Niall has been one of the many welcome commenters on my blog, and was gung-ho about the prospects of a CVA being agreed when many thought otherwise. He stuck to his guns, putting forward a number of reasons why a CVA would be approved. Now of course he has turned out to have been incorrect.
Fair play to him – he has sent me the following as a comment, but I think it is worth putting up as a post, and I welcome comment on it and analysis of it as always.
I now leave the stage clear for Niall, with many thanks.
It’s bust and I was wrong; it seems Mr Whyte’s governance breached the conditions for agreeing to a CVA.
I think you may find Mr Green will find some excuse within the next 48 hours to drop out altogether, no newco, just like Miller.
Rangers’ fixed assets are only worth something to a commercially viable football club called Rangers. These fixed assets are worth nothing to a loss-making football club called Rangers.
The potential return for any investment is in the club’s profitability and not its fixed assets.
Bill Miller ran a country mile when his financial advisers estimated it would cost £30 million to bankroll the losses Rangers would occur in the first 3 years. They added up the cost of a 3-year Europe ban, possible further point deductions, loss of playing assets and the almost inevitable drop in attendance income.
Mr Green has committed £5.5 million plus the transfer of various secured creditors totalling £9.5 million, add this £15 million to the projected £30 million loss and you have a grand total of £45 million.
£45 million to break even in 3 years and then the slow climb to profitability. Have a look how much Celtic’s profit is, and it has a bigger turnover, it is washers without Europe.
The most optimistic projection is Rangers will earn £10 million every 4 years for CL group stages. Bearing in mind they will have an affordable but average team ( just like Celtic).
Rangers is SIMPLY not worth £45 million, it would take 20 years to get your investment back. Celtic and Rangers are marginally profitable businesses if they are run at their best.
If this deal goes through, Rangers (newco) will be in administration by August 2013. The season ticket sales will be horrendous and the losses will be too great for Mr Green’s greedy little group.
I simply do not believe Rangers attendances will not drop significantly in years 2 and 3. They will be unable to win the league and there is no European prize for winning the dogfight for 2nd, 3rd or 4th. Add to this the loss of fans who don’t accept the newco and glory hunters.
Ticket sales are approx £25 million for 46,000 average, each 10% drop is 2.5 million loss. A 30,000 average crowd would lose £8.5 million, Bill Miller’s projection of a £30 million loss in 3 years is feasible when you add in ground repairs.
Rangers are too big to downsize to a small turnover, this saga has a long way to run. I fear the worst.