A dignified déjà vu

I feel a slight sense of Déjà vu when I observe things down Edmiston Drive way these days.

There are things that we know and there are things that we don’t know.

We know that there is a new owner and we also there is no credit line from a bank to provide liquidity. In May 2011 Lloyds had left the stage with their money and they weren’t interested in offering banking services to the new regime. Craig Whyte had a plan to run Rangers solely on their own resources, including European income. Of course that didn’t go well and he was forced to use the normal remittances to HMRC for cash flow. It was the last straw for Hector and in February the taxman made his move.

This year Bill Miller looked at OldCo’s books and realised that if his NewCo were to survive then it would need to be bankrolled for three years because the revenue streams wouldn’t cover the costs. The American reckoned that the overall cost would be £30million for that period without European football income.

That concurred with Craig Whyte’s own estimation of a “ten million black hole in the accounts” after the club had been ejected from European competitions. Ex-Rangers Director Dave King also mentioned that the club would need £30 million on a “non-commercial basis” to survive. We do know that Bill Miller’s people were given private assurances that his incubated NewCo would play in the SPL. There is much that we currently don’t know at the moment.

However, I cannot see how Sevco will sustain their current cost base and staffing establishment with Division 3 revenues this season. We do not know how much working capital that the private investors have provided to keep the lights on.

The succulent lamb hacks currently gush about the Ibrox outfit being “cash rich”. However, given their track record in failing to spot Craig Whyte for what he was then I think we can discount the churnalists as a source of reliable news on matters Ibrox.

They are tarred with the sickening sycophantic brush which threatens the entire industry.

Of course the MSM should be looking into this very carefully, but that might seriously restrict their access to Ibrox. To try and get a handle on what might transpire I have spoken to people in the investment world in the Square Mile. They don’t have access to the specific information I need, but they do know the share capital raising business. Sevco Scotland Limited will need to provide minute detail in the share prospectus. They will have to say what they want this capital for.

It is worth remembering that the assets of Rangers were bought from Duff & Phelps by Sevco with borrowed money.  The private investors lent that money and I think it is reasonable to assume that it wasn’t interest free. These are commercial investors who want their money to grow.

No one in Scottish journalism has been able to show how Sevco Scotland Limited’s new football outfit can achieve profitability in the short/medium term. Perhaps more tellingly they don’t appear to have tried. Neither have I seen a break even situation explored in the MSM. Given their contacts with football agents it should be possible to gauge the extent to which the Ibrox wage bill had been cut by the Great Walking Away in the summer. The wage bill is undoubtedly smaller than what it was pre-liquidation. However, the Season Ticket prices are also reduced. Someone on a business desk in a major title could be brought in to do the sums for the sports guys.

Failing that it will be left to the bampots to do the heavy lifting on Planet Fitba.

A cynic might conclude that every public utterance coming out of Ibrox these days is geared towards the success of the share issue.

My City of London guys were sceptical that the Ibrox outfit would attract serious commercial investors in the share issue, just because of the current business climate.

One of them sketched out the only scenario that he could envisage where someone could make money in British football at present:

“If you could identify an English championship club that is struggling, but has genuine potential, in terms of brand, fan base then you would buy that club from the beleaguered owners who want out. You then inject working capital with a two to three year plan to get the club into the EPL. That would generate a good return on the original investment. Invest in Scottish football? No chance!”

My Square Mile chap was being dismissive of any club in the SPL as being a good investment opportunity. Obviously then a club in Division 3, even one destined to be in Division 2 next season, would be even less attractive.

So where does that leave Charlie and the boys?

It is fair to say that when he came onto the stage he thought that his consortium would be buying the assets of the dying club and that their NewCo would be playing in the SPL.

When that was scuppered in the Scottish Spring SFL Division1 seemed a fall-back position. However, they didn’t count on Turnbull Hutton and his colleagues playing dirty by mentioning things like “morality” and “fairness”. The SFL lads were meant to do as they were told especially when they were told scary stories about “slow lingering death” and “Armageddon”. Division 3 certainly wasn’t on the agenda when the original plans were drawn up by Sevco.

Even a cynical restructuring that could see Sevco in the SPL inside two years instead of three doesn’t really help matters for Charlie, although I would not be surprised if that was tried.

The Bears need to buy into this share issue in large numbers.

Both guys in the Square Mile said that £8 million would be a good result and that £6 million would be a bottom line for success. Anything less than that £6 million, I was told, would be highly problematic for the original investors who are owed money. It is clear to any reasonable person that the main market for these shares will be the fans who have already stumped up for season tickets. They have to believe. It will be an emotional investment.

Despite the absence of any serious scrutiny from the MSM into Sevco’s business plan we seem to have seen a similar movie before.

No credit line from a bank ,questions marks over the long term sustainability of the company and lots of breathless pish from the hacks about how wonderful it is all going to be for the Ibrox klan.

Just like old times?

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