Review of Rangers' Half-Year Accounts

[Frankie 505]

As promised (from my good friend Bluedell):

The club made a £2.3 million profit in the first 6 months to 31st December 2007. Sounds good, particularly compared to the loss of £1.5 million for the same period in the previous year, but is it really?

During the last 2 years we have made losses of £5m and £6m during the second halves of the year. The extended run in the UEFA Cup may be negated by the increased costs, so we probably make a loss of a similar amount this year. A loss of £5m added to a profit of profit of £2.7m means that we would have been looking at a loss for the year of over £2m (being very conservative), and that’s AFTER we have qualified for the Champions League (CL).

What kind of loss would we be looking at had we not qualified for the CL? Given that turnover increased by £10m due to the CL then we could have been looking at a loss of well over £10m for the year.

The figures show why it was vital for the Chairman to have the Hutton deal go through. This will take us into profit for the year, and will avoid the potentially embarrassing position of making a loss despite qualifying for the CL.

The profit of £2.3m was lower than the £4m that I had expected due apparently to a higher than expected increase in salary costs, due to more players and it would seem that some of the new players may be on relatively high salaries.

Our debt has increased but this is not surprising given the fact that our season ticket money mostly comes in before the end of June and the purchase of Cousin, Cuellar, Whittaker, McCulloch and Naismith will all have had a negative effect. Again the Hutton cash and perhaps some of the CL money still to come the position will be improved at the year-end, but it’s too difficult to speculate where we will be by then given the limited information available.

So, overall, we are still reliant on both the CL and selling players to keep our head above water. Not a particularly reassuring place to be from a financial perspective.

How do our results compare to Celtic’s? Firstly their half-yearly accounts give a lot more details than our due to their stock market requirements. Rangers are quoted on the PLUS Markets Exchange which requires only a limited disclosure with no balance sheet and only a very limited profit and loss account supplied. It is therefore difficult to any sort of meaningful analysis of our accounts.

Celtic made a profit of £10m but if you strip out the £4m profit that they made on the sale of players (I believe that we had very little in this area in comparison as the Hutton transfer will be shown in the second half of the year) then they made a profit of £6m compared to our £2.3m I believe that the 3 main reasons for the difference are their bigger capacity, our bigger write-off of players due to our purchases and that they have had one more game domestically than us.

I believe their profit made on the sale of players was from the likes of Miller and Beattie, and goes to show how important it is for our Chairman and CEO to maximise return from the sale of our players, something that we appear to be guilty of not doing.

Their bigger capacity may have added over £2m to their profit for the 6 months and is something that we are going to have to live with unless steps are taken to increase the capacity of Ibrox.

[Poetry_In_Blue 1,043]

Very good report, I just hope that we don't have to end up selling our top players in the future just to remain in profit. It also shows how very little money there is within the Scottish game.

[papaguy51 912]

Does Celtics sole participation in recent CL's not having something to do with their profit?

[Craigy 0]

Nice read, explains alot of unanswered questions

[Frankie 505]

papaguy:

Not in these 6 month figures, no... In previous ones, yes.

[Briton 394]

That's very depressing.

[papaguy51 912]

papaguy:

Not in these 6 month figures, no... In previous ones, yes.

Ahh right.

It appears Celtic's pseudo 'worldwide' marketing is coming into play. Minty - take note!

[dummiesoot 16,118]

Murray did say as much, the CL needs to be achieved on a regular basis, Given Selliks greater capacity I think Selliks profit is less impressive if tickets averaged at say £25 a time and an extra 9,000 sets means £225K extra income per game, that indicates for Selliks 'far east' & North America market exploitation they don't make a huge amount of profit that some would have us believe.

WATP

[*Manticore* 1,893]

Dell sits a few rows in front of me in the Bill Struth Stand.

He's a cunt...

[Bluepeter9 5,167]

As promised (from my good friend Bluedell):

The club made a £2.3 million profit in the first 6 months to 31st December 2007. Sounds good, particularly compared to the loss of £1.5 million for the same period in the previous year, but is it really?

During the last 2 years we have made losses of £5m and £6m during the second halves of the year. The extended run in the UEFA Cup may be negated by the increased costs, so we probably make a loss of a similar amount this year. A loss of £5m added to a profit of profit of £2.7m means that we would have been looking at a loss for the year of over £2m (being very conservative), and that’s AFTER we have qualified for the Champions League (CL).

What kind of loss would we be looking at had we not qualified for the CL? Given that turnover increased by £10m due to the CL then we could have been looking at a loss of well over £10m for the year.

The figures show why it was vital for the Chairman to have the Hutton deal go through. This will take us into profit for the year, and will avoid the potentially embarrassing position of making a loss despite qualifying for the CL.

The profit of £2.3m was lower than the £4m that I had expected due apparently to a higher than expected increase in salary costs, due to more players and it would seem that some of the new players may be on relatively high salaries.

Our debt has increased but this is not surprising given the fact that our season ticket money mostly comes in before the end of June and the purchase of Cousin, Cuellar, Whittaker, McCulloch and Naismith will all have had a negative effect. Again the Hutton cash and perhaps some of the CL money still to come the position will be improved at the year-end, but it’s too difficult to speculate where we will be by then given the limited information available.

So, overall, we are still reliant on both the CL and selling players to keep our head above water. Not a particularly reassuring place to be from a financial perspective.

How do our results compare to Celtic’s? Firstly their half-yearly accounts give a lot more details than our due to their stock market requirements. Rangers are quoted on the PLUS Markets Exchange which requires only a limited disclosure with no balance sheet and only a very limited profit and loss account supplied. It is therefore difficult to any sort of meaningful analysis of our accounts.

Celtic made a profit of £10m but if you strip out the £4m profit that they made on the sale of players (I believe that we had very little in this area in comparison as the Hutton transfer will be shown in the second half of the year) then they made a profit of £6m compared to our £2.3m I believe that the 3 main reasons for the difference are their bigger capacity, our bigger write-off of players due to our purchases and that they have had one more game domestically than us.

I believe their profit made on the sale of players was from the likes of Miller and Beattie, and goes to show how important it is for our Chairman and CEO to maximise return from the sale of our players, something that we appear to be guilty of not doing.

Their bigger capacity may have added over £2m to their profit for the 6 months and is something that we are going to have to live with unless steps are taken to increase the capacity of Ibrox.

Frankie - I think you have the majority of this factually correct but some of the underlying assumptions I would quiblle with and so here my tuppence worth:

1. The easy one - Rangers do publish there Balance Sheet - for all to see, but it is on an annual basis and is available from the PLUS Market site. (Its a big attachment and I am not sure if I can post it to the board - someone may be able to help). Also any shareholder - (ie RST members - which I think you are) are entitled to a copy of the balance sheet (and P&L) anyway.

2. Our turnover is depressed (lower) than previous years due to the fact we only take profit / fee for kit and not the headline revenue from the JJB kit deal.

3. The loss has increased (as you say higher wages mainly) but that shows the clubs commitment to ensure CL football - which all fans want and which is a financial need from a business perspective - so I dont think the club can be critisised for this.

4. Its a SAD but TRUE fact that Celtic are in a stronger financial position that us - McCann got rid of the main debt and build the bigger stadium and this aligned with our poor performances in getting to CL means that they have been creating good profit and able to financially out muscle us (Brown, McDonald). We also have had very few saleable assets (players) during that time but we now seem to have quite a few. Totally agree that Rangers MUST look at increasing the stadium capacity in order to at least maintain financial parity with Celtic and I believe that this increased capacity is an essential move.

5. In many ways SDM runs Rangers like a not-for profit organisation - i.e. he is NOT out to generate a financial return and profit is reinvested in players or facilities - this also depresses or Profit figure and it is unlikely that we will report large profits due to this. The exception to this will be the accounts at the end of the year because of Hutton and CL (and possibly Cousin) as the money will NOT be spent as the financial year ends before the transfer market opens. I like the way SDM does this.

6. I think its a FACT that CL football and beinga SELLING club are the a reality of how SDM has to run the club. Enough of the turnover has to go into making sure we get a CL position year in, year out and the income generated from player sales helps this. It is also a fact our good players, no matter their alliegence to Rangers are going to be tempted by the EPL just becuase of the financial might the TV deals give them - if financial might was based on supporters we would be right up there, but in a small country we have little in the way of TV money outwith the CL. Sad but true.

7. On the positive side I believe SDM id extremely astute financially and (IMHO) seems to have taken a bigger interest again now WS is back and I believe he will look at numerous schemes to increase revenue, through the 'Rangers Village', Stadium Capacity and perhaps even (again) others investing. Time will tell.

[Poetry_In_Blue 1,043]

Good report BP9 and makes sense, I'm in two minds though about SDM's intentions with regards to Rangers my impression has been that he has to make Rangers a more successful club on the field to attract possible suitors for buying the club. As you said he is financially astute and any money that he has invested and the money used in the profits to offset debts if he sells then he will easily get this money back and an awful lot more. Can't remember the figure he paid for Rangers, I think it was around 6 million, he will be looking at 60 million plus on any sale so he will walk away without any loss following his tenure in charge. I'm not saying he will have had a 54 million profit as he has used finances some directly and some indirectly but he won't walk away showing a loss.

What will be interesting to see, is if/when any redevelopment takes place and the extent of the redevelopment, whatever happens in that area will pay for itself should a hotel, flats etc be built, and depending on Ibrox itself in time any redevelopment would pay for itself with a larger capacity, more games concerts etc.

[Frankie 505]

Frankie - I think you have the majority of this factually correct but some of the underlying assumptions I would quiblle with and so here my tuppence worth:

1. The easy one - Rangers do publish there Balance Sheet - for all to see, but it is on an annual basis and is available from the PLUS Market site. (Its a big attachment and I am not sure if I can post it to the board - someone may be able to help). Also any shareholder - (ie RST members - which I think you are) are entitled to a copy of the balance sheet (and P&L) anyway.

2. Our turnover is depressed (lower) than previous years due to the fact we only take profit / fee for kit and not the headline revenue from the JJB kit deal.

3. The loss has increased (as you say higher wages mainly) but that shows the clubs commitment to ensure CL football - which all fans want and which is a financial need from a business perspective - so I dont think the club can be critisised for this.

4. Its a SAD but TRUE fact that Celtic are in a stronger financial position that us - McCann got rid of the main debt and build the bigger stadium and this aligned with our poor performances in getting to CL means that they have been creating good profit and able to financially out muscle us (Brown, McDonald). We also have had very few saleable assets (players) during that time but we now seem to have quite a few. Totally agree that Rangers MUST look at increasing the stadium capacity in order to at least maintain financial parity with Celtic and I believe that this increased capacity is an essential move.

5. In many ways SDM runs Rangers like a not-for profit organisation - i.e. he is NOT out to generate a financial return and profit is reinvested in players or facilities - this also depresses or Profit figure and it is unlikely that we will report large profits due to this. The exception to this will be the accounts at the end of the year because of Hutton and CL (and possibly Cousin) as the money will NOT be spent as the financial year ends before the transfer market opens. I like the way SDM does this.

6. I think its a FACT that CL football and beinga SELLING club are the a reality of how SDM has to run the club. Enough of the turnover has to go into making sure we get a CL position year in, year out and the income generated from player sales helps this. It is also a fact our good players, no matter their alliegence to Rangers are going to be tempted by the EPL just becuase of the financial might the TV deals give them - if financial might was based on supporters we would be right up there, but in a small country we have little in the way of TV money outwith the CL. Sad but true.

7. On the positive side I believe SDM id extremely astute financially and (IMHO) seems to have taken a bigger interest again now WS is back and I believe he will look at numerous schemes to increase revenue, through the 'Rangers Village', Stadium Capacity and perhaps even (again) others investing. Time will tell.

1. My friend was referring to the limited half-yearly accounts - not the full annual accounts which are available to all via PLUS, Rangers.co.uk and other sources.

2. I don't think my friend mentioned depressed turnover? As you say our turnover is lower because of external sourcing but generally the JJB deal does provide value for money at this stage.

3. Agreed. However you will agree it was a risky strategy if we hadn't qualified.

4. Agreed - the stadium should have been extended in the mid-late 90s. That is one of my main criticisms of David Murray.

5. Your points about realism with regard to CL football directly affecting our finances is completely correct. People have to acknowledge that before they think about criticism of the owner or the club. However, by the same token, the club should be doing much more to attract new ideas and new money to the club. Because of last mistakes they are struggling to do so which makes the above realism all the more depressing.

[James_Dean 0]

As promised (from my good friend Bluedell):

The club made a £2.3 million profit in the first 6 months to 31st December 2007. Sounds good, particularly compared to the loss of £1.5 million for the same period in the previous year, but is it really?

During the last 2 years we have made losses of £5m and £6m during the second halves of the year. The extended run in the UEFA Cup may be negated by the increased costs, so we probably make a loss of a similar amount this year. A loss of £5m added to a profit of profit of £2.7m means that we would have been looking at a loss for the year of over £2m (being very conservative), and that’s AFTER we have qualified for the Champions League (CL).

What kind of loss would we be looking at had we not qualified for the CL? Given that turnover increased by £10m due to the CL then we could have been looking at a loss of well over £10m for the year.

The figures show why it was vital for the Chairman to have the Hutton deal go through. This will take us into profit for the year, and will avoid the potentially embarrassing position of making a loss despite qualifying for the CL.

The profit of £2.3m was lower than the £4m that I had expected due apparently to a higher than expected increase in salary costs, due to more players and it would seem that some of the new players may be on relatively high salaries.

Our debt has increased but this is not surprising given the fact that our season ticket money mostly comes in before the end of June and the purchase of Cousin, Cuellar, Whittaker, McCulloch and Naismith will all have had a negative effect. Again the Hutton cash and perhaps some of the CL money still to come the position will be improved at the year-end, but it’s too difficult to speculate where we will be by then given the limited information available.

So, overall, we are still reliant on both the CL and selling players to keep our head above water. Not a particularly reassuring place to be from a financial perspective.

How do our results compare to Celtic’s? Firstly their half-yearly accounts give a lot more details than our due to their stock market requirements. Rangers are quoted on the PLUS Markets Exchange which requires only a limited disclosure with no balance sheet and only a very limited profit and loss account supplied. It is therefore difficult to any sort of meaningful analysis of our accounts.

Celtic made a profit of £10m but if you strip out the £4m profit that they made on the sale of players (I believe that we had very little in this area in comparison as the Hutton transfer will be shown in the second half of the year) then they made a profit of £6m compared to our £2.3m I believe that the 3 main reasons for the difference are their bigger capacity, our bigger write-off of players due to our purchases and that they have had one more game domestically than us.

I believe their profit made on the sale of players was from the likes of Miller and Beattie, and goes to show how important it is for our Chairman and CEO to maximise return from the sale of our players, something that we appear to be guilty of not doing.

Their bigger capacity may have added over £2m to their profit for the 6 months and is something that we are going to have to live with unless steps are taken to increase the capacity of Ibrox.

I don't want to have a go at you Bluedell but your post is very sepculative and lots of it is based on assumptions. For example, the club may have made losses in the 6 months to 31 June in prior years but that has little bearing on the performance of the club in the 6 months to 31 June 2008. If the club continue to be a success on the park then our results for the 6 months to 31 June 2008 could be very good. Nobody has access to that kind of information so we can't possible comment and if you do have access to that kind of information you shouldn't comment.

I don't think that you can state that "extended run in the UEFA Cup may be negated by the increased costs" without stating what the increased costs are. Do you mean the increased costs of being in the UEFA Cup or the increased costs that you have assumed that the club will incurr in the period to 31 June 2008? I am in no position to comment but I would think that an extended run in the UEFA Cup will be financially beneficial for the club overall.

I do agree that being in the CL every year is an absolute must for the club and SDM has said as much. I don't know if we also have to become a selling club to make a profit but it will be difficult for the club to reject big offers for players that will result in a large profit for the club.

The club like any business will need to find a balance between its income and its expenditure and the better the club performs on the pitch the better or income will be which in turn will let the club spend more money on the team.

[Frankie 505]

JD:

Bluedell did say it was difficult to give any sort of meaningful analysis of these half-yearly accounts. He bases his analysis on past years experience and of course it's speculative to try and analyse Rangers accounts at any point.

[Bluepeter9 5,167]

What I think we can all agree on is they are a sight better than they have been for the last few years - and much better than when we were sitting with £70M of debt - and that was a real threat (ask leeds fans) - so improvement all round (and about time)

[Frankie 505]

What I think we can all agree on is they are a sight better than they have been for the last few years - and much better than when we were sitting with £70M of debt - and that was a real threat (ask leeds fans) - so improvement all round (and about time)

No doubt about it - although it was £83million of debt IIRC....

What interests me (and we won't know until the full accounts are released) is if the SDM £15million revolving credit facility has (or has not) be used and to what extent.

[Briton 394]

What I think we can all agree on is they are a sight better than they have been for the last few years - and much better than when we were sitting with £70M of debt - and that was a real threat (ask leeds fans) - so improvement all round (and about time)

No doubt about it - although it was £83million of debt IIRC....

What interests me (and we won't know until the full accounts are released) is if the SDM £15million revolving credit facility has (or has not) be used and to what extent.

Does that mean that, in the worst case, we could be a further £15million in debt?

[disgruntled_bear 157]

Looking at the Half yearly Report the only thing that stands out is, "Walter said there was money to spend in Jan" And unless SDM was Writing Blank cheques it looks like there wasn't Money to spend!

As i said Hutton had to be sold to make up for CL

[Frankie 505]

Does that mean that, in the worst case, we could be a further £15million in debt?

Not necessarily depending on the Hutton/Cousin transfers... Depends if we took the credit option and to what extent if we did.

[Briton 394]

Does that mean that, in the worst case, we could be a further £15million in debt?

Not necessarily depending on the Hutton/Cousin transfers... Depends if we took the credit option and to what extent if we did.

Let's hope we resisted the offer.

[ara 154]

Does that mean that, in the worst case, we could be a further £15million in debt?

Not necessarily depending on the Hutton/Cousin transfers... Depends if we took the credit option and to what extent if we did.

Let's hope we resisted the offer.

So having read all this it sound like:

- the figures given for the half year show an improving year on year comparison

- these figures are not necessarily reflective of what the End Of Year accounts may show.

- sounds like we have to much cost tied up in unused assets (players that are not giving us value)

Conclusions?... until we clear out some of the sidelined baggage, we're shouldn't be breaking any transfer records!

[Canadaready 9,437]

Very good report.

[Bluedell 14]

Dell sits a few rows in front of me in the Bill Struth Stand.

He's a cunt...

First time I come onto this site and I find this.

Next time you're on the sub crawl... :2g:

[*Manticore* 1,893]

Dell sits a few rows in front of me in the Bill Struth Stand.

He's a cunt...

First time I come onto this site and I find this.

Next time you're on the sub crawl... :2g:

Not everybody gets such a warm welcome <_<

[Bluedell 14]

Frankie - I think you have the majority of this factually correct but some of the underlying assumptions I would quiblle with and so here my tuppence worth:

1. The easy one - Rangers do publish there Balance Sheet - for all to see, but it is on an annual basis and is available from the PLUS Market site. (Its a big attachment and I am not sure if I can post it to the board - someone may be able to help). Also any shareholder - (ie RST members - which I think you are) are entitled to a copy of the balance sheet (and P&L) anyway.

2. Our turnover is depressed (lower) than previous years due to the fact we only take profit / fee for kit and not the headline revenue from the JJB kit deal.

3. The loss has increased (as you say higher wages mainly) but that shows the clubs commitment to ensure CL football - which all fans want and which is a financial need from a business perspective - so I dont think the club can be critisised for this.

4. Its a SAD but TRUE fact that Celtic are in a stronger financial position that us - McCann got rid of the main debt and build the bigger stadium and this aligned with our poor performances in getting to CL means that they have been creating good profit and able to financially out muscle us (Brown, McDonald). We also have had very few saleable assets (players) during that time but we now seem to have quite a few. Totally agree that Rangers MUST look at increasing the stadium capacity in order to at least maintain financial parity with Celtic and I believe that this increased capacity is an essential move.

5. In many ways SDM runs Rangers like a not-for profit organisation - i.e. he is NOT out to generate a financial return and profit is reinvested in players or facilities - this also depresses or Profit figure and it is unlikely that we will report large profits due to this. The exception to this will be the accounts at the end of the year because of Hutton and CL (and possibly Cousin) as the money will NOT be spent as the financial year ends before the transfer market opens. I like the way SDM does this.

6. I think its a FACT that CL football and beinga SELLING club are the a reality of how SDM has to run the club. Enough of the turnover has to go into making sure we get a CL position year in, year out and the income generated from player sales helps this. It is also a fact our good players, no matter their alliegence to Rangers are going to be tempted by the EPL just becuase of the financial might the TV deals give them - if financial might was based on supporters we would be right up there, but in a small country we have little in the way of TV money outwith the CL. Sad but true.

7. On the positive side I believe SDM id extremely astute financially and (IMHO) seems to have taken a bigger interest again now WS is back and I believe he will look at numerous schemes to increase revenue, through the 'Rangers Village', Stadium Capacity and perhaps even (again) others investing. Time will tell.

I know Frankie has already replied on this and I'll probably repeat what he said but here are my replies:

1. Rangers don't publish the balance sheet for the half year. They also don't publish any notes and very limited commentary.

2. Our turnover is higher than the previous year because of CL income.

3. So the club couldn't be criticised for the £74m debt?

5. He knows that he can't make a profit and certainly doesn't take any dividend, unlike many of the shareholders of a certain other club. However he doesn't run the club as a non-profit organisation, although i think I get what you are meaning.

6. Agreed.

7. Murray is a good business man, but he was also the guy who led our club into debt of £74m after reassuring shareholders that he wouldn't. I am not as confident as you that he can come up with revenue increasing ideas. i find it difficult to believe that others will invest with him still on board given the way that Enic got their fingers burned and Dave King's investment has gone south.