The early years of a new business are risky. It doesn’t matter if you have the best product or service, or the potential to rule the world, it’s critically important you don’t run out of cash.
The Rangers Football Club ran at a cash deficit from their first month’s trading. Within six months of starting business they undertook an enormously successful share issue (going public as Rangers International PLC), raising in the region of £22m, but they continued to spend more than they earned. On Saturday, the BBC reported a club source confirmed they were 48 hours from running out of money.
For a moment, put aside who owns Rangers International (RIPLC), sits on its board, owns its retail rights or has security over its assets. In any normal run of business these things are important, but right now, for RIPLC, they are secondary. The most important issue in this company is paying its creditors.
They can either pay their bills, or they can’t. If they could pay their bills, they would have no problems with predator-shareholders and the company could accommodate the aspirations of all stakeholders – including fans.
If the company cannot pay its bills it will not meet the aspirations of any stakeholders. It will either go out of business, or it will attract an investor who is prepared to pay creditors, and in return extract assets or some other compensation.
The pain of Dave King and his legions of cohorts in ‘restoring Rangers’ and preventing Celtic from accumulating 10, 20 or 30-in-a-row is tangible, but there was no easy fix. Rangers International should have been urged by all of these voices to cut costs to match income, pay their bills and ensure that Newco, unlike the original Rangers FC, would never be out of pocket and vulnerable to the most aggressive carpetbagger.
Instead, all we heard about was the Restoration of Rangers, no matter the cost. Living as modest also-rans, paying their bills while hoping to win the odd cup and avoiding an absolute hammering at Celtic Park a couple of times a season, was simply unacceptable when pitted against the alternative – burning cash like there’s no tomorrow and hoping something miraculous would turn up. It was madness.
Mike Ashley has fed the junkie-club a couple of million, which might be enough to see it through Christmas but it’ll need another, larger, hit, before long. Attempts by King or any other wealthy fans to intimidate the Easdales, or Ashley, to capitulate, will fail, again.
The club does not have the money to pay its creditors until season ticket renewal money arrives, but it has more assets, specifically the stadium and Murray Park, which can be sold or secured. In return for this latest loan, Ashley got control of the boardroom. This will allow him and his allies to dictate the terms of the next funding arrangement.
Those wondering how he will increase his shareholding in Rangers International, in conflict with his ownership of Newcastle United, are missing the point. He doesn’t need to own Rangers International, all he needs to do is own the stadium – at an onerous rent, and own the merchandising and image rights.
Like Sir Davie Murray before him, he might even fancy owning the IT provision, travel, stadium advertising and catering (yes, I know that’s already gone) at Ibrox. Murray’s companies used to take close to £4m a year out of Rangers – and they thanked him for the honour.
Much of the above could be outsourced to Newcastle, where all ‘customer contact’ could be administered from. He could even subcontract the manager, coaches, scouts and the guys who puts the cones out from Newcastle. All of which would mean that in the event of a commercial trauma, he holds all the contracts necessary to start afresh.
Ashely doesn’t need to own another ounce of Rangers International, in fact, after he has secured the stadium etc. on a long and glorious lease, he will be pretty much finished with the hollowed-out runt of a club.
Similarly, those who suggest Ashley’s loan is a sign that he will not allow the club to fail are missing the point. If he owns or controls the stadium, IP, client databases, coaches or whatever else, he controls what happens AFTER a liquidation.
Right now Ashley, and his collaborators remaining on the board, have to pay those onerous contracts we heard so much about, while they own less than 50% of the shares. I doubt Ashley has paid onerous terms in his life. Liquidation would allow him and his pals to start afresh, stop paying the last bunch of spivs and keep the money for themselves.
In practically every literary portrayal of hubris, the protagonist has a moment of self-awareness. It as though literature doesn’t work, it’s not credible, without a fleeting moment of clarity. No one, it seems, carries the same stupid world view throughout a complete novel.
Literature has failed to prepare us for the most predicted self-harming on the planet.
Remember to order Caesar & The Assassin, signed by Billy McNeill and David Hay, more here. To confirm a note on Billy’s nickname. While it was acquired from Cesar Romero, Billy prefers “Caesar”, which was how the name was always spelled during his playing days.
678 Comments- Pages:
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First?
Get in!
Get In!
Bugger!
Lefty
I have been praying all morning >}
HH
PAUL67
HAPPY HOOPY BIRTHDAY
to yer son and heir.
(Fawn fawn,bow and scrape)
BOBBY MURDOCH’S CURLED-UP, I’ve no idea who you mean.
1st squad ?
That 1-1 was 2004 I think.
HH all
Although Pardew got an 8 year contract,i’m pretty sure Sally is on a bigger salary.Can’t see Sashley funding that either
YES all the way from Indonesia, 1st page
Paul67
Clever take on events at Ibrox – I hope you are correct. I tend to agree with you. I do however see another scenario that may be attractive to Ashley…A successful Rangers gives easier and cheaper access to a wider market than NUFC…
I suspect the fans will call the next shots come season ticket renewal…if they last that long.
Paul 67
Any rules of ownership with the SFA being broken with this deal?
I wonder if the SFA have the balls to call him out on this. Technically he has less than 10% of the shares but when his placement are put on the board HE owns the club.
bawsman
Don’t go holding your breath on that mate :-))
placemen
EPL has a Global Marketing Criteria, he has ALL the exposure he needs through Newcastle United, even The Championship gives him more exposure than Europe por cierto.
CultsBhoy – “A successful Rangers gives easier and cheaper access to a wider market than NUFC”
I have seen this written a few times by various people.
How do you come to this conclusion bearing in mind Newcastle are an EPL team watched worldwide by many many millions more sets of eyeballs on a weekly basis than any SPL side?
Having control of the Club and Owning it are to different beasts entirely, por cierto.
FourGreenFields
12:22 on
27 October, 2014
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I think I’ll drop Darryl an e-mail.
CultsBhoy
12:18 on
27 October, 2014
I will try to document it out in the next day or so, but I really think getting them out the hole their in, and consistently making money will require an immediate 5 consecutive seasons in the CL Groups, maybe 4 – either way it’s all but impossible to guarantee. I see Paul67’s model as by far the most likely to make money from them.
Paul67
Any thoughts on Lawell passed his sell by date and how we are downsizing at an alarming rate.
Wilson -vvd– better
Ledley-johansson– worse
Hooper-pukki-worse
Sammi-derk-worse
Ki-kayal–worse
Wanayama–biton–worse
Forster–gordon– undecided but 10m means great deal.
Do you believe we are going from strength to strength or since they died have we been dragged down to alot lower of a standard ?
Was in Ny in 1994 but it was Ireland and World Cup duty in June.
Parlour was 2-0 League Cup final win against sheep, 2005. Drink has def addled what brain there was left.
Half terms are great. Aff ooottt again.
HH
Is mo na cumann e
Por Cierto
12:24 on
27 October, 2014
Having control of the Club and Owning it are to different beasts entirely, por cierto.
============================================================
I think we all grasp that mate but with his people doing the day to day running of the club, and his contacts/wealth, I think who owns, and who runs it, is muddy waters.
CultsBhoy
Can you please explain how a successful!! Sevco can give wider exposure than Newcastle who play in the Barclays English League which is shown worlwide.
Happy Birthday to ALL Tims everywhere whose birthday it is.
bawsman
Hope you have better luck than I have had with emailing people asking for answers . Tried asking the SFA to explain the Kris Boyd disciplinary decision ( not proven ) , still waiting.
Paul
interesting view on the happenings in govan – not sure anyone can second guess what asley will do.
Off to the funeral of an old work mates wife. Then another tomorrow, my wifes uncle – hope the old tale of things happening in 3s is wide of the mark.
So, over at Ibrox, where they love the sash and the team is pash, to avoid a crash, Mash splashed the cash, made Wallace dash and got rid of Nash.
Simple really.
Paul67
Does this mean I can start shopping at Sports Direct again? My 101ers are worn out!
Paul67
Maybe some of the new warchest millions can go towards cashing up a few kegs of beer and Sevco can open the bar this week.
My brain is exercised by the arithmetic of 4IAR. It could be our first for 46 years next spring. How many faithful Celts have we all loved who never experienced two such events in their life-time?
FourGreenFields
12:29 on
27 October, 2014
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I’ve had tons of correspondence with Darryl Broadfoot at the SFA but he straight bats any ‘awkward’ questions.
Ashley Own Newcastle United and runs it, he runs Sevco and calls the shots, he doesent Own them, and he doesent care if he does.
I wonder if Ashley is in the grip club?
Bawsman
The water can be as black as oil it doesn’t matter, it is very simple and simplistic, he does not own the Company por cierto.
tonydonnelly67
12:37 on
27 October, 2014
I wonder if Ashley is in the grip club?
Do you mean St. Andrews? :) por cierto
I see @marcwebber suggesting Ashley might move Rangers to the EPL and Newcastle North I guess he’s thinking they could just swap memberships or something thus allowing Ashley to get more from Rangers’ worldwide appeal than Newcastle’s (which they probably do have tbh).
I can totally see the EPL, SPL and not to forget the Newcastle fans going along with that plan.
Garngad to Croy
12:33 on
27 October, 2014
Paul67
Does this mean I can start shopping at Sports Direct again? My 101ers are worn out!
NO! por cierto….
Belter, Paul! Was trying to analyse it myself and came to a similar conclusion. Why would Ashley buy more shares? He already holds all the aces.
King, Paul Murray & Co just didn’t seem to get that the old club was running on a completely unsustainable basis.