This article analyses Rangers finances in respect of the 2020/21 season.
Season review
Rangers celebrated its 150th anniversary in glorious fashion, winning a record 55th league title. A run to the UEFA Europa League (UEL) was a financial boost given the adverse impact of the pandemic.
Rangers finances were hard hit by a lack of fans at the Ibrox, with losses rising to over £20m.
I would also like to take a moment to reflect on the passing of Walter Smith who played a huge part in the history of Glasgow Rangers.
Rangers Finances – Revenue
Revenue fell from £59m to £48m (19%) as the financial impact of the pandemic was felt. It is worth noting that Rangers also recorded £3.4m in ‘Other income’, of which £1.3m relates to a successful business interruption insurance claim in respect of COVID-19.
Rangers has estimated the impact of the pandemic on its 2021 revenue was £20m.
Matchday
Matchday revenue halved from £36m to £18m (49%) as the season was played behind closed doors. Due to a loyal fan base, Rangers retained a fair chunk of its matchday revenue. The return of fans in 2021/22 means that matchday revenue should mostly recover in 2022.
Broadcast
Broadcast revenue £14m to £19m (39%) due to Rangers’ title win and reaching the UEL round of 16. 59% (£11.2m) of its broadcast revenue came from its UEL campaign, highlighting the importance of European football. A rise in the club’s UEFA coefficient contributed to a rise in distributions.
Rangers broadcast revenue level will be dependent on its UEL performance in 2022.
Commercial
Commercial revenue rose from £10m to £11m (9%) as Rangers signed a new kit sponsor deal with Castore. A sleeve sponsorship deal with Tomket Tires was also signed, although there is currently a dispute with the SPFL over the stipulation to put its league sponsor Cinch on shirt sleeves.
A renewed 32Red sponsorship deal will drive any commercial revenue gains in 2022.
Rangers Finances – Revenue summary
The revenue of Rangers took a hit in 2021 as a result of no fans in the Ibrox. A return of fans will drive growth in 2022 towards 2019 levels, although revenue growth above this will be predicated on UEL performance.
Rangers Finances – Operating costs
Operating costs fell slightly from £69m to £64m (7%) as Rangers looked to manage costs in light of falling revenue. The decline in the costs was much lower than the revenue reduction so profitability was negatively impacted.
Wages
Glasgow Rangers’ wage bill rose from £43m to £48m (10%) as the club continued to invest in its playing squad in addition to bonuses for winning the league. The wages to revenue ratio rose to 100%, well above the 70% limit recommended by UEFA. The return of fans however will see the ratio fall back towards the 73% ratio of 2020.
Other costs
Other operating costs fell from £25m to £16m due to matchday costs savings.
Rangers Finances – Operating costs summary
Rangers’ cost base is relatively fixed and like the most clubs, the majority relating to player wages. The club will be looking to manage its cost base to achieve profits in the future as revenue climbs back to normal levels.
Rangers Finances – Transfers
Glasgow Rangers continued its consistent spending levels with minimal player sales values. In came Roofe (£4.5m), Hagi (£3.2m), Itten (£2.7m) and Wright (£0.2m) for a combined (£10.5m). Departing Ibrox were Docherty (£0.4m), Polster (£0.3m) and McCrorie (£0.2m) for a combined £0.9m. As a result, Rangers recorded a net transfer spend of £9.6m.
Amortisation
Player amortisation charges rose from £8.4m to £10.6m (26%) due to contunued investment into the playing squad. Spending in 2021/22 was considerably lower which is likely to result in a decline in this figure.
Profit on player sales
Rangers’ profit on player sales remains minimal, rising from £0.7m to £1.7m (152%). Player trading hasn’t formed a huge part of its business model and player sales in the future could contribute significantly to profitability. Player sales in 2021/22 to date has also been minimal.
Transfer debtors / creditors
Rangers is a net transfer creditor. This means it owes more in transfer fees to other clubs than it is owed. The club owes £13.4m in transfer fees while only being owed £0.3m, a net transfer creditor
Rangers Finances – Transfers summary
Rangers has invested relatively significantly in the last few seasons while recouping minimal player sales. As such, Rangers has minimal income from player trading which if changes in the future could boost finances considerably.
Rangers Finances – Profitability
Glasgow Rangers has been a loss-making club over the past few seasons as it invested heavily into its playing squad.
Operating profit / loss before player trading
Before player trading, operating losses rose from £8m to £13m (72%). This was primarily driven by the reduction in matchday revenue as games were played behind closed doors. Rangers estimated that the net impact of COVID-19 on operating losses was £10m. The return of fans will likely result in this loss falling, although this is predicated on UEL performance.
Operating profit / loss after player trading
After player trading, operating losses rose from £15m to £22m (43%). The lack of player sales limiting any positive impact from player trading. It is looking like a similar story in 2022.
Profit / loss before tax
Net finance costs of £1.3m resulted in a loss before tax of £23m, up from £17m in 2020.
Rangers Finances – Profitability summary
Following its 55th title win, Rangers will be looking to achieve profitability in the coming years. The club has a number of routes to this, with European performance and greater player sales the clearest opportunities.
Rangers Finances – Assets / Liabilities
Rangers required funding from its owners to support its losses.
Cash flow
Rangers’ cash reserves fell from £11.1m to £3.3m. Cash outflows from operations (£7.2m), player transfers (£18m) and capital expenditure (£2.4m) were partly offset by new financing of £21m. This new funding was provided through an equity injection and therefore is not included as debt.
Debt
Rangers’ debt levels fell from £19m to £14m as it used some of its new capital funding to pay down existing debts. Rangers’ debt levels are not particular high and are unlikely to be a major concern.
Net debt
Net debt levels hence now stands at £11m, up from £8m in 2020.
Rangers Finances – Final Remarks
Glasgow Rangers returned to the summit of Scottish football and will be focussed on staying there. Financially, the investment has paid off on the pitch, however losses have mounted, and the club will be hoping to reverse this. Paramount to this will be European performance, with UCL group stage qualification the main goal or a run to the UEL knockout phases.
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