I am delighted to say that a world famous figure from literature has chipped in on the Rangers debate.
Don Quixote has offered some thoughts on the future of the Ibrox Club, and I post them below.
Strictly no windmills were harmed in the writing of this post.
I will endeavour to summarise the current position:
Rangers assets are bordering on worthless, they are only an asset to a commercially viable Rangers. A fire sale of these assets to a non-football source would just about pay the administration, liquidation fees and redundancies. D&Ps were not bluffing when they said liquidation was not an option, there have been no bids for the assets of Rangers from a non-football source in 3 months.
Rangers structure is not a commercially viable business, its loss making potential existed prior to any sanctions. Current and anticipated sanctions affecting European and domestic income over the next 3 years renders Rangers un-salvageable.
In effect Rangers is worthless as a business proposition, and is threatened with permanent extinction. Rangers can not be downsized to survive in the SPL never mind Divisions 3-2-1, it is a superstore and not a corner shop. Rangers main source of income is ticket sales, and its overheads cannot be reduced sufficiently to compensate for the projected reduction in ticket sales.
Its a simple equation, if one reduces the quality of the team and simultaneously removes most of the prize incentives, then unlike ” the field of dreams ” the crowds vital for survival will not come for 3 consecutive years. What is the point of watching your new average team battle for second in the SPL with no Europe and little prize money ?
A newco-oldco solution does not make Rangers anymore commercially viable, the briefest diligence by Bill Miller confirmed that it would cost in the region of 30 million to turn Rangers around during the 3 years of European and domestic sanctions.
The experts on ticket sales( Ticketus) withdrew precisely because they calculated the financial consequences of playing for nothing with an affordable team.
Projected drops in attendance are the new elephant in the room, even if you bought Rangers for 5 million it would cost you 35 million in CASH before it breaks even.
A newco Rangers could not afford to maintain its assets or pay its bills for 3 years with a drop in ticket sales, they needed to cut their overheads by 10 million with 45,000 crowds, make that 30,000 and you are drowning in a sea of debt….and apathy.
In amongst this gloom is one last hope, the administration period can be extended to facilitate a stand alone CVA, involving a Ticketus guarantee and CWs shares. Players can be sold ahead to bring in working capital, this can be easily justified by the proceeds of a CVA. Even a bid of 5 million with Ticketus and the debentures guaranteed delivers over 40 million to the creditors.
A CVA does not carry the penalties of liquidation, administration or a newco, this guarantees to some extent the main source of income, the average attendance.
As for the SPL and SFA sanctions against Rangers out of administration, no point deductions and certainly no European ban, it will be financial penalties but over a longer period of time( 6 years). Possibly 25% of SPL money and 25% of any UEFA prize money.
Liquidation or a newco are not in the best interests of the creditors or the SPL and either option brings in sanctions that condemns Rangers as an un-salvageable business model.
It is a CVA where everyone benefits or it’s extinction, and everyone loses.
Posted by Paul McConville, on behalf of Miguel Cervantes