Rangers' debt increases to £29m

Rangers have suffered a period of financial problems

Rangers' total debt has increased by nearly £3.5m to £29m, according to the Scottish champions' half-yearly report.

The club suffered a drop in pre-tax profit from £13m to £9m during the six months to 31 December.

Turnover for the six-month period decreased by £4.1m to £33.7m because of fewer home games for the Glasgow club in the Scottish Premier League.

And there was 4.9% decline in the number of season tickets sold, together with a reduction in sponsorship income.

Rangers chairman Alastair Johnston said the current economic downturn and the disruption to fixtures due to extreme weather conditions in December had added to the club's financial problems.

But he took the opportunity to criticise the club's banker, Lloyds Banking Group, for making manager Walter Smith more difficult than necessary.

"While we appreciate the support of the Lloyds Banking Group through the Bank of Scotland in extending our credit arrangement and recognising the progress that has been made in developing a template for collaboration, certain provisions imposed on the club continue to compromise, in our opinion, management's ability to conduct its role with maximum efficiency," Johnston said in his statement.

Alastair Johnston Rangers chairman

"Having said that, as has been widely reported, the majority shareholder is currently engaged in ongoing discussion with a view to selling its equity interest in the cub.

"The outcome of this process could change the role that the bank will play in going forward in its financial structure."

Johnston was making reference to an ongoing takeover bid by Scottish tycoon Craig Whyte, who this week appeared to move closer to a buy-out of Sir David Murray's shares.

"We are all acutely aware of the distractions off the park but can assure all stakeholders that our objective of adding the SPL trophy to the Co-operative Insurance Cup and providing Walter Smith with a fitting finale is resolute," said the chairman.

"The strength of the club is in its collective and unyielding support to achieve footballing success."

Indeed, despite Smith being restricted in his movements in the transfer market, player costs have remained around the same thanks to the addition of Nikica Jelavic, Vladimir Weiss and James Beattie.

The latest figures also show that Rangers' gained more from the sale of Danny Wilson to Liverpool and Thomson to Middlesbrough than they did the previous year for Barry Ferguson to Birmingham City and Charlie Adam to Blackpool.

"Net operating expenses at £21.1m are in line with last year, with base salary costs at similar levels and reduced matchday costs offset by higher maintenance expenditure and provisions for doubtful debts," explained Johnston.

"The increase in amortisation of player registrations reflects the additions of Jelavic, Weiss and Beattie to the squad, whilst the gain on disposal of player registrations of £3.7m includes Wilson and Thomson compared to the lower gains for Ferguson and Adam in the prior year."

Johnston also acknowledged the investigation by Her Majesty's Revenue and Customs over a tax issue relating to offshore payments to players and the Murray Group Management Limited Remuneration Trust.

"I would emphasise that no allegations have been made to suggest any illegal activity and tax vehicles of this type have been used by a number of companies throughout the country," he added.

"We continue to vigorously contest HMRC's challenge on the taxation treatment of the trust and, in doing so, continue to receive reassuring opinion from tax, accounting and legal specialists."

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