GLASGOW, Sept 16, 2008 (AFP) - Rangers announced record turnover on Tuesday but chairman David Murray warned that the club would have to continue to cut costs because of increasing debt levels.

In the year to the end of June, the Glasgow giants generated revenues of 64.5 million pounds (115 million dollars), up from 41.8 million for the previous 12 months, partly as a result of involvement in the Champions League and subsequent run to the UEFA Cup final.

But operating expenses also rose sharply, by 32 percent to 56.8 million pounds and the club's net debt rose to 21.6 million, an increase of just over five million which finance director Donald McIntyre attributed to a higher wage bill and greater spending on transfers.

Rangers face a sharp fall in revenues this season having failed to make the group stages of the Champions League.

'Our participation in European and domestic cup competitions obviously contributed greatly to our record turnover and it is encouraging to report a substantial net profit,' Murray said.

'The increase in turnover also highlights the necessity for Rangers Football Club to qualify for Europe to meet the overheads that exist to run a club of our size.

'Existing levels of expenditure cannot be maintained in the current economic climate and, as we look to the future, it is becoming more important to focus on the development of young players to ensure the long-term sustainability of the club.'

The pressure on Rangers to balance the books was underlined last month when Spanish defender Carlos Cuellar, the club's outstanding player last season, was sold to Aston Villa for an estimated 7.8 million pounds.