Rather concerning

As regular readers will know I have been continually asserting that there is a serious cash crisis at Ibrox.

My offerings prompted a statement from Ibrox and it was duly read out on Radio Clyde refuting my allegations last month.

Now we have the interim accounts for Rangers International Football Club (RIFC) which gives the state of play from June last year until 31st December.

For the avoidance of confusion RIFC is the parent company of The Rangers Football Club (formerly known as Sevco Scotland Limited) which is sole the representative of Rangers Football Club (1872-2012) here on earth.

As you will know dear reader when it comes to matters Ibrox  you will find that Scots law, UK company law and the laws of physics are suspended.

Rangers were liquidated, but it did not die, like Doctor Who it regenerated into Sevco and everything was ok again.


The people who advise me on these matters were rather surprised that the inaugural accounts of RIFC presented at the AGM last December had avoided a going concern warning (GCW).

Now the interims have one of those.

Essentially the status quo at RIFC/Sevco makes no financial sense.

This is an unsustainable business model.

RIFC is a company and it only owns a loss making subsidiary.

Moreover, they have no credit line from a bank.

Subsequently they are relying on emergency finance from shareholders.

The infamous Laxey Loan had now become the Letham loan.

This chap is, we are told, a Rangers supporter and wants to take no cash from the club and fair play to him.

The Ibrox outfit will need much more of this type of emotionally driven altruism if they are to survive with the current cost base.

It really is that simple.

New Rangers spends too much money.

Graham Wallace knows that as does Philip Nash.

Indeed these interim accounts point to a slight increase in operating costs over the six months to December 31st 2103.

The only way to reduce this crippling cost base quickly is to press the Administration button.

All of the preparatory work was carried out with some urgency in mid-February and was completed against a tight deadline suggesting an imminent event.

The Dave King intervention completely blindsided the current regime and they thought that their highly paid PR guru would have had some prescience in these matters.

The possibility of a season ticket strike is, of course, the last straw.

The demand of the fans for the mains assets of the club to hand over as security for the season ticket money is impossible to comply with.

The hole in the balance sheet would be catastrophic for any publicly listed company never mind one that is haemorrhaging money and doesn’t have a credit line from a bank.

The fans are at the core of this entire saga.

There is an irreducible core home crowd and this is what is currently being ‘gamed out’ by the clever numbers people running things at RIFC.

That loyal customer base is crucial to any future business plan.

Let’s say 15,000 season tickets.

That is the amount of people who would turn up no matter the product on the pitch.

Now once the cost base is driven below what those 15,000 season tickets bring in then you have a profitable business.

Of course that is not what the faithful fifteen thousand or any other member of the Ibrox support wants to hear.

That is why the Dave King message is so seductive.

It is the answer to their prayers.

A Bear with cash to burn.

Terms like ‘soft investment’ sounds so appealing to their battered ears.

Of course it was that vulnerability that made them susceptible to tales of billionaires with wealth off the radar in 2010 and 2011.

One man turning up who wanted to pour millions down a hole would solve all of their problems.

The smart people at Laxey have no intention of becoming benefactors or in having their shareholding diluted by another issue.

Austerity is the only game in town.

Payroll was met yesterday thanks to some commercial income for this season and will not be replicated next month.

Sources assure me that additional emergency finance will be required to meet this monthly obligation in April.

The figures in the interims are eye watering.

As always cash is king, follow the money.

In December 2012 the new club at Ibrox had £21.2 million cash in the bank, but exactly one year later in Dec ember 2013 it was £3.5million.

£1.77 million of that belonged to Mike Ashley and has since been returned.

That leaves £1.73 million.

So in twelve months the new entity managed to get through £19.47 million.

Of course some of that would be one off payments.

However, the overall picture is clear.

This football club/holding company, celestial body (delete as applicable) is burning its way through money at an unsustainable rate.

Moreover, no one in the lending business wants to know because of the pesky contingent liability on the main assets of the business.

Of course if I were the RIFC chaps then I would be talking to Craig Whyte and his colleagues in Sevco 5088 right now.

I am sure Mr Whyte wouldn’t be difficult to deal with.

He will have a price that allows him to do walking away from the contingent liability that is crippling all efforts to get normal financing.

Now I’m guessing now, but I reckon Craig’s first request might be to say something like:

“five million pounds please!”

Therefore offering him, say £100,000 wouldn’t really work and I doubt that even upping that to, say, £275,000 would interest the suave billionaire.

However I’m sure they could, if such a hypothetical scenario were to unfold, reach an agreement.

They are reasonable men after all.

If the contingent liability were to go then that really would be a game changer.

Normal financing could be secured against the currently encumbered assets (Ibrox and Murray Park) and then even a sale and leaseback would be possible.

When Rangers died in 2012 there was a list of 276 creditors, including the Ambulance Service and local family run businesses, which were left unpaid.

The GCW might make suppliers re-think their payment arrangements with the current club at Ibrox.

Of course ‘Cash On Delivery’ terms would only make the cash flow crisis-and it is a crisis-even worse.

So February payroll was met by the ‘Laxey Loan’ and wages in March was taken care of by commercial income that won’t be available for April.

I don’t see how this situation avoids Administration and that view is shared by some insiders very close to the action.

What I am sure about is that when the important people on the sixth floor at Hampden signed off on the Five Way Agreement less than two years ago they did not envisage that the man across the table from them would now be in a fine residence in Normandy and disengaged.

Moreover they could not have imagined that in March 2014 the club chairman David Somers would be informing the market that “the company may be unable to realise its assets and discharge its liabilities in the normal course of business”.

It is just as well that the governing body of the national game in Scotland has such excellent people in key positions who will take decisive action if required.

If it were not for the depth of talent at the SFA then I would be concerned by such a warning.

I really would.

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