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.
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Oct 27, 2014 11:27 By Colin Duncan
COLIN DUNCAN was at Ibrox this morning and met the chairman of the Rangers football board as he arrived at the stadium and heard his thoughts on Ashley’s power play.
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Garry F McHarg/Daily RecordSandy Easdale arrives at Ibrox this morning and was met by Record Sport’s Colin Duncan (pictured in the background)
SANDY EASDALE today insisted Ally McCoist’s job as Rangers manager is safe in the wake of Mike Ashley becoming the major player at Ibrox.
The Sports Direct tycoon has provided the cash-strapped Ibrox outfit with a £2 million crisis loan in return for increased power.
But Ashley ally, Easdale, chairman of the Rangers football board, has assured McCoist there are no plans to ditch him.
Easdale said: “I have not even spoken to Ally. He is the manager and continues to be the manager.
“We don’t have any ideas about changing the manager. That is not on the agenda.”
VIEW GALLERY
Easdale, who represents 26 per cent of the club’s voting rights, arrived at Ibrox this morning for talks aimed at replacing finance director Philip Nash and chief executive Graham Wallace, both ousted as part of Ashley’s power grab.
However, the multi-millionaire investor is convinced the London businessman can finally bring some desperately needed stability to the fallen Glasgow giants.
He said: “Well, certainly from a point of view that Mike is a very wealthy individual and really does want to help the club so I can only see it being a good thing.
“I would hope this would bring stability. We have got to look forward now.
Do you agree with Sandy Easdale, is Mike Ashley’s power grab ‘good for the club’?
YES
NO
“At the end of the day I can’t tell anybody to make a decision. The fans have heard so much over the years, but I feel we now have somebody who is interested in helping the club and we can only look at it as a positive thing.
“As chairman of the football board I want to reassure thew staff that the directors have the interests of the club at heart.
Asked if Ashley has his sights fixed firmly on taking overall control Easdale said: “He has not intimated that to me.”
Easdale was non-committal when quizzed why the board opted to accept Ashley’s rescue package despite fellow businessman Brian Kennedy offering a £3 million loan with fewer stipulations.
He said: “That’s not a question for me. The PLC Board did their duty and due diligence accordingly and I would say they have done what is in the best interests of the fans, the club and the shareholders.”
If only the “glib & shamless liar” and his blue knights(I struggle to even type that without laughing) had come up with more than Big Haunds Green when they were up for grabs or God forbid bought shares the huns would have what they wanted .Tought*ttY Csc
Does anyone know if the New Orcs have ever produced a set of signed off accounts and how does this relate to their very ” flexible” bendy toy membership of our football association??
Looks to me like Ashley found out about some jigery pockery was going on, and he found out that Kennedy got the chineesse whisper on how much he had made available for a loan, and Kennedy upt the anti, and Ashley went after them with both barrels, bottles collapsed……ergo, enter the London spiv.
So, by buying the assets he creates a revenue stream for himself, while the existing shareholders are not technically diluted.
The existing shareholders get their busted company refloated, albeit that they: a) have swapped fixed assets for cash; b) Such cash used to cover on-going losses; c) While increasing the cost base of a loss making business.
Which doesn’t square.
So, if this is indeed an asset based deal, the corollary necessarily is a business model that breaks even despite the additional costs associated with lease payments.
And voila, we arrive at the same solution that would have prevented Rangers from going bust 3 years ago, only in addition to having sold the stadium and other assets, the IP is now owned by someone else, who takes a cut of the revenue/ charges a royalty for use, creating a further set of constraints.
If that is indeed the model in mind, the future is a perpetual purgatory.
You figure Sir Minty only took £4m a year out of the dead club Paul? I was told it was nearer £10m a year, a conservative estimate was he and his family companies trousered £100m in a 15 year spell and some Edinburgh colleagues used to call Castle Greyskull “Davids Personal cash cow” and how the hoardes loved him for it! :)
The Battered Bunnet
” the future is a perpetual purgatory.”
But heavenly for those to whom the revenue/royalties go to por cierto
The Battered Bunnet – “If that is indeed the model in mind, the future is a perpetual purgatory”
Not for Mr Ashley…..
… for the football operation
Murray Park is on absolute prime land.
worth millions – all profit
Syd Negakev
12:30 on 27 October, 2014
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.
===========================
Are you Dr.Seuss?
—————-
P67: ‘Like Sir Davie Murray before him, he might even fancy owning the IT provision, travel, stadium advertising and catering’
============================
What would this mean for Fat Sally’s chief scout, Stevie the IT guy? Disaster.
I see some on RM questioning the SFA two clubs rule. They don’t seem to realise that Ashley is getting his way without having to own two clubs.
Michael you have taken them away.
Paul – a well thought out piece, but I’m stil really unsure regarding Ashley’s end game.
On the face of it, they will have a bona fide billionaire in charge of the boardroom which is a first. But why is he there? Obviously doesn’t need the money nor the aggro, gets plenty of both from Newcastle.
European football? He could have splashed the cash on big signings and tried to turn Newcastle into a European power many years ago before the ultra-multi-billionaires took over – so that might not be a big deal for him either. He seems happy to run Newcastle a the level they are now. Shows no sign of lavishing them with big budget signings.
Rangers merchandise? A piddling sum in relation to his overall wealth and outside Scotland it will never be a big seller. Would be lucky if it is in the top 50-100 in Europe.
It doesn’t seem to add up unless he sees massive synergies in running both clubs (not owning as has been pointed out). Could he, as you hint, turn them into a feeder club, get rid of their present players and staff and treat them as no more than NUFC reserves?
It still doesn’t make a lot of sense from a business point of view – there must be far easier ways for a billionaire to make a few million without all the hassle that will come from running them. We know he has no emotional attachment to them. And surely if he wanted media exposure for Sports Direct to sell lots of tops in the Scottish stores he could just sponsor the league and the cups – that way he doesn’t alientate the fans of any particular club.
Yours,
confused.
50 posts and an article on the Zombies.
Lifting a finger to the winds, I predict it won’t be too long before Les Miserables appear whining in their Eric Cartman South Park voices about ‘Thees ees a Celtic blewg… I’m not inereesteed in the dead clewb…’
Meanwhile the Mordor PA system (now Stevie the IT guy’s mate Des and his mobile disco) plays out Ken Dodds ‘Happiness’ as a handful of demented Bears gather at the gates of Hell to protest loudly and unintelligibly, directed at Mike Ashley who’s 200 miles south doing business, as aware of their rancour as a buffalo supping at the waterhole might be about a few keech-drunk flies buzzing lazily about it’s backside.
proudbhoy
Wilson -vvd– better Agree
Ledley-johansson– worse Jury out, Ledley was inconsistent at times, same as Johansen. Both similar, good days and bad days, don’t think there is much difference.
Hooper-pukki-worse Yeah, but Guidetti has potential to be as good as Hooper.
Sammi-derk-worse Agree but Derk not bought to replace Sammi. Would think Tonev or Waskaso would be a better comparator but on early season form, both have a bit to go to be up there with Sammi.
Ki-kayal–worse Ki was constantly lambasted when he was here but Kayal was here at same time as Ki. If anything Wanyama was bought as Ki’s replacement and was a huge success.
Wanayama–biton–worse Biton had early potential but has struggled off late. Don’t think this new formation is suited to a holding player like him.
Forster–gordon– undecided but 10m means great deal. Agree, Gordon has been excellent so far this season and an early contender for POTY.
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 ?
I don’t think we have the same quality throughout the team as we did a couple of years ago but too early in the Deila era to be making judgments. The players we have may yet improve but the best thing so far this season is that in the Europa League we have been getting good results without playing well. I remember far too many games in Europe that we have been praised for excellent performances but to still lose the game at the end.
Mort
Great article, and makes more sense than anything else I’ve read about this.
Regarding the kind of story Rangers are in… obviously it’s a cartoon, which explains why the baddies never learn. They’re proper cartoon villains.
bournesouprecipe
13:10 on
27 October, 2014
Michael you have taken them away.
———————————–
Excellent
DeniaBhoy
13:11 on
27 October, 2014
How about the fact that he could put £16M and take out £4M (or more) for the next 20 years (or more).
Guys like MA don’t pass up an opportunity to make money just because they’re already rich.
weeminger
The SFA rulebook covers not just shareholding but “any power whatsoever to influence the management or administration of a club”.
For MASH get SMASH!!
>>they peel them with their metal knives<>and then they smash them all to bits<>hahahahahahahah<<
Canny wait me.
I couldn’t care a flying monkey’s about Ashley and his end game, I’m more interested in Celtic, our boardroom, its five year plan objectives, (or lack of) and our own domestic ambitions and end game….
tonydonnelly67
12:37 on
27 October, 2014
I wonder if Ashley is in the grip club?
According to some of the “Bowler hat”mob,he is a tim.Not going down too well that one.
Of course if that is so,it does not stop him being a “Gripper”
The BBC rewriting history there on their national UK news bulletin with a story on Mike Ashley taking control at Mordor:-
“Rangers are one of Britain`s most successful clubs but entered administration in 2012.”
No mention of liquidation, which is the whole reason how Ashley has ever got anywhere near Mordor in the first place!
The BBC clearly no longer cares about factual accuracy.
deniabhoy
I think feeder club a possible motivation for Ashley. That would spell disaster for us as feeding would go both ways. You might find emerging Noocastle Stars playing SPFL…
I doubt if anyone other than Ashley knows exactly what his plans are for the Rangers but I dont think it will become clear for perhaps 18 months.My own personal thoughts are he will stabilise the club and get them living within there means but he will want them in the SPL next season. H.H.
Sports Direct has caved into pressure over its use of controversial zero hours contracts in a victory for campaigners who have called on the company owned by billionaire Mike Ashley, to end the “abusive” practice.
Former employee Zahera Gabriel-Abraham took the company to an employment tribunal, which was due to be heard next month, over its policy of employing nearly 20,000 staff on contracts which guarantee no fixed hours each week.
The company, which is the UK’s biggest sporting retailer, agreed to settle out of court and will now re-write all job adverts and employment contracts to expressly state that “casual” roles will not guarantee any work.
Staff will also have holiday and sick pay explained to them more clearly, with many not realising they are entitled to paid holiday and to claim for sick days.
the glorious balance sheet. Exactly what I said to my wife while watching the news the cover up goes on. H.H.
kitalba
I share your feelings – too much focus on Huns suits Lawwell and co perfectly , keeps our eyes off their hapless behaviours.
However I guess our strategy must be linked to events at Inrox as the strategy for a 2 horse race should be different to the one horse race we’ve been running for last 3 years.
At least that’s a theory…..
I don’t think it has anything to do with football related matters, purely brick and mortar por cierto.
fo those who missed it well worth catching the BBC ALBA piece Thomas Telford: The Man Who Built Britain
Pardew must have threatened his players they would be punted to Poundland,if they didn’t start getting the finger out- Tottenham Hotspur 1 – Newcastle Utd 2……….
http://www.onfieldsofgreen.com/spoils-of-war/
Footage just in from Dave King’s recent meeting with the Brother’s at Sevconia – an insight into the complex mechanics of Business!
http://www.youtube.com/watch?v=h2gHq0CBu0Y
from McMurdo’s blog
Reports say that Mike Ashley’s loan to Rangers is only about £2-3 million, probably lower than Brian Kennedy’s last-minute offer and way less than King’s “rescue” package.
But it’s not the what that matters, it’s the who.
By this I mean that Ashley is a giant compared to both King and Kennedy. He is now effectively the lender of last resort to Rangers and he has pockets so deep you could lose his rivals in them. In essence, if Rangers need cash to see them through these choppy and challenging waters, Ashley will supply it. Far easier than emergency share issues or begging bowls to “Rangers men” and other lenders.
Must be why he said ” here’s 2 million quid” “what’s it going to cost?”
“Ach, just gie me 2 seats on the board” basically a WEE present, I right!
HH
Vinyl of the week-way down south-
The Rise and Fall of Paramount Records Volume 2 1928- 1932 (Revenant/ Third Man)
6 x Lps of greatness from the likes of Charley Patton, Son House , Skip James etc.
On the CD front – Mrs S of T is mighty pleased with this-
Lucinda Williams-Down Where The Spirit Meets The Bone ( Highway 20)
@Kenny_Crawford: Celtic manager Ronny Deila: “We’re talking to everybody around Guidetti & him also, and he’s positive (about a permanent move).”
-tojo-
13:02 on 27 October, 2014
Murray Park is on absolute prime land.
worth millions – all profit
With no chance of planning permission.
Unless it was us ;-)
UnseenFenianHandCSC