Charles Green is moving his Rangers outfit at high speed towards a share flotation. Everything he says now seems designed to reassure institutional investors, and to encourage fans to invest in his company.
He is trying at the same time to head off some of the questions before they are asked. The official Rangers website is a good source of information – at least here it is unlikely that Mr Green would be misquoted. I have a few posts to put up regarding recent reports from Ibrox. I hope they are of interest! My plan had been to write a piece about a number of the quotes, but some deserve a piece of their own.
This one is especially so, as it shows Mr Green’s business acumen clearly. As he said, he raised £12 million at the “start of the year” for this project – before anyone knew it would be up for sale, and at a time when he was cautious enough to consider that there was no guarantee of Rangers playing at all. To attract £12 million investment in those circumstances – at the highest risk level – deserves great credit.
And the fans and investors will be delighted by Mr Green saying that all the cash raised is to go into the club – this implies he will not be taking his £3.2 million bonus for saving Rangers and getting his Sevco entity off the ground, at least at this stage coupled with him leaving.
It is also relevant to look at the commentary – this is, after all, the official club website.
My comments are in bold.
CHARLES GREEN is confident Rangers’ proposed share issue on the AIM market will raise the £20 million it is hoped it will generate. And he has stressed every single penny which is brought in under the initiative will go straight back into the club.
Bearing in mind the concerns that the share issue is intended to raise some funds to reward the initial investors in Sevco, this will be of great re-assurance to the fans. It would also suggest that Mr Green does not intend to use it as his own reward – 10% of the increased share capital, which would amount to £3.2 million. This is a fine gesture of his commitment to his company.
Green, along with manager Ally McCoist and financial director Brian Stockbridge, was in London today to announce Gers’ intention to float once more on the London Stock Exchange. And given he helped generate an eight-figure sum to get the club moving forward over the last few months, he expects interest in investing to be high. Chief executive Green said: “I’m definitely confident. I mean we raised £12 million at the start of the year when there was no guarantee we’d even be playing football.
Mr Green is clearly a masterful salesman. In this troubled economic climate, he succeeded in raising £12 million for a football team when there was no guarantee it would be playing football. Funny how the Presentation which was being touted round the City in May after Mr Green obtained exclusivity did not mention that there was no guarantee that they would be playing football at all.
What a persuasive man to get people to invest £12 million in a business which Mr Green saw might be closed by August 2012! And as the investment included the £5.5 million purchase price, then at least half of any investor’s money would have been lost for good.
I also note what must be a slip of the tongue. How could Mr Green have raised £12 million “at the start of the year” for this project. Surely he was not in the frame even before Rangers went into administration? If so, he deserves even more praise for his perspicacity.
“We didn’t know then either if we’d be allowed back into the league so to go to the market now, when people have seen what we’ve done, is good. We’ve got the club playing again, we’ve got big crowds and while there are still problems to overcome which we shouldn’t lose sight of, we don’t have some of the issues we had before.
Mr Green clearly is a very prudent businessman too. After all, when he bought the club, it was an SPL team, and no one seriously expected that the team would not be in the SPL? However, it seems to be the case that Mr Green foresaw this all – the struggle with the SPL, and the admission to the SFL and subsequent SFA membership.
However, there do remain a number of serious issues, as he mentions. These will be mentioned, no doubt, in the “risk section” of the Prospectus.
“The reality is we have got the fans engaged and we have got the institutional markets looking at us.
A quick straw poll of business papers saw an almost universal negative opinion towards the float. One paper compared it to “prune juice”! However the Independent was on its own, from what I saw, in stating that it could be of interest, “although not for widows or orphans”. This suggests that there is a high element of risk, and institutional investors, as opposed to venture capitalists, are not known for their attraction to high risk.
However, Mr Green says he has “institutional markets” looking at them, and we must take him at his word.
“When you look at Manchester United raising £200million and being valued at £1.5billion, why can Rangers not be worth £30million?
Mr Green is unfailingly positive, as someone in his position would be expected to be. As matters stand right now, one could say that his comparison would be like Arkwright of “Open All Hours” comparing his business to Wal-Mart – after all they are both in retail!
Manchester United do have certain advantages, in relation to TV money, merchandising, European income, huge sponsorship deals, attendances 50% higher than Ibrox capacity etc, but what is wrong with aiming high?
One might ask, if one was in BDO, the soon to be liquidators of the former Rangers company, how it was adequate consideration to pay £5.5 million for assets worth £30 million?
I am sure Mr Green has his answer prepared already for that question, should it be asked of him.
“Ours’ is a long-term strategy and part of the money which is raised will be put towards very important infrastructure projects around the stadium. We announced recently that David Murray has agreed to sell Edmiston House back to the club and we want to turn that into a megastore and a café/bar. That will require investment. I’d like to put something similar to Bar 72 into the Broomloan Stand as well.
Is it note-worthy that the first matter Mr Green mentions is unconnected to the team? Property investment and expansion of the licensed trade might not be seen as being as glamorous as buying Lionel Messi, but it could generate income for the team. That suggests that the existing facilities do not generate enough.
How good is the track record of his management team in running licensed premises, at a time when pubs and clubs across Scotland are closing at a rate of knots?
Mr Green is clearly very smart in looking to take on an area of business where times are very hard, and must be confident of his ability to succeed where many have failed.
“There are a whole raft of things we’d like to invest in which will generate income for many years to come.
“It is very important for Rangers fans to understand there is no confusion about where this money is going to go. None of the original shareholders are selling shares.
There is the reassurance people have been looking for. How long the original investors are tied in for is another question, which I am sure will be answered soon enough.
“Every penny we rein will go into Rangers Football Club and will be used for the club and when the transfer ban comes off, Ally will have cash to enter the market.”
Great stuff! Fans can be reassured that the money will be used for these infrastructure developments and, by January 2014, for player additions. Mr Green also believes Mr McCoist will still be his manager then, answering those who have criticised the manger for on-field results.
It isn’t just from home Green anticipates there will be interest in investing. He believes people from further afield will be keen too. The Rangers story has gripped football fans from around the world and the way the club has galvanised itself has intrigued so many. Green added: “We had one of the big German financial papers come to do a big article on the club along with publications from France and America.
Yes – but the article in Forbes magazine did not meet with much approval from Mr Murray, the Chairman, did it?
“People have taken an interest in Rangers and not just the sporting press worldwide but the financial press too. The whole world understands now what the value of soccer is as a product and that’s why people are showing an interest in us outside the media as well. When Imran (Ahmad) and I were in America, we had a meeting in New York on Wall Street with potential investors. They see and know the Rangers brand and name and I think there will be very good interest in this initiative from abroad.”
Well done Mr Green! In a time of continuing economic uncertainty, how well he has done to find investors potentially willing to put large sum towards an investment in another country, in a sport where financial returns, with very few exceptions, have proved to be money down the drain.
Obviously Mr Green has found the secret of turning base football metal into gold. In that case his issue of shares will undoubtedly be over-subscribed many times, and the shares will immediately start to trade at a premium.
Such a result would be his best response to those, like me, who are sceptical about his plans!
Posted by Paul McConville