Gersnet Review of Rangers' Accounts 2019

Current Affairs
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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.


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 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 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.


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 cash-flow 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.


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.


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.


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.

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