Does the Slump in the Rangers Share Price Matter?

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Good morning all! 

The Rangers International Football Club PLC share price, having sat at around 54 or 55p per share for months, plunged this week to just over 40p. Does this actually matter? Not directly, as I will explain, but it cannot be ignored by those with an investment (personal or financial) in the company which owns the company which owns the assets and business of the football club.

It does not affect Rangers directly. Mr Green’s proud boast that RIFC was not funded by debt, sorry, “external debt” means that the shares are not mortgaged as security for loans or overdrafts. RIFC already has the cash/proceeds of the share sale. It makes nothing from public trading of issued shares. In that direct regard therefore the drop in price is meaningless. 

The fan investors are not bothered either. They did not expect a financial return. They paid their cash to support and even to save “their” team. I doubt many supporters invested looking to turn a profit!

Next we come to the “non-fan” shareholders, though these need to be split into two groups. First we have the initial founding investors. For example Mr Green is understood to have acquired his shares, as did others, at 1p. Should Mr Green sell at 41p, for example, he still makes 40p profit per share. Of course this is much lower than his notional profit when shares were valued at over 90p but it is still a good return!

One assumes that Messrs Green and Ahmad will sell as soon as they are permitted to do so. After all, with both having left Ibrox (with clear names but under clouds) why keep the shares? Indeed Mr Green’s shares are already, supposedly, committed to new buyers. Of course the terms of such a deal could be affected by the shares sliding. 

So who is affected and does it harm Rangers?

The people hurting will be the institutions which paid full price of 70p in the float. They can’t have expected dividends – football clubs rarely if ever pay them as the customers demand profits are used to make new signings, not pay the owners. 

Institutions invest to make money. At some point the plan must be to sell the shares. The long view may make the present slump irrelevant and after all if Fulham can be sold for well over £100 million, who is to say RIFC shares won’t rebound to £1 or more. But that has rarely happened with quoted football clubs.

If the investors look to cut losses and dump shares the price will likely go down further. 

That could affect the nebulous concept of “confidence” in those running the outfit.

However it also presents an opportunity. Falling share prices allow someone keen to expand their holding to do so now for far less than buying at the float. Will we see the price drop a bit more, then hold once it gets to the point where the buyer is ready to fill his boots? 

In an entirely unrelated matter RIFC has today announced that the new director, Mr Easdale, owns 357k shares in the company. This does not accord with press reports that he had 6% of the shares but we must trust the official announcement.

Maybe time for me to buy a few shares? I would enjoy the chance to pop along to an AGM and ask a few friendly questions! 

😉

 

Posted by Paul McConville

Good morning all!

The Rangers International Football Club PLC share price, having sat at around 54 
or 55p per share for months, plunged this week to judt over 40p. Does this 
actually matter? Not directly, as I will explain, but it cannot be ignored by 
those with an investment (personal or financial) in the company which owns the 
company which owns the assets and business of the football club.

It does not affect Rangers directly. Mr Green's proud boast that RIFC was not 
funded by debt, sorry, "external debt" means that the shares are not mortgaged 
as security for loans or overdrafts. RIFC already has the cash/proceeds of the 
share sale. It makes nothing from public trading of issued shares. In that 
direct regard therefore the drop in price is meaningless.

The fan investors are niot botgered either. They did not expect a financial 
return. They paid their cash to support and even to save "their" team. I doubt 
many supporters invested looking to turn a profit!

Next we come to the "non-fan" shareholders, though these need to be split into 
two groups. First we have the initial founding investors. For example Mr Green 
is understood to have acquired his shares, as did others, at 1p. Should Mr Green 
sell at 41p, for example, he still makes 40p profit per share. Of course this is 
much lower than his notional profit when shares were valued at over 90p but it 
is still a good return!

One assumes that Messrs Green and Ahmad will sell as soon as they are permitted 
to do so. After all, with both having left Ibrox (with clear names but under 
clouds) why keeo the shares? Indeed Mr Green's shares are already, supposedly, 
committed to new buyers. Of course the terms of such a deal could be affected by 
the shares sliding.

So who is affected and does it harm Rangers?

The people hurting will be the institutions which paid full price of 70p in the 
float. They can't have expected dividends - football clubs rarely if ever pay 
them as rthe customers demand profits are used to make new signings, not pay the 
owners.

Institutions invest to make money. At some point the plan nust be to sell the 
shares. The long view may make the present sdlump irrelevant and after all if 
Fulham can be sold for well over £100 million, who is to say RIFC shares won't 
rebound to £1 or more. But that has rarely happened with quoted football clubs.

If the investors look to cut losses and dump shares the price will likely go 
down further.

That could affect the nebulous concept of "confidence" in those running the 
outfit.

However it also presents an opportunity. Falling share prices allow someone keen 
to expand their holding to do so now for far less than buying at the float. Will 
we see the price drop a bit more, then hold once it gets to the point where the 
buyer is ready to fill his boots?

In an entirely unrelated matter RIFC has today announced that the new director, 
Mr Easdale, owns shares in the company. This does not accord with press reports 
that he had 6% of the shares but we must trust the official announcement.

Maybe time for me to buy a few shares? I would enjoy the chance to pop along to 
an AGM and ask a few friemdly questions!

😉

Posted by Paul McConville

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