Accounts may read well, but Rangers face fresh hurdles

RANGERS may have stepped back from the financial abyss by winning the past two SPL titles, but they are still some way short of securing their longer term financial stability.

While the headline figures of the club's annual accounts make for encouraging reading as far as the club's supporters are concerned, there remains some devil in the detail.

Participation in the group stage of last season's Champions League, as chairman Alastair Johnston recognises, was critical for Rangers' welfare as they emerge from one of the most fiscally challenging periods in their history. In earning a return to European football's elite tournament this year, manager Walter Smith and his players ensured the recovery process took a hugely significant step forward.

Closer inspection of yesterday's annual report, however, reveals that Rangers are continuing to pay the price for a less austere approach to their business. While their Champions League income contributed to turnover of 56.3 million, an increase of 16.6m on 2009, it was partly offset by payments of 8m they had to make in scheduled transfer fee instalments for players purchased in previous years.

A decrease in advanced season ticket sales, the number dropping by almost 3000 to 40,306 last season, also had a mitigating effect. The club's annual wage bill was marginally reduced, from 24.9m in 2009 to 23.7m, a figure which does not take into account the six players offloaded from the first-team squad before the start of this season. The quest to reduce operating costs and cut the club's debt, now standing at 27.1m, remains a priority.

The annual report also notes the necessity to fall in line with Uefa's new financial fair play regulations which will demand a balance between expenditure on playing staff and income generated. So while Johnston speaks optimistically of a more productive relationship between Rangers and Lloyds Banking Group, he also recognises that the club remain limited in what steps they can take to both strengthen their playing resources and hold on to existing assets.

The renewal of Kenny Miller's contract, which expires at the end of the season, has become a cause of considerable concern to Rangers supporters following the striker's white-hot scoring start to the current campaign. But while Johnston is hopeful a new deal can be agreed with Miller, who has already turned down one offer from the club, he warns against any notion that Rangers are suddenly in a position to stretch their budget.

"Obviously, we would be nuts not to want Kenny Miller to stay at the club," Johnston told The Scotsman."He couldn't have started the season any better and he is a player we all appreciate and admire. I'd like to think we can reach common ground with him over a new contract, but there are clearly limits within which we have to operate. As a Rangers supporter, there are lots of things I would love to do immediately in terms of signing players and giving players new contracts. But as chairman, I can't sanction anything which might stifle the club's ability to maintain the progress we are making towards stabilising financially."

Rangers' latest accounts underline once more the value of Champions League football and there is a keen awareness that it is a source of income which will not be so readily available for Scottish clubs in forthcoming seasons. The slump in Scotland's Uefa co-efficient ranking over the past two years means this season's SPL title winners will face at least two qualifying ties next year in order to taste the milk and honey on offer in the group stage. "It is obviously a concern," added Johnston, "and we have to cut our cloth to suit a revenue model which does not take the Champions League into account. But as a club, we also have to be clear that we are not writing off continuing to be involved in the Champions League in the years to come. With the squad we have this season, for example, we believe that winning the SPL again and then coming through Champions League qualifiers next season is not only an ambition but a realistic aim."

The current Champions League campaign, which started with an encouraging draw against Manchester United at Old Trafford and continues with a home tie against Bursaspor on Wednesday, is set to be the final one overseen by manager Smith. The 62-year-old has re-iterated his intention to stick by his decision to retire next summer despite close friends such as Sir Alex Ferguson suggesting he may change his mind.

"Walter is very comfortable with his decision," observed Johnston. "But he hasn't reflected on it yet because he has a job to do this season which is fully occupying his thoughts. After we have gone through the season and the pressure is off, then we can only speculate on what view he will take. We have to respect his wishes whatever they are."

KEY FIGURES

Turnover: increased 41.8 per cent from the 2009 figure, from 39.7m to 56.3m

Net operating expenses: decrease of 9.1 per cent from 48.3m to 43.9m

Operating profit: increase of 16.9m from loss of 12.7m in 2009 to profit of 4.2m

Bank debt (including loan and overdraft facilities): reduced by 3.7m to 22.3m, having stood at 26,1m in 2009.

Total debts at 30 June, 2010, incorpoarating finance leases and other loans, amounted to 27.1m.

KYLE Lafferty admits he deserved the bad press which came his way in the past but has vowed to change for the better after claiming his first hat-trick for Rangers in Tuesday night's 7-2 Co-operative Insurance Cup win over Dunfermline Athletic.

The Northern Ireland international has often courted controversy since his move from Burnley, hitting the headlines for all the wrong reasons, and he says he has been hurt by what has been written about him. "I probably deserve it for the stupid things I do, but I'm working on it with the coaching staff and I'm trying to put it right. I just want to let my football do the talking and hopefully everyone will see a different side to me," he said.