Financial fundamentals, credit where due at Ibrox

Credit where it’s due, season ticket sales at Ibrox near 17,000, with so many people trying to force the club into the gutter, is an achievement, and ignore anyone who doubts this figure.  Respect to those fans who have remained ‘loyal’.  The information was released to the stock market, so sales will definitely be north of 16,500.  It’s not worth lying to the stock market over such trivialities.

In the short term, this means the club will be able to meet its loan repayments, if they choose to do so.  Don’t ignore the possibility of a game of brinksmanship over loans made by fans hostile to the board.  Lenders could be forced take insolvency steps to recover their money, which would be politically awkward, so the club might be able to hold onto this cash.

It also means they will survive the summer and start the new season, which in itself, will encourage others to buy season tickets.  The eventual figure may reach 20,000.

With adult tickets costing an average of under £300 before vat, that’s circa £5m hitting the budget so far.  Visits from Hearts and Hibs next season, in what counts as big games at Ibrox these days, will provide additional income, which will go towards offsetting the drop in income from lower season ticket sales.  Controlling investors are looking to raise £8m from a share issue, so where does that leave Newco?

Based on figures produced by the club in their 2012-13 accounts, income, including a contribution from circa 36,000 season ticket sales, was £19m, while operating expenditure was £32m, leaving an annual shortfall of £13m.  Since then, costs and well as income, have fallen.

The £8m share money still leaves them short by a margin that’s likely to be at least £5m, probably more, so further funding should be required by early next year, possibly in the form of a secured loan.

From this position, assuming they compete successfully on the pitch, Newco are short odds to survive long enough to make it into the Premiership for season 2015-16, albeit, still carrying an enormous structural overspend.

It’s also likely that Dave King’s plans, however limited they were, have been torpedoed.  Newco will limp on as an unrecognised and unloved rump of a football team, largely owned and controlled by people who have done everything in their power to hide their identity from fans.  We can only speculate………

Know your place

King’s most damaging intervention in recent months was to assert that Newco should be spending enough money to compete with Celtic, which after original Rangers went through liquidation is hard to fathom.  Newco Rangers must surely learn to live within their means, whether that involves competing with Celtic or fighting off relegation.  Those now running Newco can insist all they like that they are custodians of the heart and soul of Oldco, but only the colour of the shirts will bear any resemblance with the former ‘bears’ in the decades ahead, should they survive long enough to enjoy them.

The financial fundamentals have not changed.  It will cost between £17m and £20m to operate a football operation at Ibrox, before you employ a footballer.  Rates (possibly rent in future), policing, insurances, utilities and the hundreds of staff required for a stadium which can accommodate 50,000 people leave little room for shortcuts.  Jettisoning the vanity project that is Murray Park is a no-brainer.  Get rid of it, cut costs and bring in some cash.

Football on this scale in Scotland is only possible with regular Champions League participation.  Celtic could not operate at anything like their current levels without reaching the Champions League group stage more often than not, or by receiving an investment of cash to recover the situation, should the bogey come off the rails.

This scenario has gone for the Rangers group of clubs.  Celtic’s dominance has come while they have sorted out their finances and, right now, are not in debt.  Should things go wrong one season in the future, they have the bank facilities available to roll the dice again.  Should this go wrong they have investors available to step in, just as they did in 2001 and 2005.

Dave King’s plan may have been unfathomable, but his motivation is not.  He knows too well that a subservient Rangers will be unloved and will eventually wither and die, just like the supremacist, version.

Don’t even try to fight long-term fundamentals.  They are fundamental!  Accept it.

The one and only Bertie Auld is due in the comments section below for a live chat starting at 1pm. Tune in.

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