Dec 082012
 

…Think I’ll Buy Me A Football Team

 

 

Those are, of course, the immortal words of Pink Floyd and, as you’ll see here and on countless other sites, they have a stark relevance to the ongoing saga down Ibrox way.

Late last night, “Rangers International Football Club PLC” (henceforth known as TRFC for simplicity) released the details of the prospectus relating to their upcoming share issue. Within minutes, many of the so called “internet bampots” began to dissect the one hundred and twenty two page document and, within minutes, they began to highlight several points of interest.

Before discussing a few of these points in more detail, I’d like to take a moment to remind you, and the Ibrox faithful (if any of them happen to be perusing this article), just who we are dealing with. Charles Green, current Chief Executive and major shareholder in TRFC, has a notable record with regards shares issues. In the mid-nineties, Mr Green became the Chief Executive of Sheffield United; then a Club on the up, consistently challenging for promotion to the top flight of English Football.

However, this would all change under the stewardship of Mr Green, as his Club, and it’s supporters, began to suffer. During his tenure and whilst Sheffield United were still performing fairly well, Mr Green decided that the Blades would become only the sixth English Football Club to float shares on the British Stock Market.

Within months, after repeated calls from Sheffield United supporters, the Department of Trade and Industry began to investigate the aforementioned share issue. They found that Mr Green was guilty of misleading investors as to exactly what they were buying, and to it’s exact value. On his final departure from Brammall Lane, Charles Green left the ground under police escort, such was the bad feeling amongst supporters towards him.

Around a decade later, Mr Green was to be involved in another share issue, when he found himself on the board of a steel company based in the Middle East, known as “Panceltica Metals”. Despite questions regarding the timing of the share issue (which was to be carried out just after the global credit crunch struck) from those in financial circles, Mr Green pressed ahead. Within a year, the company, which previously had an annual turnover of over £50,000,000, entered insolvency.

 

Now, before we go any further, I’d like to pose two questions to you:

1. Would this track record make you feel confident in investing your own, hard-earned, money?

2.  If Mr Green is considered the best choice as the public face of his group of investors, what sorts of skeletons lay in the proverbial closets of the Yorkshireman’s financial backers?

 

 

Anyway, moving onto the prospectus itself, where shall we begin?

Well, first and foremost, say you’re a supporter, let’s see just where your money would go. Now, TRFC aim to raise £27,000,000 if the share issue is a fully unbridled success. Charles Green is currently on an annual salary of £360,000 (plus bonuses and expenses). The prospectus states that he will be entitled to a bonus of 100% if the Club wins promotion from the SFL (although this doesn’t specify whether this refers to SFL3 or out of the SFL altogether…which is rather odd for a man who says his Club will never return to the SPL).

Regardless, there goes at least 1.33% of the money raised from TRFC supporters (which could double to 2.66%).

Next, there is Brian Stockbridge, who will receive £200,000 per year, equivalent to another 0.74% of the potential money raised in a share issue (which could double to 1.48% in the same manner as Mr Green’s). Imran Ahmad will also receive £350,000 per annum (plus bonuses) for his role as Commercial Director.

We then have several non-executive directors who receive as follows: Malcolm Murray (£60,000 – despite the fact he isn’t employed by TRFC), Ian Hart (£40,000), Walter Smith (£50,000), Philip Cartmell (£40,000) and Bryan Smart (£40,000). Totalling all of this up, the Club will spend a minimum of £1,140,000 on the salaries of those previously mentioned. This figure doesn’t include any bonuses, and will make up over 4% of the funds raised in any share issue (per year). Dependent on bonuses and the exact meaning of the document, this percentage could be somewhere between 6-7% per year.

Beyond this, the Club plan to spend £5,500,000 on upgrades to Ibrox, £4,500,000 on the acquisition of land, and other projects totalling £3,000,000. These plans account for another 48-49% of the money raised by a fully successful share issue. Another £5,500,000 is scheduled to go to more upgrades to Ibrox and more projects in a year. There goes another 20% or so.

The rest, around 25% or so, according to TRFC, will be used for “cash flow purposes”. Of course, it is worthy of note that some of this money will likely be used for cash flow, and then replaced with revenue gathered at a later stage (i.e. upgrades to the stadium scheduled for twelve months in the future).

 

 

Moving on, we once again return to the role of Charles Green (amongst others). Returning to the Pink Floyd theme for a moment, the song continues “…new car, caviar, four star daydream, think I’ll buy a football team”.

At present, Mr Green owns approximately five million shares in TRFC. He paid £50,000 for these, at a price of one pence each, meaning that (pre-share issue) he owns 14.96% of the company. When TRFC hold their share issue, Mr Green will retain his current number of shares, although the percentage of the company which he will own will decrease. To put this in context, Celtic’s current share price is a little under thirty nine pence, and the Club is not only financially stable but succeeding on the European stage. Now, it is of note that prices vary not only on the performance of a company, but on the number of shares in existence. For example, if there were one hundred billion shares in Barcelona, they would likely be cheaper than shares in Elgin, if Scottish Club only had fifty shares in existence.

If, for argument’s sake Mr Green was to have bought his five million shares in the upcoming issue, it would have cost him £3,500,000. Even more recent investors attained shares for a fraction of the price which the fans of the new Club will pay. Whilst some of them will not be able to resell shares immediately (due to some year long restrictions), all those who invested in the new Club prior to the share issue will be in for a very healthy profit in the future (if and when they decide to sell on).

All in all, it is clear the a minority stand to make a lot of money. Despite what Mr Green and his companions may try to tell you, they are not involved with TRFC for any love of the new Club; they are where they are today in order to make money. Now, there is nothing wrong with this, but at least Fergus McCann was honest when he put his money on the line.   When you consider the fact that Craig Whyte has claimed he introduced Charles Green to Duff & Phelps (whom we know Whyte has connections to prior to his purchase of the old Rangers) things continue to become increasingly murky and incestuous.

 

 

The Club’s financial summary of the last three months, as well as it’s overall valuations, don’t make for the best reading either. When you ignore the goodwill earnings which have been regarded as a profit for the new Club, you find that the Club has actually lost a few million pounds. For the record, the reason these “goodwill earnings” should be ignored, sizeable as they are, is because they represent a false view of reality. Simply because Charles Green picked up a few assets at a reduced price does not mean that these are a “true” profit. Just because the new Club pull figures out of the air, it does not mean they are necessarily correct.

And now, on a day where TRFC celebrated their “one hundred and fortieth birthday”, speculation remains rife as to how rosy the future really is for the new Club. Of course, you don’t need to be a genius to work out that TRFC are much closer to one hundred and forty days old than one hundred and forty years old, but nonetheless many are still worshipping at the Altar of Green. Funnily enough, many of these people previously attended the Church of Whyte, and the Temple of Murray.

The continuation of this “we’re a new Club when it suits us, but we’re still the same Club as before at others” mentality may well lead to a rather rude awakening one day for the Ibrox faithful. Whilst their leaders continue to talk of persecution and others being against them, perhaps it is no wonder that most of them would see this article simply as another example of “Timmy” trying to bad mouth their Club. However, they do say “you can take a horse to water but you can’t force it to drink”, but in this case I feel a new saying may be more appropriate.

“You can try to open a Bear’s eyes, but it won’t make any difference if the Bear is blind.”

 

  4 Responses to “New Car, Caviar, Four Star Daydream”

  1. There are none so bind as those who will not see. Why are you telling them this let them stew in their own juice.

  2. You can lead a horse to water…….but try getting it to do the backstroke whilst playing the ukulele.

  3. Your good self and many others have repeatedly try to warn them, but their WATP attitude will not allow them to heed such good well-thought-out and reasoned advice. Leave them to it. They’ll learn soon enough. Or pay a hefty price! Again.

  4. A blind man knows he cannot see, and is glad to be led, though it be by a dog; but he that is blind in his understanding, which is the worst blindness of all, believes he sees as the best, and scorns a guide.
    Samuel Butler

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