Rangers slice debt with help from retail agreement

Scottish Rangers announced they have reduced their debt by slightly less than GBP 5.9 million, according to accounting for the fiscal year ended June 2006.

Rangers reported their net debt was slashed by more than GBP 17 million from the GBP 23.1 million from the previous fiscal year.

A major factor in the drop was the initial GBP 18 million payment received from JJB Sports when its ten-year retail contract kicked in on 8 June. Rangers are guaranteed a minimum annual royalty payment of GBP 3 million in each year of the licence, with additional payments if agreed sales thresholds are exceeded.

Of the initial GBP 18 million cash consideration from JJB Sports, GBP 3.5 million was released to Rangers' profit and loss account.

According to Donald McIntyre, who replaced David Jolliffe as the club's financial director in June, the remaining GBP 14.5 million will be released over the term of the agreement.

Rangers reduced their net operating expenses by GBP 2.5 million to GBP 54.9 million, mainly because they ended the in-house retail operation which involved the controversial closure of 18 shops and the loss of 250 staff members.

The vastly improved financial position of the club, who were almost GBP 74 million in debt two years ago until owner David Murray underwrote a GBP 53 million share rights issue, can also be credited to their passage to the last 16 of the Champions League.

In becoming the first Scottish club to progress beyond the group stage of Europe's elite club tournament last season, ultimately losing out on away goals to Villarreal, Rangers saw their turnover increase by 11 percent to GBP 61.2 million. They also recorded an operating profit of GBP 4.4 million for the year, compared to a loss of GBP 7.8 million in 2005.

"I am pleased to report a set of positive financial results for the last year, despite a disappointing domestic season on the pitch," Murray said. "We enjoyed an extended run in the Champions League and all areas of the commercial side of the business benefited greatly from this, further enhancing our financial performance."

Rangers' total profit for the year was just GBP 100,000, compared to a figure of GBP 12.7 million in 2005 which included a one-off payment of GBP 15 million relating to the acquisition of preference shares in Rangers Media Investments Ltd.

A profit of GBP 1 million was made on player registrations, while the net book value of the club's playing squad was recorded as GBP 8.5 million, an increase of almost GBP 2 million on the previous year.

"We continue to focus on creating a sustainable player pool whilst maintaining financial prudence," added Murray. "Our house is in better order than it has been for several years and we must go forward carefully to ensure we sustain this positive position. That being said, I can assure all Rangers supporters that our number one priority for this year is to win back the SPL title. Focus will also be on Europe, where we hope to enjoy another extended run."

Rangers rival Celtic last week announced its debt had been cut by more than GBP 10 million to GBP 9.1 million. Hearts now has the highest debt in Scottish football, with their most recently published deficit of GBP 21.3 million.

Murray, meanwhile, paid tribute to former manager Alex McLeish's part in taking Rangers into the last 16 of the Champions League and making a significant contribution to the fiscal health of the club.

"This was a fitting final achievement for Alex McLeish who said farewell to the club at the end of last season, having secured seven trophies in his time as manager," said Murray.

Source: euFootball.BIZ © Copyright 2006 - All rights reserved.