Ibrox financial worries
£15.9m loss leaves Rangers requiring more funding help
Funds: Rangers (pic: SNS Group)
Scottish premiership leaders Rangers will require further funding of nearly £9m to ensure the club completes the current league season.
The stark message was revealed in the RIFC plc year-end accounts to 30 June, which showed a loss of £15.9m, an increase of £4.3m on the previous 12 months.
Far East-based businessman Stuart Gibson invested £8m last month but chairman Douglas Park has indicated season 2021/22 may require additional funding of more than £14m to see Rangers meet its liabilities.
Helped by an extended run in the Europa League, revenue rose by 11% to nearly £6m but the effects of the pandemic with no fans being allowed inside Ibrox to watch games is likely to cost the club £10m, according to Mr Park.
Figures also show £43m was spent on wages, with the wage to turnover ratio sitting at 50%.
The RIFC plc report said: “At the time of preparation, the forecast identified that the Group would require £8.8m by way of debt or equity funding by the end of season 2020/21 in order to meet its liabilities as they fall due with further funding of £14.4m required by the end of season 2021/22.
“The first tranche of funding is required from investors before the end of November 2020.
“However, the final amount required is dependent on future football performance, European football participation, player trading and the ongoing impact of COVID-19 amongst other factors.
“The board of directors have discussed the club’s forecast cash flow shortfall and have reached agreement with Douglas Park and John Bennett whereby they will provide additional loan facilities as necessary to meet shortfalls to the above requirements and any further amounts that may be required a result of variances to forecast cash flows.
“Further to this, Douglas Park and John Bennett have agreed to provide a formal facility with funds being made immediately available to meet short term cash needs with further funds to be made available to draw down as they are required.
“The board has considered the level and timing of additional funding that may be needed and is satisfied that any such amounts will be made available as and when required.
“The board of directors have discussed the club’s forecast cash flow shortfall and have reached agreement with Douglas Park and John Bennett whereby they will provide additional loan facilities as necessary to meet shortfalls – RIFC plc
“The board acknowledge that the uncertainty over the level of additional funds that will be required and a lack of a binding debt facility indicate that a material uncertainty exists which may cast doubt over the group’s ability to continue as a going concern and therefore its ability to realise its assets and discharge its liabilities in the normal course of business.
“Nevertheless, having secured the offer of further loan funding referred to above, the board of directors believe that there is a reasonable expectation that the group will at all times have adequate resources to continue in operational existence for the foreseeable future.
“Accordingly, they continue to adopt the going concern basis in preparing this report and the statutory financial statements.”
In his statement to shareholders, Mr Park said: “The financial year under review is unlike any other, no matter the business or walk of life. The impact of Covid-19 will have far-reaching consequences for our economy and society. Rangers is not immune to the severe effects of this unprecedented challenge.
“This is a club which has experienced some of the darkest days that any football club can endure. This is a club which has repeatedly displayed remarkable resilience in the face of adversity and which will do so yet again.
“This resilience, together with a burning ambition, has, once again, been underpinned by significant investment from our directors and shareholders. Our club continues to attract investment from across the world, and I believe this will grow further as our resurgence builds momentum.
“Covid-19 has brought with it the severest of strains to all of our business and personal lives. As we can see from the plight of a number of clubs throughout Europe, football is facing some very serious challenges.
“Indeed, playing matches behind closed doors is likely to adversely impact the club by in excess of £10m in the current season.”