses us from BR’s ‘snap’ decision IMHO



    Perhaps it was really such a bad relationship £60,000 per week just wasn’t enough anymore. Maybe £140,000 a week at nice little safe Leicester where he could spend money on expensive diddies much worser than Celtic’s cheap diddies was just too good an opportunity for him and all his backroom staff, ripped from Celtic, to pass up?



    Just how badly do we all get on with our bosses? CSC

  11. GlassTwoThirdsFull on

    David17 5:08


    Well said. We will be at a big crossroads in a couple of months time. Do we appoint NL, regress back to the rest and go all “old firm” or decide that we are a European club who just happens to play in Scotland and get in a manager that can advance us in Europe?


    So often in the past we have failed to strengthen from a position of strength. I wouldn’t consider myself to be a “board basher”, but they have to get this right.

  12. celticforever on

    I see season tickets for next season have went on sale as from today



    With a nearly 20 quid hike (for mine anyway)



    That’s the earliest Ive ever seen them go on sale and that’s without


    us knowing if Neil will be the manager next season or will they go


    for someone in the Rodgers price range



    Deadline is also May 10th which is before season end which theoretically


    means league might not be won yet although hiopefully it will be



    Think they are playing with fans loyalty

  13. Chairbhoy



    “Well I’m not sure how fair it is comparing known dopers to currently performing Athletes. Also no indication that football is not on a par or worse than rugby, there are many very effective, legal supplements and training techniques out there.”




    Well – one indication is that we are not creating the monster sized athletes that Scottish Rugby have- so what ever drugs are rife in football, I still suspect recreational trumps performance-enhancing in its prevalence.




    As for your conclusion, that corruption and letting talent development wither, was at play in recent times in Scotland, I would be somewhat in agreement.



    I just think it was wrong to link the “Largs Courses” and their creators as being responsible for our decline, they were not, and the coaching system they set up remains fit for purpose and a vast improvement on the situation in the 60s and 70s. Those 2 guys may have many faults but, developing a coach training system is to their credit. They also managed to get teams to qualify for competitions without being obvious coaching geniuses, hence my conclusion that it is the decline in the talent pool rather than the “Largs Mafia” that is more likely to be responsible for this state of affairs. We can improve though; Wales and Norn Ireland have shown us a way. I think the Tartan Army should have stuck with the safe hands of WGS but they were, like all football fans, deluding themselves that new bling is better bling.



    P.S. The Portugal result was a bad one but I see no merit in Alan Hansen’s criticism. He is one of the laziest pundits around who laughs and sneers at punters who do their homework and learn to pronounce foreign names correctly. He was, a superb athlete with a serious talent in several sports and he is a presentable looking fellow. That is the sum of his talents and insight

  14. !!Bada Bing!! on

    In Monklands for a sinus operation ,great staff,great ,great service, the NHS is to be supported at every turn,Underpaid, overworked, underfunded….

  15. David17


    Agree, we do obsess about huns, but, is it any wonder after the decades of cheating by them and the Sfa et al.


    You are right though, Celtic should forget about them best we can and plough our own furrow based on a sound financial plan, and grow ever stronger,financially and on the field of play.


    We know, really do, that “they” must be seriously hacked off, and I for one am just loving that, but they will stoop to any level to stop our success growing, and grow it will.



    Hail Hail





  16. My mistake, I thought this was a Celtic site. I’ll leave you bluenoses to wallow in this dreary piece of pointless speculation and go elsewhere tonight for a more enjoyable read…

  17. GlassTwoThirdsFull on

    Watching that shot by Ollie Burke near the end, you have to wonder if he took McLeish’s half time instructions to play like the rugby boys a bit too literally…….

  18. random musings for today.



    I was over at the jubilee today as a “test” patient for the examinations board, quite interesting , and had to come through the hotel side.


    Quelle suprise when several parking spaces, the closest to the main doors right enough have a nice “reserved for the SFA bigwig” reservaton boards.



    Its lunchtime, there are areas set up for a medical conference and some football teams. Poland and Portugal i seen , then some real SFA middle management blazers. Without knowing what events they are hosting or attending, and in the full knowledge that organisations host things to train people, I coudnt help but notice the rotundance and general demeanour of the blazers, I thought, why aint they doing these things at hampden, just a total junket entitled culture exam.



    Fantastic spread on the tables by the way, How much must the breadmore cost to host something like that.



    Anyone any insight as to what was goi9ng on ?



    Next up, for the first time ever I noticed the Damuir cat at the square, how long has that been there ?



    Next next. The Beardmore sculpure is quite excellent looking.



    Next next next, annie luddon on the reporting scotland news today. Judith successor in waiting,.

  19. St Stivs,



    After being discarded when my apprenticeship was over (apparently it was the done thing), my first job was at the HCI hospital, Drake and Skull Madchester were the contractors.



    Seemed to be very Fife based howevaaaaaah. So many Great Tims from there.



    I spent so many weeks/months in ICU’s!!!!

  20. !!BADA BING!! @ 6.32pm



    Well said. It has its issues but we are so lucky to have it.



    Best of luck with your op.




  21. emusanorphan on 22nd March 2019 5:24 pm


    Over 3.4 million people calling on govt to revoke article 50.



    I suspect Queen Bodecia wants to go down in history as the PM who led the UK out of Europe. Should’ve hired McLeish.




    A wee bit to go to match the over 17 million who voted to leave.


    Me I voted remain but being a democrat believe the people have voted already – leave. That is unless of course we spend endless years debating and re voting on every issue we vote on in the future before we decided what to do? Democracy – not as I know it.

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