I was directed to the piece below earlier today. The wider point of the flotation and exactly what investors would be buying is the subject of a post which is presently being drafted for me by Mr Lawwell personally, and I will post it when he gets it to me.
For now, I want to “fisk” the piece. My comments are in bold.
The new owner of Rangers Football Club is close to appointing advisers to kick off a swift return to the London stock market. I understand that the consortium led by Charles Green, which took control of the Scottish outfit in a cut-price £5.5m deal to acquire its assets in June, is poised to hire Cenkos Securities, the broking firm, to handle the flotation.
Mr Kleinman, the City Editor, is presumably a wise man in the affairs of business. You will note his reference to the “cut-price” deal to buy Rangers assets. I wonder what he thinks a fair price would have been? Maybe the £50 million that Mr Ahmad, one of the Rangers directors, claims is the value of the Rangers Football Club, “on a bad day”?
Mr Kleinman was spot on with his naming of Cenkos, as was confirmed by Mr Green later today.
Cenkos is one of a number of brokers which have held talks with Mr Green’s consortium in recent weeks, and it remains possible that another firm will be appointed if an agreement cannot be reached, according to insiders.
The listing is likely to see the newly-reconstituted Rangers, which began the season in the bottom tier of Scottish professional football, listed on the junior AIM market before the end of the year.
Here is where he might offend Rangers fans. The “newly re-constituted” Rangers?
Does he not know that it is Rangers Then, Rangers Now, Rangers Forever? (I cannot hear that phrase without adding, sotto voce “Rangers without end. Amen” which is not the reaction they were going for, I assume.)
People close to the situation said that it could seek to raise as much as £20m, part of which is likely to be used to fund the acquisitions of new players.
If the share issue is as imminent as has been hinted, then, as Rangers cannot acquire new players until January 2014, if some of the flotation proceeds are to be used for that purpose, the cash will be sitting in the bank for some time! Will investors be happy to hand over cash so that Rangers can keep it in the bank, or even withdraw some of it, as they would be entitled to do if duly authorised by the board, by way of dividends? I come back to the question about why “insiders” are suggesting the cash is for player acquisitions.
Details of how supporters and investors will be able to acquire shares in the company, called The Rangers Football Club, will not be available for several weeks, insiders say.
The company is actually “The Rangers Football Club Ltd”.
Rangers’ takeover and subsequent demotion to the Scottish Third Division capped an astonishing fall from grace for one of the biggest names in British sport. The club’s liquidation following the fiasco of the ownership of Craig Whyte culminated in a series of bitter contract disputes with star players, and the tax man.
The club has not, as we hear repeatedly, been liquidated. The former “corporate entity” which owned the club, so we are told, is soon to be liquidated. The club proceeds on and on and on and on…
The tax man dispute was there long before Mr Whyte, and the “bitter contract disputes”? They are as to whether there was a contract at all!
Since the deal Mr Green, a former chief executive of Sheffield United, has struck a merchandising joint venture with Mike Ashley, the tycoon who owns Newcastle United and who may acquire a stake in Rangers as part of a stock market listing.
What about the £1 million Mr Ashley was going to put in for 10% of the shares? Is he now waiting on the floatation, where £1 million would get 5% of the shares being issued, which would be a long way short of giving him 5% of the whole company? Was that story as much rubbish as the “Newcastle United will lend nine (thanks for the heads up TBK) players to Rangers” story?
Mr Green believes that despite its recent travails, Rangers has considerable international potential as a sporting and leisure brand.
So did Mr Whyte…
Why do football teams obsess about tapping into the overseas markets?
Does anyone remember the unfortunate Misha Sher? He was picked as Global Partnership Director for Rangers in January 2012.
THE man who was yesterday appointed Rangers’ global partnership director plans to take the Old Firm derby on a money-spinning world tour – including a stop-off in the Middle East.
The SPL champs announced that development expert Misha Sher will front the club’s new London office in a bid to “expand the brand in overseas markets”.
Sher said: “Taking the Old Firm fixture abroad would be near the top of my agenda. I have to look at where the biggest value is. If there is an opportunity to do something with the Old Firm the appeal would be massive. It’s one of the world’s biggest rivalries.
“I wouldn’t be a proponent of having the teams play regular season games in other parts of the world but there is a chance to play in tournaments or take these teams to the Middle East, North America or other places. It should be looked at.”
He believes Rangers could be sitting on an international goldmine. He said: “We have to better leverage our traditions and history to engage with Rangers fans worldwide. We’ve seen it happen with other clubs like Manchester United and Liverpool. The goal is to explore the opportunities that are there. There are certain ties to India and North America, particularly Canada.”
How did that work for Mr Sher? He ended up being one of a handful of employees who was made redundant by the administrators.
If Rangers successfully floats with a valuation of around £30m, that could augur well for the prospective valuation of the club’s ‘Old Firm’ rivals, Celtic, which is also listed on AIM.
And back to gratuitous alienations. Mr Green’s team bought a company which owned an SPL football team. They paid £5.5 million for all of the assets of an SPL club.
Since then the club has been permitted to play in SFL3, rather than the SPL, and a number of players have left without transfer fees being paid, despite Mr Green thinking he was due substantial payments. In addition the football team has far less in revenue open to it, as the prize money for the SFL3 champion is rather less than for anyone in the SPL.
Yet despite all of this, the estimate is that the valuation would be around £30 million! And that was a sale at a fair price?
I think that no attention at all will be paid to the “value” of Celtic arising from this flotation. Almost every football team in which shares are traded has the shares of the common fan effectively worthless. It is an emotional stake people buy, not an investment.
There have been few new stock market flotations of major British football clubs in recent years, with Manchester United’s recent listing in New York being a rare example.
If you are planning to buy Manchester United stock, you may want to think again. Publicly traded professional sports teams rarely outperform the market, and they don’t even pay a dividend or grant shareholders any level of control over company decisions. Shares in Manchester United might be a nice piece of merchandise for lifelong fans of the Red Devils, but history suggests that there is little reason to believe that it is actually a good investment.
The Man U stock now trades at $12.60, down from $15.27 at the recent flotation.
The club declined to comment.
As is often the case, information about Rangers raises more questions than answers.
Why is there a need to raise money now for player acquisitions, which is the explanation from “insiders”?
Why does the Sky City Editor think the sale was “cut-price”? Is he an obsessed fan of a rival team?
What are these untapped global markets Mr Green is looking at which were not exploited by Sir David Murray or Mr Whyte? We might have to wait for the recent Des Spiegel article to be translated into English before we find that out definitively.
Bearing in mind the result of the Manchester United float, how will Mr Green persuade the faithful to subscribe to his plan?
Is there a rush to do so before the liquidators appear and seek to strike down the sale, or demands a “fair” price?
Posted by Paul McConville