Review of Rangers' Half-Year Accounts

[stewarty 2,060]

I think you are right here. I'm sure the full cost of the player is amortised over the period of his contract.

 

Totally forgot about this so thanks for clearing it up.

 

Still, I think we'll do significantly better in the second half of the year than we have in recent years as we're in a good position in the league and in both cups - all three were pretty poor showings recently.

 

I'm hoping we can break even before the Hutton and possibly Cousin transfer fees are included.

 

However, this is an exceptional year and there should be less expense in enhancing the team in subsequent seasons and a prospective sustained upturn on the performances on the pitch should increase revenue for years to come.

 

In the end though, it's depressing that we're struggling to balance the books while being successful while mediocre EPL teams are handed 50M every season with no effort or cost to themselves.

 

Yip, sad really. The EPL juggernaut shows no signs of slowing up either so the gulf is only going to widen unless Setanta decide to multiply our TV rights contract at least ten-fold. I do think the club ought to get smarter about marketing itself abroad. Celtic are doing a good job of opening up certain markets like Poland and Japan and we should do likewise. A strategic signing or two like Onetrick KnackeredMotor could make a real difference to our bottom line...

[Bluedell 5,679]

Still, I think we'll do significantly better in the second half of the year than we have in recent years as we're in a good position in the league and in both cups - all three were pretty poor showings recently.

 

I'm hoping we can break even before the Hutton and possibly Cousin transfer fees are included.

Last year's expenses in the 2nd half of the year were �£23.0m compared to �£23.7m in the first half. This year's expenses for the 1st half of the year were �£30.0m. I don't see any reason to think that expenses in the second half of the year will not be of a similar size. We made a loss of �£5m in the second half of last year.

 

We will get some more income from the UEFA and the 2 domestic cups, but not enough to offset the increase in expenses, so my �£5m loss figure for the second half of the year looks very conservative.

 

I just can't see any way we will break-even before Hutton and Cousin.

 

 

In the end though, it's depressing that we're struggling to balance the books while being successful while mediocre EPL teams are handed 50M every season with no effort or cost to themselves.

Agreed.

[stewarty 2,060]

Are there any specific one-off costs in the second half of the year that cause us to lose so much money compared with the first half? Also, is this a recurring trend because we seem to have a similar amount of income for each half of the year?

[Bluedell 5,679]

Yip, sad really. The EPL juggernaut shows no signs of slowing up either so the gulf is only going to widen unless Setanta decide to multiply our TV rights contract at least ten-fold. I do think the club ought to get smarter about marketing itself abroad. Celtic are doing a good job of opening up certain markets like Poland and Japan and we should do likewise. A strategic signing or two like Onetrick KnackeredMotor could make a real difference to our bottom line...

Our problem is that we seem not to be very good at that kind of thing. Look at Northern Spirit and that Chinese team. We had Reyna for example and didn't seem to make any headway in the States. I also don't believe that Celtic make as much from this as they like to try and make out.

 

Although perhaps we have started with the loan deal of Steven Davis.

[Bluedell 5,679]

Are there any specific one-off costs in the second half of the year that cause us to lose so much money compared with the first half? Also, is this a recurring trend because we seem to have a similar amount of income for each half of the year?

Difficult to say due to the lack of detail given in the half yearly accounts. I doubt it though. It's just that the European income mostly comes in the first half of the year.

[stewarty 2,060]

Difficult to say due to the lack of detail given in the half yearly accounts. I doubt it though. It's just that the European income mostly comes in the first half of the year.

 

I wonder if the structure of player contracts could add to our debt? If you are paying a player �£10k per week regardless of the income you receive, this could potentially cause cashflow problems for which the club may then borrow money and incur interest, meaning our operating costs increase. If player wages were structured so that they received less money during periods where our income is lower, say during the close season, we could overload their wage during the season when we have regular income streams. The total amount of money we pay would not change it just might mean there's less need to dip into the overdraft which will cost us.

 

I dont have any basis of fact for this theory and I'm not an accountant but what do you think?

[Bluedell 5,679]

I wonder if the structure of player contracts could add to our debt? If you are paying a player �£10k per week regardless of the income you receive, this could potentially cause cashflow problems for which the club may then borrow money and incur interest, meaning our operating costs increase. If player wages were structured so that they received less money during periods where our income is lower, say during the close season, we could overload their wage during the season when we have regular income streams. The total amount of money we pay would not change it just might mean there's less need to dip into the overdraft which will cost us.

 

I dont have any basis of fact for this theory and I'm not an accountant but what do you think?

The close season is when we have all of our season ticket cash in, so it's potentially when we have our cash is at its highest level. I don't think it would make that much difference, mate.

[stewarty 2,060]

The close season is when we have all of our season ticket cash in, so it's potentially when we have our cash is at its highest level. I don't think it would make that much difference, mate.

 

Fair enough. :cheers:

[craig 5,199]

What you say rings a vague bell with me as well, but it's not the case. The 2007 accounts themselves confirm that "the costs...are capitalised..and are amortised over the period of the respective contracts."

 

The 2007 accounts show a value for players of �£9.8m in the balance sheet, which is after �£3.8m being written off in the year.

 

I dont have the time to delve the depths but at one time I am sure the costs were directly taken to the P&L.

 

That being the case there would have been a change in accounting policies which would have had to have been disclosedin the notes to the financials in the year in which the change occured.

 

I don't doubt you though Bluedell, I just don't have the time to trawl through.

 

I think that We could probably go back to Advocaat's era to see the change - the likelihood is that we changed the policy to capitalisation and amortisation when SDM realised the financial state of the club was in the shitter - so to capitalise means to basically defer the cost (no direct hit to the P&L each year). Which would also defer the negative numbers in the P&L.

 

Having said all that, most other teams recognise their players as assets so capitalise and amortise, would make sense that we do too

[craig 5,199]

The close season is when we have all of our season ticket cash in, so it's potentially when we have our cash is at its highest level. I don't think it would make that much difference, mate.

 

What WOULD make a difference though is having contracts which are structured more towards performance based.

 

You play and you get paid, you dont play you get paid less. You perform well, the team wins, you get paid more.

 

The Tims have done this and it actually motivates players to perform to their highest level - you may not get the desired performance but you likely WILL get the desired endeavour !