Rangers losses balloon - what the football club's accounts reveal

It is worth observing that the ballooning of the loss in the latest financial year occurred in spite of Rangers posting record annual revenue.

Analysing the accounts, there is one key line which has made all the difference between the year to June 2024 and the prior 12 months.

This key line relates to player trading, and specifically sales. Profit on disposal of player registrations was just £5.632m in the year to June 30, 2024. In the prior 12 months, Rangers recorded a profit on disposal of player registrations of £23.601m. The decline in the boost to the profit and loss account from disposal of player registrations, comparing the two financial years, is thus £17.969m.

To put this in context, the increase in the pre-tax loss sustained by Rangers in the latest financial year, comparing this with the prior 12 months, is £14.197m.

If Rangers had in the year to June 2024 matched the profit on disposal of player registrations achieved in the prior 12 months, which it obviously did not, it would have been in the black at the pre-tax level with a profit of £664,000.

In this regard, it was therefore no surprise to see Rangers declare that “the player trading model is not yet where the business needs it [to] be”.

Significantly, operating losses before player trading at Rangers in the year to June 2024 were reduced to £1.988m from £10.495m in the prior 12 months.

This was enabled by a £4.535m jump in revenue, and also by other operating income of £4.841m booked by Rangers in the 12 months to June this year which was driven by one-off factors. Other operating income in the prior 12 months was just £919,000. Rangers also booked a £1.093m gain on the sale of part of the Albion Car Park.

Detailing the other operating income figure for the year to June 2024, Rangers said: "The club generated £4.8 million of other operating income, driven by revenue grants and a business interruption insurance recovery in relation to Covid-19."

The lumpy nature of gains on player trading was also highlighted recently when Celtic published its latest accounts, although in this instance in terms of the part it played in a sharp drop in profits rather than an increase in losses.

In spite of a rise in revenue to £124.58 million in the year to June 30, from £119.851m in the prior 12 months, Celtic’s pre-tax profits dropped sharply to £17.825m from £40.697m.

Celtic’s latest accounts show that the “profit on disposal of intangible assets”, the line in its accounts detailing the overall financial impact of player sales, was £6.637m in the year to June 30, 2024. In the prior 12 months, the profit on disposal of tangible assets was £14.441m.

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This represented a fall of £7.804m in such profits between the two financial years, feeding straight through to the bottom line.

Rangers’ latest results will do little to quell the mounting unrest in the Ibrox stands, as fans become increasingly frustrated with the lacklustre displays of Philippe Clement’s team – currently a distant third in the Scottish Premiership behind Celtic and Aberdeen – and inertia in the boardroom.

Rangers are currently operating without a chief executive – James Bisgrove departed for a lucrative role in Saudi Arabia back in May – and a permanent chairman, with John Gilligan stepping in to perform the role on an interim basis after John Bennett stepped down for health reasons in September. There is also vacancy for a director of football operations, following the departure of Creag Robertson.

The notion that Rangers is a rudderless ship will not be dispelled by today’s accounts, which cover a period in which the men’s team tasted only limited success by the standards expected. Season 2023/ 2024 finished with only the League Cup to show for the efforts of Philippe Clement, who replaced Michael Beale in October last year and hauled Rangers back into contention for the league title, only to lose out to Celtic once more as the challenge faded in spring.

Off the pitch, the club is at least able to point to an increase in revenue to a record £88.309m – up from £83.774m the year before. The record revenue performance was, according to the accounts, driven by strong performances across a range of departments, from ticketing, hospitality, and corporate sales to soccer academies, events, Rangers TV, and retail.

However, the bottom-line loss is likely be a major concern to fans, especially with the club’s financial implosion of 2012 so fresh in the minds of many of them.

The accounts lay bare the deficiencies of the current player trading model at Ibrox, which continued to result in losses albeit with some signs of improvement.

They flag the board's "additional confidence on the future success of the player trading model".

St Mirren's Caolan Boyd-Munce (right) and Rangers' Mohammed Diomande (centre) battle for the ball during the William Hill Premiership match at Ibrox Stadium (Image: Jane Barlow PA)

Further improvement will be crucial to the club’s long-term success, as senior executives have routinely noted. Rangers can no longer afford to let valuable assets such as Alfredo Morelos and Ryan Kent depart for nothing, as occurred on conclusion of the 2022/ 2023 reason.

While the accounts for 2022/ 2023 were boosted by notable player sales, including the deal which took Calvin Bassey from Rangers to Ajax for a reported near-£20m in July 2022, and the sale of Joe Aribo to Southampton around the same time, gains from player trading were much more limited during the year under review. The club did manage to remove some high earners from the wage bill during the 2023 close season, including Morelos and Kent. However, former manager Michael Beale was afforded the opportunity to spend millions of pounds in the transfer market, with only limited success.

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The club raised record revenue in the year to June 30, 2024, and management kept the club’s overall operating expenses broadly steady over the year – despite inflationary pressure.

The club states in its financial review: “Despite the significant revenue growth, the overall cost profile of the business remained steady despite an inflationary macro-environment, with costs increasing to £96.2m, up 1% on the previous year.

“The board and the executive team will continue to ensure a strong focus on the operational cost profile of the club, ensuring that improvements in financial performance have a direct impact on the playing budget.”

Referring to the after-tax loss, it added: “Despite this improvement in the pre-player trading loss, the club made a net loss of £17.2m in the year. The player trading model is not yet where the business needs it [to] be with player amortisation and impairment of £13.6m million significantly higher than player gains of £5.6m. The £13.6m includes £2.9m of player impairments, ultimately a direct cost associated with the necessary summer 2024 transfer activity in order to rebalance the squad and the first team budget.

“The strategic goal is, at a minimum, to match the player amortisation cost with player gains over the strategic cycle. The investments made in the January and summer 2024 transfer windows provide the board with additional confidence on the future success of the player trading model.”

The biggest single factor in the drop in Celtic’s profits in the year to June 30 was the absence of £13.5m of non-recurring “other income” which had been received in the year to June 30, 2023.

Celtic’s annual report for the 12 months to June 2023 shows this “other income” came from “a combination of compensation received following the departure of [former manager] Ange Postecoglou and a business interruption insurance recovery in relation to Covid-19, with the two items mentioned being one-off in nature and typically non-recurring”.