The impending Rangers share sale is another milestone in the most remarkable Scottish football and business story for many a year. As well as penning my own obsessed thoughts, I am delighted that other contributors have sent me pieces for posting on the present position. As you all know, I try to keep discussion here civilised, and despite the views of one prolific poster today, I do not operate a Nazi or Soviet policy to stifle opposing views (well at least until Peter Lawwell tells me to change).
Therefore I am pleased to welcome Andy, who has been a regular commenter from the Rangers perspective, with his thoughts on the latest news.
I therefore leave the floor free for Andy.
29 May 2012. The day Charles Green stormed into Scottish Football. As brash and forefront as you would expect of any Yorkshire man. His appointment, on the day Administrators announced his consortium preferred bidder a complete bolt out of the blue (excuse the pun). The Blue Knights, Brian Kennedy and the Millers had their shot and either chose not take the chance or didn’t put up enough cash.
And now, only 4 months since appearing the scene, here we are on the verge of a flotation, where the fans can potentially take considerable ownership of the club, along side some big hitting institutional investors. So how much can fans own? Well as this is a share issue, we currently have 22 million shares owned by CG and co, and a new batch of 22 million shares for new investors/fans. So dilution of original investors’ shareholding I assume will have to be compensated somehow. Taking that aside, and assuming original investors retain their 22 million shares, there are 22 million up for grabs, and fans can buy in at £500.00 a pop, if you’re a season ticket holder or proven Rangers fan via some other means.!?!. So on that basis if 40,000 fans buy in, fans could potentially own 50% of the club by fully subscribing the 20m. Sounds good. Unrealistic, but good. I think at best, you will get 15,000, so say 7.5m which only buys around 17% holding in the club, not all that much different than what was held under Whyte, albeit that Doctor Dodgy from South Africa owned 10% of them. Is that enough to create enough influence when it comes to investors (bearing in mind CG and co are also just investors) wanting a return and fans wanting a new player…easy answer. No.
So fans realistically are not buying any power. They are simply putting up some of the cash to what Green’s plans are. Which have changed, evolved, devolved, and disappeared so many times that nobody is quite sure what the final prospectus will look like, other than we can sure that is very glossy and will no doubt look the part.
It therefore comes down to fans trust in Green. Many have in my opinion have trusted far too easily, especially so soon after being so badly burned by Whyte, it would have been more rational to expect Green to be far more heavily scrutinised on every move, however he is playing to the mob, and whilst he controls the mob he retains the power. He sold tickets off the back of ‘No one likes us’ attitude, or more specifically ‘the spl don’t like us’, and to his credit (despite upsetting fans of other clubs) it worked and provided the club with much needed working capital. But now, he is asking fans and families for more money, just 2 months after season tickets were purchased (yes, at reduced rates, but still not as cheap as many believe), and just 2 months before Christmas. I think he is going to have to put a pretty convincing prospectus together if he wants anything like the take up he desires/needs.
He has stated in May his original plans, but it is fair to say, given circumstance (division 3 etc), that the majority of it all will have to have been ripped up and re-worked. Green probably doesn’t like it, but himself along with his initial investors are now stuck in a longer term project than they probably anticipated (3-4 years minimum to yield returns expected). And so on the basis that they will want to maximise returns, I do for the best part believe that the money will not be for remuneration of original investors. Though, clearly they have reached their investment limit, as why would Green not have simply raised the cash from them for his plans and asked fans etc to buy in 3 years down the line?
So the new plans as he has leaked so far state:
- Investment in playing squad? That’s one of the headlines? What sort of institutional investor is going to put money in just to buy players. Players are a huge risk, and something that should be traded and purchased as revenue allows, not via share issues.
- To provide working capital? Same question. What sort of return is an investor going to get from paying somebody’s wages?
- Investment in Edmiston House and Bar 72. So we will have a new superstore and a couple of bars to generate additional revenue. Great ideas, fully behind this, I would enjoy a pint before a game if I wasn’t restricted to some of the establishments around the ground which just aren’t for me. Should yield a decent return. This isn’t going to cost much though and it isn’t going to generate the profits that would persuade someone to part with say a million pounds…
- So what else do we have…..well nothing yet on since the announcement of the flotation…..
So if we take it on that basis, what the actual funds are for, from an investor’s perspective it does appear to be high risk, so begs the question, does Green expect the majority of, if not all, funds to come from fans…Surely not?…..expendable income is not something in abundance these days, and with Christmas just around the corner, take up could be relatively low.
I’m sure there will be other treats the money will be spent on such as:
- Setting up academies in America and Asia….again unclear what the purpose is…is it just to promote Rangers or is it to find the next ‘star’?…or both. Again, it’s high risk, and without providing a stream of cheap talent or 1000s of merchandise buying fans isn’t going to yield much of a return…
- Em….and well actually that seems to be the gist of it for now.
It is hard to see the big return appeal for proper investors unless, they were first in the door (CG and co) or there was truth in the formation of a Euro league discussions, at which point the share price should take a hike if invited in of course. For now, it sounds more like pipe dreams. Having said that, I’m sure there will be some, most likely those that believe their core business can benefit, i.e. Mike Ashley and Sports Direct, but how many of those can there be?
To summarise, the timing seems odd, it’s a hard sale to fans telling them that the money is for players at a time when we can’t buy players for another 16 months, and even then their shouldn’t be any requirement for significant investment in players…..I think the majority of fans (myself included) would have been more comfortable and willing to invest had Green been able to run the club for a year or two without any financial hiccups, and then at a time when the club could and required to invest in playing squad, then the sale would have been far easier.
For investors, unless there are commercial benefits to their other businesses to be had, then I think they will be few and far between, perhaps a small number happy to take a low level high risk punt at the possibility of a European league and the resultant share price increase. The plans thus far, do not offer much for new investors to get excited about, if they are expecting a reasonable dividend each year from profits, they will in all likelihood be bitterly disappointed.
The only saving grace, if it is one, is that Charles Green is ready and willing to underwrite the full flotation. I wasn’t aware that he was a man of such means……but we may soon find out how deep those pockets really are, if fans don’t have the cash and investors don’t see the benefits…
PS: Will I invest? Well, I’ll wait until I see the prospectus (I know, apologies predictable answer from myself)….Do I trust Green? Enough that I don’t think he means any badness towards the club, but not enough yet to invest on his word, I need to see numbers first.
Posted by Andy