Emotional investment

I once received a cheque from Fergus McCann.

I think it was for £14.40.

However, I never did cash in that debenture as I hoped that it would circulate back into the club.

My investment in Celtic wasn’t business, it was personal.

I saw it as a donation.

The man Celtic fans call “the Bunnet” had a stock market flotation because he wanted to raise share capital for a specific purpose and that was to build a new stadium.

The Taylor report meant that the old Celtic Park was not fit for purpose.

It was, and remains, the most successful share issue of any football club in Britain.

Not only did Celtic fans mobilize in 1994 to topple the old board and then they stepped up to fund Celtic going forward.

Fergus was good to his word and used the millions raised to build a stadium that held more people than Ibrox.

If it could be filled on a regular basis then Celtic would, possibly for the first time ever, have greater financial clout than their city rivals.

We know the rest.

David Murray’s decision to go the disastrous EBT route was to allow him to continue to outspend Celtic and re-assert the dominance of the 1990s.

Through it all Fergus did what he said he would do.

Firstly and most importantly he saved the club from liquidation.

That means that the team I watched win the European Cup in 1967 is the same club I watched beat Helsingborg last month.

He then built a stadium cashed in his chips and left without any fanfare.

However, it would have been different.

After the successful share issue Fergus, as majority shareholder, could have decided that putting seats into the old stadium would satisfy the requirements of the Taylor Report.

What would he have done with all of that spare cash?

Well he could have bought star players.

However, he could also have just issued a dividend to shareholders.

Obviously as he held the majority of the shares he would get a bigger pay-out than anyone.

As expected Charles Green and his investors are planning a share issue for shares in The Rangers Football Club (formerly known as Sevco Scotland Limited).

The PR has stated that they hope to raise £20 million and that this will be used to provide Ally McCoist with a budget for players.

Given that a registration ban is now in place and no new players can be brought in until January 2014 then this money would remain unused until then.

Moreover, clearly there is no need to build a new stadium or a training ground.

Let us assume best scenario for the flotation and that £20 million is raised.

That money cannot be used to buy players until January 2014.

There is no need to conduct any major capital project like a new stadium.

So what will that notional £20 million be used for?

If the money is indeed intended for the purchase of players then why not wait until nearer to January 2014?

However, if that £20 million was used to fund the shortfall between  the costs of running a club with an SPL squad and Division 3 revenues then that could be the road to ruin.

What would the company do the year after to bridge the gap between the cost base and the revenues streams?

A Sevco insolvency event would defy parody.

No, it really would.

If  the share capital is not there to provide for player purchase and  it is not to be used as working capital then there is only one other possibility that I can see.

With many millions raised by a successful flotation the shareholders could receive a dividend fairly quickly.

Of course the emotional investor wouldn’t much care about that, as I didn’t with the Celtic debenture from Fergus McCann.

However, the commercial investor in Sevco Scotland Limited would be very interested in such a move.

There would not, of course, be anything untoward if a dividend was paid to the shareholders.

It happens in business all of the time.

This, of course, is why investors put money into companies in the first place.

Such a move would be perfectly legal and just like the residents of animal farm although all shares are equal, some shares may turn out to be more equal than others.

Perhaps one day next year if Sevco shareholders receive a cheque in the post from Mr Green then it might not bode well for “The Rangers”.

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