The Financial Underbelly: Queens Park Rangers

Posted by on Jun 24, 2015 in Financial Underbelly | 2 Comments
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This summer, a serious new broom is sweeping through Loftus Road, the current home of Queens Park Rangers.

Four new players have joined since the cessation of hostilities in May and each has a very different image from the ragbag of a shower of ex-internationals, cronies and never has-beens brought to Shepherd’s Bush by Harry Redknapp and others.

First, QPR showed adroitness in picking over the bones of Swindon Town’s play-off demolition at the hands of Preston North End — with Ben Gladwin and Massimo Luongo joining from Wiltshire. The latter finished the most recent Asian Cup tournament with a Most Valuable Player accolade, scoring Australia’s first goal in their final victory over South Korea.

A monitoring of the upper reaches of League 1 has resulted in another of the arrivals — Jay Emmanuel-Thomas — ex-Arsenal youngster and a somewhat mercurial presence in the lower leagues for some time now can be special on his day even if he still has much to prove at Championship level. Released by champions Bristol City, the lanky winger cum striker had his best year for some time and will add unpredictability to the Rangers attack.

Add to that, the return of Jamie Mackie, one of three players along with Shaun Derry and Clint Hill who came out with any credit the last time QPR were relegated, Mackie will run all day and had an honest and effective part year on loan at Reading, having been deemed surplus to requirements at Nottingham Forest. That Rangers ever let him go is a mystery and they are lucky to have him back.

On that last occasion that QPR were demoted, at the end of that 2012-3 season, player wages dropped by a mere smidgeon — from £78m to £75.4m, in keeping with a recent tradition that seen the west Londoners make just £4m from player sales over the past nine years.

At that point, the R’s gambled on keeping their star players, despite a woeful season that had seen them finish bottom of the Premier League pile.

Two years on and the determination is of a different variety. Having grown impatient with a bunch of players — Joey Barton’s ‘bad eggs’ among them — who have helped the squad to two relegations in three years, there has been a real change of tack and a shift to the sourcing of younger, up and coming men. Those who have already arrived as well as those who are being linked – including Brentford’s Andre Gray – are evidence of that — but so are those on the way out the door.

A number of first teamers are out of contract — including Barton, Bobby Zamora and Richard Dunne – while Adel Taarabt — a former Football League player of the year on this blog — has seen his contract cancelled by mutual consent before moving to Benfica and a scarcely credible five year deal.

Elsewhere, unlike the superannuated bunch of twenty four months ago, the current squad has some seriously saleable assets.

Chief among these is Charlie Austin, a player whom QPR have done an undeniably good job in developing — Rangers are right to hold out for the £15m they have quoted in the teeth of rumoured offers from Southampton and Crystal Palace that amount to only two thirds of that.

Leroy Fer, accused by some Rangers fans of laziness in a defeat against Leicester City in the Spring, still holds enough credibility to attract Premier League buyers, Steven Caulker has just about enhanced his reputation despite a recent off field incident at London’s O2 and Rob Green, excellent for two seasons now, has been linked with a £2m back-up role to Thibaut Courtois’ Chelsea.
Last week, it emerged that Sandro, the club’s Brazilian midfielder, has been playing without a work permit for the whole of 2014-5, landing QPR with a ban imposed by the Home Office on signing players from outside the European Union and throwing the player’s future into serious doubt.

But new Chief Executive Lee Hoos and co-owner Ruben Gnanalingam might just view this as a stroke of luck — a chance to offload another of the high earners and the inability to sign players from outside Europe will hardly clash with the general atmosphere of a fire sale.

So why such decisiveness — what’s the rhyme and reason behind QPR’s new found financial sobriety?

Since December, negotiations have been underway to come to an agreement with the Football League concerning a possible breach of Financial Fair Play (FFP) rules — central to this is an extraordinary line in the club’s accounts for 2014 — a £60m element of income labelled as an ‘exceptional item’ and amounting to a loan from the owners.

Current FFP rules do not allow for this kind of article in the accounts and the possible sanction that could be levied is a £58m fine for breaching the rules.

Blogger The Swiss Ramble, in a typically essential post, has described this as ‘fancy footwork’ and his overarching analysis of the state of QPR’s finances is a must read at this link.

To pick out only some of the headline figures and to refresh the reader’s memory as to the incredible level of spending that QPR have indulged in in recent times, let’s reflect upon a wages to turnover ratio for 2013-4 of 195%; the eighth highest wage bill in the Premier League for that season (in which the club were relegated); a £65m loss for 2012-3; a wage bill for last season’s promotion season of £75m (compared to that for the other promoted clubs of £36m for Leicester and £15m for Burnley) and player amortisation of 17m.

Officially, the club quoted a loss of £9.8m for 2013-4 but that does not take into account that exceptional item. At the heart of the negotiations between the club and the League is this and its validity or otherwise.

As The Swiss Ramble explains:

Under the existing rules, clubs are only allowed a maximum annual loss of £8million (assuming that any losses in excess of £3 million are covered by injecting equity). Any clubs that exceed those losses are subject to a fine (if promoted) or a transfer embargo (if they remain in the Championship). There is a sliding scale for the next £10 million, but beyond £18 million the fine is imposed on a pound-for-pound basis.

Hence the £58m figure. So — are QPR bang to rights?

They would argue No.

First, there is the overwhelming and oft spoken argument voiced by many fans that the owner of a concern can do what he likes with his money — Tony Fernandes is a rich man and has been able to underwrite this extraordinary venture handsomely since purchasing his majority share in 2011. The Premier League — not subject to the same level of Financial Fair Play rules as the lower leagues — has seen a number of its most successful clubs rack up huge debts and Chelsea and Manchester City are among these.

Second, there is an argument that up-front investment is needed in order to achieve the kind of medium term growth that Rangers desire — plans are afoot for a new training ground in Hanwell and a new stadium at Old Oak Common and although the latter is mired in debate, the club feel they can move beyond tiny, creaking Loftus Road with its severely limited capacity that sees average gates of under 18,000.

Third, the FFP rules have been something of a moveable feast and have been relaxed in recent times. QPR’s tendency to switch divisions has made them elusive and hard to pin down — like a footballing Scarlet Pimpernel.

Add to that, there is an argument that ‘allowable’ expenditure on youth development and promotion bonuses means the debt is less than quoted.

This latter point is important as it is evidence of good behaviour and here we return to the motivation behind the clear out of the overpaid and the arrival of the promising. QPR can point to serious progress since May in lessening the wage bill and if the likes of Austin, Fer, Caulker, Green and Sandro can be moved on, they may receive a B+ for good behaviour from the Football League.

Although a number of big earners remain, Alex McCarthy is a ready-made replacement for Green and promising youngsters such as the wonderfully named Reece Grego-Cox can be allowed a chance.

However, more cynically, one might suppose that QPR’s actions are motivated by a wish to act while they can .

The fine is by no means certain to be imposed but Fernandes is obviously concerned enough to try and get the business he wishes to undertake out of the way before any sanction might be imposed. Hence, with negotiations ‘ongoing’, the club have simply taken advantage of the hiatus to spring clean the squad.

This hasn’t gone down well with the fans of clubs such as Nottingham Forest and Blackburn Rovers — both subject to a transfer embargo for their own breaches of FFP rules — that QPR have exploited the loophole that they were not competing in the Football League for a year seems like a very clever manoeuvre — they won’t have been the only suitors for Luongo and Mackie.

So why the drag in the case? It’s now a couple of months since Adam Bate wrote this excellent summary of why QPR looked certain to be fined.

That’s likely to be bound up with football’s potential legal apocalypse. Throughout the history of the sport, owners have largely respected that the sport is circumscribed by rules and regulations and recourse to the law has been rare.

But the stakes have never been higher — and with Fernandes having racked up in excess of £250m of debt at QPR, he’s unlikely to let the random and possibly ill thought out impositions of a collection of blazers stop him in his tracks. Indeed, he’s already vowed to contest any fine in the courts if one is imposed.

Just as Spurs wriggled off the hook and avoided a 12 point deduction during 1994-5, QPR have the staying power to make the fight go to the wire and, put simply, the Football League are unlikely to have the stomach for an unlimited legal battle.

Alternatives to fines such as a points deduction or, from the outset, a salary cap — may have come into play but it’s probable that the discussions behind the scenes are to do with the level of the punishment and it’s hard to believe that the League would allow QPR to bring in the players they have if the intention was to throw the book at them.

I’ll leave the last word to the chairman himself from early on in his tenure — ‘Football needs to change. There are clubs who are spending money that if they were in real business they could not afford.’

Tony Fernandes has unwittingly hit the nail on the head — football is emphatically not a real business.

Rob Langham
Rob Langham is co-founder of the defiantly non-partisan football league blog, The Two Unfortunates, a website that occasionally strays into covering issues of wider importance. He's 50 and lives in Oxford while retaining his boyhood support of Reading FC. He tweets as @twounfortunates and has written for a number of websites and publications including The Inside Left, When Saturday Comes, In Bed with Maradona, Futbolgrad and The Blizzard as well as being nominated for the Football Supporters' Federation Blogger of the Year Award in 2013.


  1. Iain
    June 24, 2015

    Great article!!!

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