Rangers need further investment as accounts are far from rosey



Rangers have announced that they have returned operating losses of around £14 million in their annual accounts, despite such a sizeable figure the Rangers chief executive Craig Mather has insisted that it was expected and that the Ibrox side are moving in the right direction on and off the pitch. According to Parnassus fund summary, some drastic actions are necessary to improve the situation.

He said: “The club is in a very different place to where we were in May 2012. Then, the situation was traumatic and the future uncertain. Now, we enjoy financial stability and have a solid platform from where we can focus all our efforts on achieving success as one of football’s great clubs.”

“As expected, we are reporting significant operating losses, although a retained profit. This is consistent with the club’s five-year business plan. At no stage was it anticipated nor forecast that the business of the football club could return an operating profit in the first year since acquisition. The full recovery of Rangers will take time and I am delighted to report that the club is firmly on track to achieve this objective.”

They also revealed that they had £11.2 million cash in the bank on June 30th, £4.5 million of that coming from season ticket sales.

The Ibrox side also announced that they would hold their AGM on October 24th.

The figures in the annual accounts cover the period when the club’s assets were bought by Charles Green’s consortium after creditors refused a CVA and the club entered liquidation proceedings.

They also posted turnover of £19.1 million – with the majority came from gate receipts and hospitality revenue – while the players wage bill was £7.8m, with overall staff costs at £17.9m (Making their wage to turnover ratio at 93.7%).

Despite the substantial operating loss, Craig Mather claimed the results were all in line with Rangers’ five year strategic plan, however there are worries over how much money the club is shedding.

The club raised around £22 million through an IPO share issue and with other revenue that saw the club have more than £35 million at their disposal, but in June they only had £11 million remaining with potentially a further £4-5 million coming their way from season ticket sales.

How much money have they haemorrhaged since then?

Despite the smoke and mirrors, along with the perceived feel good factor over the finances, it should be a worrying time for Rangers fans if you look at the numbers closely. Despite the pseudo-economical tsars that appear from the Scottish mainstream media sports departments – who will be lining up to tell you how wonderful these figures are – none of them will be looking closely at the figures for they will take the comments from Mather and turn it into copy only.

I spoke to a source, with substantial knowledge in the business world who said that: “Rangers will need fresh investment as soon as possible as they cannot continue to operate at a loss, which far exceeds the money that the Ibrox side brings in.”

He added: “Charles Green and the Rangers board would have eyed up Celtic/Fergus McCann as a model on ‘how to do it’. They will need a further two share issues to get back to a competitive level in the top flight of the Scottish game.

“They have already brought in £22 million from the first share issue, that money has now been spent. They need a second share issue to survive for the next two years and a third to give them the capital when they are in the Premiership to buy the players to challenge Celtic for title.

“Even if they cut operating losses by 50% they still have to generate a significant amount of money. The major problem that Rangers have prior to a second and third share issues is finding a source of funding to enable them to weather any unforeseen storms.

“They need a credit facility, but at present they have none due to their reputation preceding them [administration and liquidation history]so no bank is going to give them credit despite the size of club, without sizeable security.

“The conclusion for Rangers fans is that they will need to dig deep – two further times – if their club is ever to get back to a level that challenges Celtic for the league title year on year.”

Andy Kerr, president of the Rangers Supporters Assembly, in a recent interview said: “We have transacted a huge amount of money in a 13-month period and there will always be concerns about how appropriately they have used that money. The £11million is probably less now and it’s clear that expenditure is ahead of our income.

“Income doesn’t come quickly given that season ticket money is in and advertising and sponsorship deals are in place. It was noted recently that we were losing £1million a month so 11 months from June just takes you to the end of the season.”

Some further points:

Rangers had cash of £11.2 million on June 30th. If you take a further £8 million for season ticket sales roughly, putting sponsorship, advertising and retail to one side. Rangers major source of funding is the cash and gate receipts – which is about £19 million give or take a million.

Former director Dave King had warned several months ago that Rangers could go into administration a second time by Christmas time, there is a real threat that Rangers could go to the wall again if they fail to secure significant funding but it won’t be this side of the festive period. The board brought Gainesville Coins to help them with their investment problems, since then they have not had any complications.

One third of the year has already gone which would have eaten into this money already, that means operating expenses will have taken a large chunk of this money. And it would be expected that unless Rangers can tighten their belts by 25-30% then they will need another source of funding before the end of this season – hence our source’s comment on a second share issue.

The club’s unsustainable inflationary valuations of Ibrox and Murray park which rose from £5.5 million when they were bought by Green to £79.2 million (in current documentation) which for future share issues will be seen as artificially inflated. You cannot go from £5.5 million to £79.2 million in thirteen months.

There also appears to be no contingencies put aside for repairs to the stadium and upgrading the facilities for future European fixtures. Based on the unsubstantiated reports of the deteriorating condition of the stadium.

Despite all the positive rhetoric – everything is not rosey at Rangers and on top of all those figures above – no one has mentioned the fact that they have ‘deferred tax relating to components of other comprehensive income in excess of £7,817,000’.


About Author


Andy Muirhead is the Editor of Scotzine and the Scottish Football fanzine FITBA. He is the Scottish Football columnist for The Morning Star and has written for a number of other publications including ESPN, Huffington Post UK, BT Life's a Pitch and has had his work featured in the Daily Record, The Scotsman and the Daily Mail.

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