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Paltry 15% cut cannot be main story

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Got into a brief conversation last night about whether administration and liquidation were likely at Newco Rangers.

The club’s creditors will be few and of comparatively low value, nothing like their predecessor club’s £100m debts.  They will owe HMRC vat and PAYE money, utilities and other trade creditors will be owed no more than a small number of money’s month.  Newco have not been able to secure bank borrowing, so that’s not a worry, but there may be directors’ loans, as well as wages in arrears.

The upshot of this is that money saved by ditching creditors is limited and unlikely to offset the damage administration would do to a club with less than two years trading history.  The only significant action that could be taken in administration would be redundancies.  Playing staff could have their contracts terminated by administrators, bringing to an end the Charles Green extravaganza.

Liquidation is an unlikely to occur as a consequence of the short or medium term challenges.

The most surprising element of yesterday’s news is that players were asked for such a modest pay cut.  15% of player salaries will not change the fundamentals and will save very little (circa £300k) between now and season ticket renewal time.

Keep your eye on the sale and leaseback of properties we discussed here since 2012.  If Ibrox and Murray Park are sold (potentially to existing investors looking for their payback), Newco could get some relief between now and being able to reach the Premiership, while the investors would become less anxious.

The cynic would say that being able to lay blame for selling Ibrox on players for not taking a modest pay cut is a convenient line.  Selling your main/only fixed assets to a commercial investor is a horrendous prospect as you will left to pay the consequences in perpetuity, you also lose collateral, making future borrowing more difficult and expensive, but, right now it’s a decent option for Newco.  Their future is screwed, not because of a land deal (delightful irony), because of what has happened on that land over the last two decades.

The fundamentals remain:

Running a football club the size of Celtic, under normal conditions, costs anything between £17m and £22m – before you employ a footballer.  Utilities, rates, policing, stewarding, insurances, maintenance, ticketing, PR and the tasks circa 200 people carry do not come cheap for a club of this size.  When budgeting for football operations, start to count your football income after you’ve banked money around this level.

Newco Rangers will be a fraction below this at the moment, but if they are to continue to operate a business capable of entertaining (sic.) >30,000 people several times per month they will not be able to eat into these costs significantly.  Insurance, rates, police and other costs need to be met; face painting is optional.

A club the size of Newco Rangers, or Celtic, is not viable without regular Champions League income, and is not possible short term without splurging into higher debt.  If Celtic slip away from the group stage for an extended period, they will have to downsize all areas of operations.  Football budget would be much more like Aberdeen’s.

Keep in mind the words of the magnificent Blue Knights.  While ensuring Charles Green was left in an invidious position to start his new enterprise from, they were clear, only a CVA, leaving Rangers in top flight football with access to Europe, was viable.

This BBC article adds insight into what I referred to yesterday about former Southampton chairman, Nicola Cortese: “A presentation to the players in April last year did not ask if Southampton can win the Premier League, but how can they win it?

“Players were asked to fill out questionnaires. What time did they wake up at home? What were their habits? Did their children wake them, did the dog? The results were analysed and changes were made.

“When Southampton travel away from home, the hotel is often booked for two nights rather than one. On the first night, club staff arrive and clean the already pristine rooms. They vacuum up every particle of dust that might cause illness or carry a bug.”
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  1. BOBBY MURDOCH'S CURLED-UP WINKLEPICKERS .........FC not PLC on

    bobby murdoch’s curled-up winklepickers ………fc not plc

     

     

    12:22 on 17 January, 2014

     

    THE BATTERED BUNNET

     

     

    Did you see the post from MURDOCH AULD AND HAY re yourself and BRT&H?

     

     

    Seems you are on a list….

  2. The Battered Bunnet on

    Gerry, from previous thread

     

     

    Gerry

     

     

    The club has a facility with the Co-op which allows us to borrow up to £33M on excellent terms, pre-agreed and running forward some considerable time hence, to 2019 as I recall.

     

     

    The agreement requires that a set amount is drawn down at any given time in order to maintain the facility going forward. This gives Co-op interest at rates which would shame a benefactor :¬) Libor plus 1.125%. We pay about £200K interest a year to have the facility on hand. It’s a national scandal I tell you. I might write to my MEP and kick up all manner of fuss. We should be paying far more interest.

     

     

    So, we have a loan account drawn down by £10.6M as at end June. If needs must, if the stand falls down tomorrow, we can borrow a further £23M to rebuild it. It’s on tap as required, but not used.

     

     

    The club also has cash on account. At end June there was around £14M cash on hand.

     

     

    Netting off the loan account with the current account, we have net cash of £3.6M. In other words, net cash, not net debt, as at June 2013. Of course the cashflows are cyclical over the year, highest in the summer, lowest in the spring. cf the current problems at RIFC plc. So we dip into the red over the business year.

     

     

    With the sales of Wanyama, Hooper and Wilson subsequent to the June year end, together with the income from the Champions League this season, less operating costs etc, it’s forecast the club will have a net cash balance of perhaps £20M at the end of June this year.

     

     

    Despite being so cash rich, the club will continue to ensure that the Co-op loan facility remains available and on hand, just in case it’s needed. It’s an emergency contingency. A disaster recovery fund if you like. It costs us a pittance after all. I’m sure the EU people will be all over it soon.

     

     

    TBB

  3. Paul: ““When Southampton travel away from home, the hotel is often booked for two nights rather than one. On the first night, club staff arrive and clean the already pristine rooms. They vacuum up every particle of dust that might cause illness or carry a bug.”

     

     

    Are they available for domestic contracts? My house could do with a right proper clean!

     

     

    TSOAL: The 15% probably IS their combined tax and NI payment. I’m sure they will be utilising some loop-hole to avoid paying at the same rate as the rest of us.

  4. The Battered Bunnet on

    BMCUW

     

     

    Nup. Haven’t seen anything lately. Is it a new thing, or just the old, corrupted haverings of the demented?

  5. BOBBY MURDOCH'S CURLED-UP WINKLEPICKERS .........FC not PLC on

    PAUL67

     

     

    Good article,like you I think there is little wriggle room for the huns.

     

     

    Watch for a media campaign after the sale and leaseback telling everyone what a groundbreaking plan this is,forward thinking,rangers lucky to have such men of vision at the club,etc.

     

     

    It will become the mantra and the template for ALL clubs-they will try to drag us into it too-as they spin the justification.

     

     

    BTW,thanks for the reverse podium,ya sod! Just like the good old days,haha…

  6. Paul67….

     

     

    Sale and leaseback is a certainty.

     

     

    No need to keep an eye on it mate.

     

     

    It is inevitable,there is no other logical way through this mess for thems.

     

     

    RentboysleasingthebighooseforevermoreCSC

  7. GlassTwoThirdsFull on

    Excellent article, Paul. What really annoys me right now is the MSM saying how Rangers (sic) would be challenging Celtic if they were in the Premiership. They barely competed with us even after circa £250m of “external funding” (of various one-off means) over a 10-15 year period. Without access to any more of this funding they will be nowhere.

  8. BOBBY MURDOCH’S CURLED-UP WINKLEPICKERS ………FC not PLC

     

     

    12:32 on 17 January, 2014

     

     

    Sale and leaseback is the new ownership Timmy!

  9. tommytwiststommyturns on

    P67 – in your opinion, who’s got ra deeds?! Seriously, who do you think owns the stadium, the Albion car park and Murray Park?

     

     

    If Newco do own the assets, which I seriously doubt, would the starting point not be selling off the car park and Auchenhowie?

     

    If Wee Craigy/Ticketus still own the lot, due to the floating charge, then what wriggle room do the Newco have at all?

     

     

    TTTThuvnaeclueCSC

  10. Paul67 – excellent article and sums up nicely a point about the myopia of the hordes.

     

     

    I’ve seen several of them commenting that they can’t understand the need for a wage cut as a wage bill at 30%(ish) of turnover should be perfectly sustainable.

     

     

    They haven’t figured out that the other costs are already at rock bottom and Ibrox and MP are the albatross around their neck.

     

     

    A straight sale of MP would be my first option. Followed by a physical reduction of the size of Ibrox, if possible.

     

     

    What is it they used to say to us “We welcome the chase” or something.

     

     

    As we all know we struggled very badly for numbers in the early 90s. If they are consistently 2nd best to us they’ll struggle to get 25k and the downward spiral will turn to a helter skelter.

  11. Back to Basics - Glass Half Full on

    Excellent article Paul. Proportionate facts and informed comment.

     

     

    Compare and contrast with the stuff published by the BBC today by Alisdair “Dave King’s minor administrative problems” Lamont.

     

     

    “In July, Rangers posted a £14m operating loss over a 13-month period, although the club has no bank debt.”

     

     

    No Bank debt? Because no one would lend them a penny.

     

     

    Who is supposed to be the professional and who is amateur here ?

     

     

    Hail Hail

  12. BigChipsUK, good call.

     

     

    BOBBY MURDOCH’S, indeed.

     

     

    ryecatcher, a possible certainty :-)

     

     

    GlassTwoThirdsFull, absolutely correct.

     

     

    TTTT, in my strong opinion, Rangers International PLC.

     

     

    weeminger, very few people have realised just what a game changer 2012 was. 10 years from now, 20 years from now, we will still be winning trophies because of it.

     

     

    SFTB, it’s a disgrace.

     

     

    Glass Half Full, thank you.

  13. In terms of size of squad, I just counted it up on Wikipedia (since the Official site is so out of date).

     

     

    I make it

     

     

    37 Senior squad players (3 out on loan)

     

    15 Development players with squad numbers (1 out on loan and 1 on loan in to us)

     

    11 Devt. squad players without numbers.

     

     

    I make that 62 employed footballers at Celtic. Am I close?

  14. eddieinkirkmichael on

    I’ve never been convinced re sale and leaseback. iBook is basically falling down and probably needs in excess of £10m just to bring it it up to a decent maintainable standard. There is no way it could be leased in it’s current condition and the current owners know this. The only way it c,an work is if Murray park is sold to fund the redeveklopement and this will mean the current board and sharehOlders are tied in for the foreseeable future, which isn’t good news for the bears. But does keep us amused for a while longer.

  15. Reports say that the Rangers manager has taken a 50% pay cut to receive only around £412k per annum (although some reports has suggested that the cut was in fact less than 50%).

     

     

    On Monday Rangers are away to Forfar. Don’t have 2012 details, but in 2011 Forfar’s TURNOVER was £261k (http://www.footballeconomy.com/content/loons-post-loss )

     

     

    So young Mr McCoist has taken a cut to earn only 60% more than his next opponents turnover. I’m not surprised he hasn’t done walking away, for now anyway.

  16. Paul…

     

     

    What with the revelations about Southampton’s away match routines, is that how we managed to avoid defeat away to Elfsborg & Cliftonville? All it took was to send a couple of CP catering & cleaning staff ahead of the team to cook the players’ fish suppers, vacuum the rooms and to wash & iron the bed-sheets. After all, you can’t expect to keep clean sheets if you don’t have clean sheets, can you?

     

     

    It’s just a shame we couldn’t organise the same level of preparation in Turin, Milan, Amsterdam or Barcelona! While our domestic form is outstanding, it seems that the execution of our domestic chores have been somewhat overlooked on our foreign travels of late…

  17. GlassTwoThirdsFull on

    To all you guys saying there will be a sale and leaseback. It won’t happen. Remember, Charles Green told us:

     

    “Nobody’s going to abuse or say rubbish that I’m going to sell the ground. Absolute nonsense

     

     

    Next you’ll be saying there’s no Dallas Cowboys tie-up. Or that he won’t stay at Ibrox until he hears Zadok………

  18. BigChipsUK – There are only two SPL teams in Glasgow… Celtic and Partick Thistle

     

     

    12:50 on 17 January, 2014

     

     

    I suspect that the benefit of the somewhat OCD pre match preparations are more psychological than physical (though doubtless a neuro scientist would say that’s a false dichotomy). If players feel they are valued that highly, and that others are going to such extraordinary lengths on their behalf, the players self esteem and self confidence will rise and they will be more inclined to give 100%.

     

     

    Jock Stein achieved the same results with rather more down to earth methods.

  19. BOBBY MURDOCH'S CURLED-UP WINKLEPICKERS .........FC not PLC on

    THE BATTERED BUNNET

     

     

    The post from MAH was at 1914 yesterday.

     

     

    I have to say BRT&H was typically insouciant about it,and I suspect you will be too.

     

     

    I’ll be lucky to make it onto TONYDONNELLY’s list!!!

  20. time for change on

    Paul 67 Game changer for me remains the day Fergus hunted the BOS officials from his office. At that point Masterton and his flunkies lost any form of power over the club……compare this to Dunfermline, Dundee and the others who effectively paid for some (not all) of the Rangers superiority……we never did.

     

     

    2012 was the icing on the cake….

     

     

    Looking forward to tomorrows game hoping for a victory….

     

     

    Tickets arrived last Saturday for Aberdeen game however darling daughter won’t be able to use hers as she has her Conservitoire audition that day (lucky for Sister in Law) busy time for her as she also has interview for teaching at Glasgow following week …what’s for you won’t go by you..

     

     

    Can’t say I’m not enjoying what’s going on…..Hugh Keevins and ilk (if lurking) how can I miss a game where the opposition cheated me by using tax loopholes to fiscally dope a team when I paid full price for a season ticket thinking it was a fair competition? How come every decision they got and we didn’t we were paranoid (how that turned out the only honest ref is now out of a job)? How can I miss a team that thought it was better than us when this was achieved by external support from the neutral organisation we help fund?

     

     

    In time the other teams will get stronger be able to complete for the talent available…..armageddon (I think not)

     

     

    Hail Hail

  21. I note from East Dunbartonshire Council’s site that there’s an application to turn Lennox Castle in 36 apartments.

     

     

    It’s from Allied Irish Bank – but let’s not let that get in the way up turning the perma-rage up a notch.

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