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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Lex Baillie surely
Jimbo67 supporting Oscar Knox
Bhoy on right…Lex………………..not luthor
TBJ
and Lucifer.
The ‘If’ man speaketh.
‘I have been categorically assured that there
will not be another administration’.
TBJ,
Even a leg end.
Does Ally McCoist want Sevco to go bust?
(Serious question)
Young boy loses his job & the sleekit fat 1 still hang taken a paycut.
Dignity my erse.
From pmcn88 twitter
easyJambo on January 17, 2014 at 2:02 pm
19 0 Rate This
I’ve now found the source of the sell on fee agreement. It was in the BDO report to Creditors in May.
Book Debts
Following our appointment, we were made aware that the purchaser of the business and assets of the Company (“Newco”) had asserted claims over a number of the outstanding book debts. Other than the sums due in respect of the transfer of Nikita Jelavic (two payments of £975K due in May 2013 and 2014), Newco advised that it considered that all further sums due to the Company had been acquired under the terms of the sale and purchase agreement entered into by the former Joint Administrators. These debts included crystallised sums of £504k, with potential further amounts arising in respect of sell on clauses in various contracts (“the contingent debts”).
After taking legal advice in respect of the Company’s entitlement to the debts, and to avoid the costs and risks involved in determining the matter through litigation, we ultimately reached agreements with Newco whereby all sums relating to debts known to be due would be retained for the benefit of the liquidation estate (£504k) and any sums arising in respect of the contingent debts will be split equally between the Company and Newco.
G64
How you doin big ghuy? did you catch the liar’s gig on telly the night…….fekn shameless.
Lex bhoy became a cop ?
I’ve said it before but I am really not overly fond of that The Rangers manager. Fat chap, Salary McMoist I think his name is. Cad of the worst stripe.
Jimbo67 supporting Oscar Knox
Shoooorly the biggest institution in Scotland should cut all ties with the berrs….
Liars ,cheats ,anti Christian ,tax dodgers,charity stealers….how low can you go?
VP
The crucial word in the lie was ‘another’.
I was not aware of Sevco having previously been in administration
however if their manager knows better.
Good Evening CQN,
Forgive the sporadic posts since the new year but I am preparing for an AGM which has taken up a fair amount of my time. However that takes place next Monday evening and after that the usual verbosity can be resumed.
The next edition of CQN Magazine is coming along nicely with more than a few good contributions from the usual suspects and more.
On the topic of the Ibrox goings on I will reserve judgement as some in the know still seem to think that there is just no plan there at all and that the management mood is akin to Corporal Jones in full flow.
On other topics, if anyone has something they wish to raffle or auction at CQ10 then please get in touch.
Meanwhile I will leave you with this ……..
http://www.collegehumor.com/video/6947898/google-is-a-guy?referer=http://dontpaniconline.com/magazine/radar/what-if-google-was-a-guy
Cheers
BRTH
adi_dasler
20:45 on 17 January, 2014
He did indeed.
Keep the Faith!
Hail Hail!
badab…
Thanks checked it out…black and gold???
Quite like it tbh.
No way it is a replacement for the shirt badge tho.
I’ll guess its a copyright branding to secure our image rights.
Why did the clover end up on our badge anyway? Not particularly Irish more universal I’d have thought. Had it been a shamrock however!!!
From FrPaulStone
So BDO basically said “Ok, we’ll give you something at some point in the future if you just go away?” This gets worse..
FrPaulStone
Just incredible. Not a legal contract existed in any fashion, but BDO just didn’t want a fuss.
Anyone interested in a Celtic quiz ?
News on the wires linking Sammi with Everton.
If he goes, he leaves with my best wishes. But time to make up your mind big guy.
HH jamesgang
Twitter
The Life of Brian #Stockbridge: @Policescotland alerted to viable threats from Sevco supporters man round the clock home protection ring.
BRTH,
ACGR was looking for you earlier, has a gift for you I believe, and looking to arrange tomorrow ?
Hail Hail
Sammy, the grass isn’t always greener as they say.
Lennybhoy
If he was involved in the Gallowgate Kettling – I reckon most could have run away :)
His auld man was a bun
And McCoist says he has sympathy for his players, stating they were not to blame for any financial problems at the club.
He said: “I don’t know who is responsible but I do know who is not responsible and that’s the players and supporters, who have given us two years of 36,000 season tickets.
“I have my own ideas about who is responsible, but I would rather keep them to myself.”
WE WANT NAMES…..and….you don’t know who is responsible, BUT you have your own ideas about who is responsible………what the…!!!!!!!!!?……this is beyond comical now
Woke up with this song in my head this morning, no reason why just couldn’t stop humming it all day.
http://www.youtube.com/watch?v=fI_vbmbA4JE
Turkey bhoy @20:17
My mrs is just sitting here trying to look for a holiday for 10 days, she had mentioned Turkey, where is the best place to go? We are just looking for a chilled holiday, nothing mental, inside knowledge is the key mate!!
http://t.co/vx3nzwMNjh
Bottom line. I used to give a lot of money to the homeless. Now I might have to ask questions.
Tricoloured ribbon
you in glasgow mo chara? If so I will be in the brazen with tonyd after the game if you fancy a few beers marakesh should be there also
Turkeybhoy-might be over in the summer,but will be a resort with 7 year old on tow..
67 Heaven
Beyond comical you say?
They do say laughing keeps you young.
I was 44 when i woke up this morning. A days worth of this mirth must have me back down to my mid 20s. Albeit mid 20s with a gammy knee and expanding belly.
Can’tHaveEverythingCSC
HH jamesgang
Cowiebhoy
Cheers — we exchanged texts this afternoon and are sorted.
Thanks
BRTH
justafan
19:24 on 17 January, 2014
Bada b
Can you post the ‘new’ badge?
>>>>>>>>>>>>>>>>
What’s this about ?
Roll up Roll up anyone for the Celtic quiz. Will start it at 9:30 if anyone is interested ?
adi_dasler
21:03 on 17 January, 2014
Wrote for the Sunday Post I believe.
Keep the Faith!
Hail Hail!
turkeybhoy
20:05 on 17 January, 2014
What’s the story on the Dham Bhoys. .?
Cowiebhoy
I hope you didn’t ask anyone to take a 15% cut today
67H- it’s just a notion i have with the new black/gold badge on the website and round the refurbishment area at CP,why do we need a new badge/crest ?