Leaderboard

Overview A loss of £11.3m has unsurprisingly made the front pages but are we really in such a bad shape? I’d argue that we are not for 3 main reasons: · The loss is funded by the directors/investors who have converted most of their loans into share capital. · We have no external debt · I will argue below that the inherent loss is well under £5m and can be contained by regular European football and the sale of players after development. What is the loss? The loss of £11.3m has been heavily publicised but the extent of the loss is misleading due to relatively new accounting rules, which make it harder to understand the accounts. Included in interest payable are net amounts of £2.6m of notional interest which is only there for accounting purposes and will never actually be paid and can therefore be ignored. I would therefore argue that the actual loss for the year was £8.7m. To highlight this, we had £2.3m charged through last year’s accounts, most of which were on investors’ loans. When the loans got converted to share capital, an amount of £2.8m got added back to retained earnings. That is the main reason why the retained loss in the balance sheet moved from £38.7m of losses to £46.8m, a movement of £8.1m and not the £11.3m that you would expect. Confused? Yeah, me too. It’s difficult enough for accountants to understand it, never mind the man on the street. The bottom line is that if the accounts were prepared 10 years ago, they would be showing a £8.7m loss. Results The £8.7m loss contains at least £3.6m of legal fees which will hopefully not occur in the longer term plus some additional player amortisation (the writing off of transfer fees) of £3.3m on top of the normal charge of £4m. There would always be an extent of additional write offs but this year’s seems very high (possibly due to some of Pedro’s purchases and Grezda?). The underlying inherent loss is therefore arguably well under £5m. Revenue Revenue increased from £32.7m to £53.2m (+£20.5m), mainly due to our European run. We received £6.4m in European prize money and £7.9m in gate receipts, a total of £14.3m, which highlights how important a run in Europe is to us. Staff costs Staff costs increased by a whopping 43% in the year, going from £24m to £34m, which was a result of bringing Gerrard to the club and a significant increase in the quality of the squad. This sounds bad but the following should be taken into account: · Staff costs as a percentage of revenue have actually fallen from 73.8% to 64.8%. The average for the English Championship, League 1 and League 2 for last season were 106%, 94% and 78% respectively, so it shows that the level we have it is reasonable, albeit based on European income, which isn’t guaranteed. · Celtic’s staff costs are 63% higher than ours. Other operating expenses Other Operating Expenses increased from £13m to £22m due mainly to · the costs involved in an additional 9 home games · the travel costs for our European games and pre-season · additional legal and professional fees of £3.6m, due mainly to the ongoing Sports Direct dispute Sale of players We made a £3.1m profit on the sale of players. I assume that Windass and Gilmour would make up a majority of that. However we need more of that to sustain a break-even situation in the future. Our model looks to be largely working as I’d argue that we have at least 10 players on whom we should be able to make at least a 7 figure profit. Retail Retail income was £3.3m for the year whereas it was probably under £500K in the prior year. This was offset by high legal costs of at least £3.6m. The legal costs for the current year may not be reduced and therefore there’s an argument that we are worse off signing the new agreement with Sports Direct than we were previously as we had an end date after giving our 7 years’ notice, whereas the current agreement appears not to have an end date. The full facts have yet to come out and therefore a full assessment can’t be made yet but, although the directors should take great credit for funding the club, it seems that they have not dealt with the retail situation well and we are not any better under the new arrangement which they signed. Cash I was initially surprised that the level of cash was only at £1m, but we have £14.7m of debtors which is season ticket cash which is in respect of season tickets that are paid by supporters using deferred payment plans or credit cards so that will be converted into cash. The credit card companies are passing on the cash over the course of a season to limit their risk. This isn’t an issue as it’s only a short term cashflow problem and it hasn’t prevented us from spending £10m on Kent and Helander after the financial year-end. However I may consider paying my season ticket by debit card rather than credit card in the future to allow the club to get the cash quicker. Funding The accounts show investor loans of £11m down from £23.4m after some were converted into shares, and another loan, possibly from Close Leasing, of £3m. There were additional investor loans of £5.2m provided during the year. Dave King has committed to providing an additional £10m this season and £5m next season which highlights the incredible commitment he and the other investors have to the club. Improvements There was £4.3m of fixed asset expenditure, presumably work done on Ibrox and HTC. This highlights that the directors are investing significantly in the club’s infrastructure as well as the playing squad. Sundry The club’s bankers have changed from the Metro Bank to Barclays. This is a further example of the normalisation of the club’s operations and it’s good to see that we’re now dealing with a bigger high street bank, and also removes questions created by Metro Bank’s issues earlier this year which saw a number of other clients leave them. Post year-end The accounts do not reflect the signing of Kent and Helander and they will appear in the 2020 accounts, although it should be remembered that the £11m spent will be written off over the length of their contracts. The future The losses over the last few years are not a concern as they have been fully funded by our directors/investors and we should be very grateful to them for that. We are able to continue to make losses while the directors continue to fund them but that cannot go on indefinitely. King has committed to fund us at least until the end of next season, so the level of losses are not an issue at the moment, and player sales, with hopefully in excess of £20m being realised for Morelos in the summer will put a much brighter light on our financial position. We do need to get regular European group football, sort out the retail side once and for all and regularly make profits on player sales in excess of £5m to allow us to break even and this is the business model that our directors have been putting in place. We know from bitter experience that we need to keep an eye on our financial position and my outlook may change over the next few years but I don’t believe that this set of accounts is anything to be overly pessimistic about. The loss isn’t great but it’s been fully funded. We are in a solid financial position and there are no short term concerns.

Glad you’re back, buster. I missed the orange avatar.

It's actually not an £11m loss. Watch this space..... ?

I'm feeling under pressure. ? I'll have something up before the end of today.

I think in part the reason for the lack of focus is that they were released late on a Friday and it was the build up to a significant game in our domestic season. Now that we have enjoyed the aftermath of a fine victory, we are naturally looking back over the accounts. That said, I think there is a degree of apathy/jadedness (if thats a word) about matters financial, and I think its partly a chunk of the support wanting to go back to just supporting the team and not having to worry about these matters overly. Looking forward to reading @Bluedell 's analysis

I read the accounts, but I didn't post anything because I didn't see anything particularly surprising or worrying about them. Others may be the same. I have an issue with your point about selling a player. Of course selling a player will have a big impact on the team, which is why I hope King will be around for long enough to help us build a conveyor belt of talent to allow the club to fund itself. However we can't have it both ways. Either we don't want the club to require funding from King and in which case take much longer to return to winning ways, or we are happy with it for a period of time. How can anyone be surprised in the slightest with these results, given the outlay we've had on players and upgrades? I think it's all very well being concerned that the club suffers losses, but what would anyone here propose we do differently? How can we build our revenue streams quickly without incurring significant losses? I've never known any medium sized business (such as our club) being able to do that. I'd be more concerned if these losses were debts but they're not. These losses have been converted to equity at each opportunity. Like everyone here, I'll continue to scrutinise the board's actions and the relevant accounts (and court judgements) because I don't want to leave that to other commentators again, but I will represent the information fairly. There can be nothing in here that is a surprise to anyone surely?

Do we really need a Celtic fan's view on here? I'm sure we could go into the Celtic forums if we want to read how we're not going to make it to the end of the season but there's no need for it here.

Well done @Bluedell Gave it a bump on the blog also, I hope it gets the necessary views

I think the importance of effective player trading to our financial cannot be overstated. We need to be prepared to sign players who we know may never become first team players but who can be loaned out and will turn a profit in two or three years.

I expected a loss but I expected a much reduced one. So I was surprised at the size of the loss and the need for more investment on top of it, I don't mind admitting. You make a very valid point about the need to grow and to do that there's a requirement for investment and I accept that, as far as we know, all the investors are happy to see that investment turned into shares. We're very lucky. As I said earlier in the thread I'd be interested in knowing what the mid-term plan is, how will the current Directors exit. I'm not panicking, but I'm a little nervous.

My biggest concern Gaffer is there has in fact been very little focus on the board and accounts. This thread had around 4 replies until yesterday. We live in strange times, without making any political points there is a genuine chance that this country could look very different this time next year. Between Brexit and serious calls for another independence vote there is instability and uncertainty as well as financial volatility. Not the time you want to be depending on the largesse of individuals who, I assume, have their money tied up in investments, property and so on. Selling a player isn't without consequence. If we lose Morelos, undoubtedly our most sellable player, he needs replaced and that will cost money. Also, these figures remind all the buying clubs that we need the money, never the best place to be in negotiations. Morelos aside who is going to raise serious cash? Jack should walk into most English Championship sides and if he can maintain his form Barasic could prove valuable, Goldson, Katic, Helander, Tav and Kamara I suspect would too. But in reality are any of them going to leave for in excess of £10 million? I'm not convinced. Our squad players aren't going to raise much, no one is spending a lot to take Grezda, Murphy, Flanagan, Polster, McCrorie, Docherty, Foderingham or Halliday from us. I found the results a lot more troubling than you. Perhaps that's because of our recent history, perhaps I'm just naturally more pessimistic and cautious.

Really, ra Sellik View from Mike Meehall Wood? A twitter account lionising Phil McFournames, screaming in capitals, 'FCUK THE H-U-NS'. proclaiming TAL, mocking the deceased Sandy Jardine, hinting at FARE membership, and a disgraceful comment reference the Manchester bombing. Well, he has had his piece published in Forbes and it is now on our screens. That will be enough objectivity for BBC Scotland to reward him with a senior position.

I agree and that article above does nothing to acknowledge the fact that we are much closer to Celtic than they would like us to be, despite the funding gap. This is going to be a close run championship, not the stroll that they are used to. We await your assessment and analysis of the figures with interest Bluedell.

Think we have all become somewhat burned out by it. I'm leaving the obsessed from the usual sources which is pretty much every other clubs fans to get in a lather about it.

Morelos. Perfect pass into space for Helanders opener. His movement to find the pocket of space for his first strike The lay off header for his second was class as was his finish. Superb.

It seems clear to me -although I am no accountant- that Messrs King & Co are not tinkering at the margins here, but have committed, are committing, and will continue to commit serious dough to the recrudescence of Scotland's Premier Sporting Institution. This indicates that they are in earnest, which should comfort us all.

A calm, measured and well written summation - many thanks @Bluedell!

Historically, you could argue that we are today, more or less where DK was expecting back in early 2015 with perhaps, the dark shadow of SDI / Mr.MASH still being here an unexpected and costly ongoing negative. Where the potential issue or risk is, at least for me, is the coming years if we don't stop 10IAR, a probable downsizing and all that will come with it. We have a very important year or two ahead of us.

Good stuff Bluedell, many thanks.

Absolute Legend

It's Phil's 'rugger guy' breaking cover. Phil won't be happy.

I'd never heard of that guy until yesterday and clearly he isn't someone to take seriously on matters Rangers. However nature abhors a vacuum and, 4 Lads aside, I didn't see much written about our results by our supporters. If we've learned anything in the last few years it's that Tims enjoy nothing more than writing about Rangers. JFK-1up the thread has possibly summed up how too many of our support feel and that apathy has the potential to ruin us, again. That's probably my biggest concern.

Even if it were real if we want to win this league he has to stay as I just don't see it happening without him. I suspect Gerrard will do everything in his power to keep him beyond January and I further suspect the influence of Gerrard on the board to be enormous. There's every chance we wouldn't be in this position without Gerrad. Taking into account his pulling power alone just off the top of my head I can think of two key players in Defoe and Kent who most certainly wouldn't be with us if not for Gerrard. If anyone can pull this off it's the man who pulled off the miracle of Istanbul and he has to be well aware that if he can do this it will enhance even further his legendary status. I doubt anyone thought when he came in last year and I mean even we doubted that less than 18 months later we would be looking so formidable. Even down South where our league is derided as pub league standard heads are being turned by the Euro results. And if he pulls it off there may then be offers for his services never mind Morelos but I just don't see him leaving us for anywhere but England and it's hard to see him leading a team out against Liverpool. There is a precedent for such a mentality in Alex Ferguson. Ferguson was once sounded out for the England job but said though he would have loved the challenge there was no way he could bring himself to lead out an England side against Scotland.

That's why fans buying shares is not a waste, either through Club1872 or not.

Yes it has. Labour's antisemitism pales beside the child abuse excusers of the SNP. Can you imagine where their named person scheme would have led?

The SNP cavalry rides in to buy off the child abusers of Celtic FC and the Catholic Church with taxpayers' money.

I realise we all see the game differently, but I'm really surprised to see the stick that Ojo gets. He's a very young guy with bags of skill, pace and power. He's definitely one for the future and in my opinion he's one I would like us to buy soon before his price rockets. I thought Hearts looked terrified of him, Kent and Morelos yesterday, and if he develops some better decision making he will be a fantastic player. I liked Candeias but he WANTED to go because he couldn't be guaranteed a more regular place in the team. Let's not forget that. Candeias proved that he had a great workrate, but whenever we are up against packed defences he lacked the skill and guile to be effective. Gerrard had to improve the team so there's no way he could guarantee Candeias more starts. He acted as cover for Tav, which was fine, but we need someone with more skill than Candeias offered. Kent, Ojo, Arfield, Barker, Jones, etc are all more effective at breaking down packed defences than Candeias was. If we hadn't upgraded from Candeias we wouldn't have been much better than we were last season. He was a good servant to the club, but let's not make him out to be something he wasn't.

Its one thing saying players are aware of the standards and expectations at Rangers but in Davis & Greegsy you have two guys who have actually lived and thrived on that expectation. The embodiment of that in the dressing room is no bad thing.

Yes it’s true it protected us when any deal would go to tribunal & we would get a lot less (cross border which we’ve done before) Billy was signing his First deal so we had no negotiation stance, if we didn’t agree we were due to get a lot less We got an enhanced fee, add ons & future incentives that suited us all of which we wouldn’t have got in another deal if we had waited a worthwhile risk & transfer loop to get a good deal We were smart & got a minimal fine