Difficult choices at RIFC

A conference call last night between all the major players in the Sevco sitcom did not come up with many solutions.

What to do with the Season Ticket monies was one point of contention.

Despite the stern warnings from Deloittes the chaps at Blue Pitch Holdings and Margarita Holdings want to dip into that pot of seasonal cash.

RIFC CHhriman David Somers had to…err…remind the representative of these offshore fellows that the directors of the company had legal responsibilities apropos the Season Ticket funds.

Deloittes have re-stated to all the principals the basic facts of RIFC’s financial situation and how it is much worse than it was last year.

Then last night some of the Institutional Investors rowed back from their previous position on the Shareholder option.

They questioned the wisdom of continuing to put money into the loss making business.

One of the problems is that with upward only contracts for high earning players and increases in the remittances in the ‘onerous contracts’ then the cost base  is due to go up by at least 10% in the next financial year.

This was explained to me was that these contracts had built into them increments as the club went into a higher league.

It must be that that ‘The Journey’ is proving rather costly in that regard.

Now Graham Wallace and Philip Nash have to go away and come up with a couple of scenarios about what to do next.

As I see it there are really only two options and neither of them are very good ones:

(1)   The Muddle Along strategy.

(2)   The Internal Administration route.

The first one is where the Shareholder Option is used to fund the loss making operation in the hope that the fans come round when the team is back playing football. Half Season Tickets could then be sold to the faithful who had temporarily lost their faith.  In Donegal this strategy is known as ‘digging for better weather’ and it is fair to say that Deloittes are not keen on this option.

The second option is rather strange in that both the Institutional Investors favour it as do Blue Pitch and Margarita. These two camps in the RIFC tent usually don’t really see eye to eye on anything else. In this plan the Share Holder Option would be used to fund austerity and pay redundancies etc. The market usually smiles on austerity and this would, perhaps, allow RIFC go back to the City, probably in September, to try and raise fresh funds on the AIM.

Those appear to be the only viable options now.  The clever folk at Laxey partners probably accept that, at this juncture, the Administration boat has sailed.

That is the option that they wanted to pursue in January/February. At the start of the year they had all of the controlled insolvency event ducks in a row and they had them in alignment at their expense.

However those shy chaps in Blue Pitch and Margarita weren’t too keen on an Administrator looking under the bonnet although I can’t think why.

Of course one of the benefits of the ‘In house Administration’ option is no sporting penalty.

The main drawback is that it is much more expensive apropos severance payments than a formal insolvency event.

Most of the main players now seem to agree that Murray Park is a huge drain on resources of the loss making company.

Quite simply it is a status symbol from the Murray years at Rangers that the new club simply cannot afford.

Now for the avoidance of doubt Murray Park eats up £1.35 million per month.

However the Blue Pitch and Margarita chaps are not keen to see this citadel of sporting excellence close as some of their service contracts are connected to Murray Park.

However some of the most ‘onerous’ ones aren’t tied to any physical site and while RIFC exists then the remittances on the contracts must be paid.

Clever boy Charlie, clever boy.

Going forward there are options for RIFC, but there aren’t really any good ones.

Muddling along isn’t very smart, but then even highly intelligent people sometimes do un-smart things.

Moreover, there is no guarantee that the City will smile on a slimmed down Sevco come September or October.

There is no doubt in my mind that the people currently in senior positions at RIFC are trying to make the best of a difficult situation that they did not create.

I am sure that The People will continue to rail against the executive pay at Ibrox and they may have a point, but when you think of the stress that someone like Graham Wallace is currently under then his remuneration package next season, just south of £400,000, does seem fair.

If you prefer a printed edition of this article then a re-hashed version will be available in a Scottish tabloid in a week or so marked ‘exclusive’.

Leave a Reply