Rangers FC announced accounts at 6-45pm on a Friday, conveniently after the majority of people have stopped looking at the news. This, too, before a huge weekend of Scottish football, with two League Cup semi-finals as well as a full English Premier League program to distract attention. It’s not quite releasing them 15 minutes before kickoff in a crucial league match, as they did last year, but it is certainly not releasing them in a way that makes life easy for anyone in the media who might want to report on them. This is, of course, not an accident.
I wrote a piece for this very site last year that questioned quite why Rangers might have chosen such timings to release vital information to their supporters, and posited that good news is rarely proclaimed in such a manner. That is as true now as it was then. Last year, the headline news was that the club had lost £14 million, and in a sense, the news this year shows an improvement, as this season Rangers only lost £11 million.
Hidden deeper in the report was that the club needs £10m to keep going to the end of the season, the sort of thing that Rangers fans—who have a fairly recent memory of their club ceasing to exist before their eyes—might want to know about. That the club’s Twitter account was silent on the issue, and one would have had to have been perusing Rangers’ website at an unusual hour to be made aware of this, should trouble Bluenoses tremendously.
Tucked away in the second to last paragraph of the report, it reads that: “The Board acknowledge that the uncertainty over the level of additional funds that will be required and a lack of a binding debt facility indicate that a material uncertainty exists which may cast doubt over the Group’s ability to continue as a going concern and therefore its ability to realise its assets and discharge its liabilities in the normal course of business.” Worrying stuff.
The big positive is the increase in turnover by 20%, which is unquestionably a good thing. More cash going through the club represents more opportunity to make cash, and turnover is now close to what it was in 2011, the last year the club filed accounts before going bust in 2012. Back then, the major issue hanging over the club, and the one that ultimately led to its demise, was their tax problems and mammoth list of creditors. Now, it is their ongoing losses and continuing reliance on share issues and generous benefactors to merely keep the club going.
Revenues jumped by 63%, as increased sponsorship and UEFA Europa League qualification boosted the coffers. Crucially, however, Celtic also qualified for the Europa League, and generate plenty of sponsorship themselves, as well as player sales, meaning that the competitive edge of such growth is blunted. Football is unusual in that the success of the business is judged on other factors than a balance sheet. As Rangers fans will tell you, making money doesn’t matter if that means watching Celtic win their record-equalling ninth title in succession, or even worse, a record-breaking tenth.
The simple reality of the matter, however, is that the funding gap to Celtic is essentially insurmountable within the time required to stop the ten unless someone is willing to consciously and deliberately lose tens of millions of pounds to do so. Dave King, the major benefactor of Rangers, is currently losing upwards of £10m a year to watch Celtic win every trophy, and no matter how big a fan of the club he claims to be, that is completely unsustainable. Now, he must find another £10m to keep the club solvent until the end of the season.
In the pursuit of Celtic, the Ibrox club have nearly tripled their staff costs in three years. That is way too much for a club that loses as much as Rangers do to keep up, unless they qualify for the Champions’ League, which would require winning the Scottish league. If they did that, it would justify it, but that is a huge if. Gamblers are plentiful in football—both Rangers and Celtic are sponsored by bookies, as is the Scottish Premiership itself—but currently the odds are 2/1 against Rangers winning the league. Should Rangers not win the league this year, or next year, Dave King would be well within his rights to question the point of it all. Without him, there is nobody else.
The club also spent an estimated £9m on legal fees, largely on battling Mike Ashley’s Sports Direct for the control of their own merchandising rights. Without going into the incredibly complex details of the case, Rangers lost and now must stump up. That is unusual for most clubs, and Rangers will hope that the worst is now behind them. The inward investment into the club has come via share issues, with the club admitting that the cash was designed specifically to purchase players. Buying players is nothing out of the ordinary for a football club, but for clubs in the Scottish Premiership, it is vital to sell to maintain a healthy balance sheet.
Rangers cannot realistically generate much more revenue from sponsorship, TV broadcasting, match day revenue or merchandising. The only route open to the club—well, the only one other than a wealthy benefactor losing money hand over fist—is to make up the shortfall via player sales, which cannot be squared with their stated goal of winning the Scottish Premiership. Titles are not won by selling your best players halfway through the season, but there is a legitimate threat that the club might not make it to the end of the season without someone departing for cash.
Celtic’s financial figures, for example, reflect the reality of Scottish football in 2019. They turn a profit based on the sale of players or qualification to the Champions’ League, which in turn allows them to reinvest in the squad. Kieran Tierney was brought through the club’s youth academy and sold at a huge profit, while Moussa Dembele, Virgil van Dijk, Victor Wanyama, Stuart Armstrong and others have come through the club and then left at a profit. Next summer, Odsonne Edouard or Kristoffer Ajer could move on to keep the wheels in motion. Rangers fan media, in response to their poor accounts, has played heavily on the line of “if Celtic hadn’t sold XYZ, they’d be losing £10m too”, without countenancing that selling players is an essential part of the business plan.
Currently—and despite investment similar to Celtic’s—Rangers lack anyone who might represent any significant sell-on value to the club. Alfredo Morelos, their most obvious cash generator, is seen as toxic due to his horrendous disciplinary record, while Ryan Kent, the club’s record signing, has barely featured since joining three months ago. James Tavernier, club captain, is touted as an asset, but has been found out consistently at a higher level than the Scottish Premiership and a significant portion of the Rangers support would question his place in their team, let alone an English Premier League club’s. Throw in that all three are older than Odsonne Edouard and Kristoffer Ajer, Celtic’s most sellable assets, and the outlook becomes yet bleaker.
Inexplicably, in the time since the announcement of their financial reports, stories have appeared that suggest that Rangers will offer new contracts to Allan McGregor, Jermain Defoe and Steven Davis. Parking for one second the irony of McGregor and Davis’ situation—they were also offered new long-term deals in the summer before Rangers were liquidated in 2012—it makes absolutely zero financial sense for a club that should be predicated on selling young talent to the riches of the Premier League to invest valuable wage expenditure on players aged 37, 37 and 34 respectively. The youngest member of their first team squad is 22 and the average age is 27, while Celtic’s is 25 and includes the likes of Jeremie Frimpong (18), Ajer (21) and Edouard (21). The obvious tribal rivalry and pressing need to stop ten-in-a-row aside, Rangers fans could probably better stomach their team coming second if it looked like the club was growing sustainably. This current team needs to win now, or else.