Releasing their accounts for the year ended June 2006, Rangers were able to report their net debt was slashed by more than £17 million from the £23.1 million they posted 12 months previously. The biggest single factor in the dramatic change was the initial £18 million payment received from JJB Sports when its ten-year contract kicked in on 8 June.
Under the terms of the deal, Rangers are also guaranteed a minimum annual royalty payment of £3 million in each year of the licence with additional payments realised if agreed sales thresholds are exceeded. According to club chairman and owner David Murray, "early indications in this respect are positive". Of the initial £18 million cash consideration from JJB Sports, £3.5 million was released to Rangers profit and loss account. According to Donald McIntyre, who replaced David Jolliffe as the clubs financial director in June, the remaining £14.5 million will be released over the term of the agreement.
Rangers reduced their net operating expenses by £2.5 million to £54.9 million, largely as a result of terminating their own in-house retail operation which involved the controversial closure of 18 shops and making 250 staff redundant. The vastly improved financial position of the club, who were almost £74 million in debt two years ago until Murray underwrote a £53 million share rights issue, is also credited to their historic passage to the last 16 of the Champions League.
In becoming the first Scottish club to progress beyond the group stage of Europes elite club tournament last season, ultimately losing out on away goals to Villarreal, Rangers saw their turnover increase by 11 per cent to £61.2 million. They also recorded an operating profit of £4.4 million for the year, compared to a loss of £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," said Murray. "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 £100,000, compared to a figure of £12.7 million in 2005 which included a one-off payment of £15 million relating to the acquisition of preference shares in Rangers Media Investments Ltd. A profit of £1 million was realised on player registrations, while the net book value of the clubs playing squad was recorded as £8.5 million, an increase of almost £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."
The reduction in Rangers debt is another illustration of the new financial reality being accepted by the Old Firm. Celtic last week announced their debt had been cut by more than £10 million to £9.1 million. It leaves Hearts bearing the highest debt in Scottish football, with their most recently published deficit of £21.3 million. |
