Shared business plan? Not in a million years

I see comment in today’s Telegraph about a shortage of staff to facilitate a club which occasionally hosts circa 50,000 fans at Ibrox.  Let me put some meat on the financial bones of that particular project.

During 2010-11, the last season Paul Murray and Dave King were directors at Ibrox, Rangers spent £27.7m on wages with the bulk of that, some £21.5m, going on players and football management, while £6.2m went on non-football related wages.

That same season 37,599 season ticket sales were bought, all at ‘full price’, of course, which brought in £12.9m (this is net of vat, remember).  That was a bumper European season for Rangers.  They qualified for the Champions League, where they faced Manchester United, Bursaspor and Valencia.  They then dropped to the Europa League, where they beat Sporting Lisbon before going out to PSV Eindhoven.  Total ticket sales, including all cup, European, away support and individual match sales, came to £19.9m.

Newco’s revenue from all ticket sales and hospitality sales last season was £12.4m.  They also paid £1.629 in equipment hire and plant depreciation, this figure is not coming down, while costs for police, insurance, rates, water, electricity, gas, IT, office consumables, cleaning and the odd onerous contract was £16.4m

So consider: the last non-football wages at oldco was £6.2m and total ticket and hospitality sales last season at newco was £12.4m, while a recent peak for season ticket sales at oldco was £12.9m.

The only way modern football is a viable business at a stadium which regularly holds circa 50,000 people is with the support of healthy retail and merchandise deals, and with regular group stage European football.

Newco don’t have access to Europe, as they are a newco, and they don’t have healthy retail and merchandise deals.

If they eventually qualify for Europe they will need to eliminate seeded teams at every round to progress to group stage football.  They are not in as healthy a position as they were when Charles Green took over.  Green and his cronies had their business plan spiked, before those onerous contracts kicked in, by way of compensation, ironically, leaving the new regime with the prize they planned for, but it’s a battered looking trophy.

Now they have as much money as tub thumping can generate and Sugar Daddies are prepared to pony up.  No one has yet explained how this club is a viable entity.

For the record, we don’t share a business plan.  Not in a million years.