Independent Rs Messageboard

[Steve Russell]

'QPR moved out of the relegation places at the weekend, but there was real sadness at the
passing of their legendary player Stan Bowles. Sincere condolences to everyone who knew him,
he was a true bright light in football.

QPR’s pre-tax loss reduced from £24.7m to £20.3m, as revenue rose £1.2m (5%) from £22.1m to £23.3m
and profit from player sales increased from £0.2m to £1.0m.

The main reason for the revenue growth was commercial, which increased £1.4m (19%) from £7.3m to £8.7m,
while gate receipts were slightly up, rising £0.1m (2%) to £5.7m. However, broadcasting fell £0.3m (4%) to £8.8m.

QPR’s £20.3m loss is still one of the worst of the nine clubs that have published 2022/23 accounts to date, only
surpassed by Norwich City £27.2m and Bristol City £22.2m. That said, very few clubs manage to make money in
this very challenging division with only Watford in the black so far last season.

Although QPR increased their profit from player sales from £0.2m to £1.0m, this was still one of the lowest in the
Championship, miles below the likes of Watford £59m and Middlesbrough £22m.

Losing money

QPR’s last two seasons have not been great from a financial perspective, as they have lost £45m in this period,
i.e. nearly £2m a month. Like many others in the Championship, they had clearly gambled on reaching the play-offs
in 2021/22, leading to a return of large losses. Up until then, they had been making good progress, losing “only” £4m i
n 2020/21, which was their best result since 2006.

That said, Rangers are no strangers to losing money. Since Tony Fernandes arrived in August 2011, total losses have been
£274m – or £334m if we exclude a £60m loan write-off in 2014.

A big factor in QPR’s worsening financials is the tiny amount they have made from player sales, amounting to only £1.2m
in the last two years. In fact, they have only generated more than £10m profit from this activity twice in the last decade,
despite a stated desire to develop players from the academy.

QPR’s revenue has dropped by a third since parachute payments ended in 2019, falling by £11.3m from £34.6m to £23.3m,
due to a £13.1m decrease in TV money. This was partly offset by small increases in commercial and gate receipts.

Relegation from the Premier League in 2015 is the root cause of QPR’s steep revenue decline, leading to a 73% (£63m)
fall from £86m. Equally importantly, the club has missed out on the growth in media rights in this time.

QPR’s £23m revenue puts them mid-table in the Championship, but is significantly lower than those in receipt of parachute
payments, e.g. Norwich City £76m and Watford £66m had around three times as much. It’s also worth noting that Rangers
are a fair way below some other clubs without parachutes, e.g. Bristol City £37m and Stoke City £31m last season.

QPR’s average attendance increased for the second year in a row to 14,977, which is the club’s highest since 2015/16.
However, crowds have fallen by 2,800 (16%) since relegation, as they peaked at 17,809 in the top flight.

QPR have been looking for a new ground for some time, as the club “is not financially sustainable in the long-term”
without a move, but it has been a fruitless search to date. As a result, there has been talk of redeveloping the main stand.

Wages

QPR’s wage bill was cut £2.2m (8%) from £27.6m to £25.4m, following a number of departures. Even if players left on free
transfers or loans, thus generating little profit, this still helped the finances by reducing the payroll. After all the ups and
downs, QPR’s £25.4m wage bill is around mid-table in the Championship, suggesting that they badly under-performed last
season.

Debt and owner funding

QPR’s gross financial debt rose £14m from £75m to £89m, mainly £79m provided by the owners (a £70m loan plus a £9m
convertible bond issued to Ruben Gnanalingham’s wife). QPR’s £89m gross debt might be relatively high given that their
revenue is only £23m, but it is not that large compared to many other clubs in the Championship, e.g. Blackburn Rovers
owed £163m and Middlesbrough £159m. That said, QPR’s debt would have been considerably higher if their owners had
not converted £256m loans into equity, including £13m last season, and written-off another £60m in the last 10 years.

In the last 10 years QPR’s owners have put in an incredible £219m, basically providing all the available funds for the club.
Although they are not putting in as much as the early years of the takeover, they have still had to write cheques for a hefty
£68m in the last three years, which works out to very nearly £2m a month.

Whatever criticism is aimed at QPR’s owners
(and they have clearly made several mistakes over the years), nobody can accuse them of not putting their hands into
their pockets.

The harsh reality is that the Championship is a division that has an endless appetite for owner funding, so QPR are far
from alone with this business model. In fact, no fewer than seven clubs received more than £100m in the five years up
to 2022.

Tony Fernandes stepped down as a director and shareholder last July, leading to increased stakes for the remaining owners.
Ruben Gnanalingam remains the majority shareholder with just under 60%, while American businessman Richard Reilly’s stake
is up to 21%. The Mittal family has 19% and is represented on the board by Amit Bhatia. There have been media reports in
the last few months that QPR has drafted in a team of US bankers to help pitch the club to new investors, though nothing
concrete as yet.

It’s yet another sorry tale of a Championship club struggling to compete with “parachute payment” clubs on far larger budgets.
Basically, such clubs are “damned if they do, damned if they don’t”. The Championship is effectively a Premier League 2 and
a lot of spending and some luck is needed to get to the top flight.'