A colleague came up to me today and asked what the real implications are for Rangers in a business sense after all the media speculation over the last few days following comments by Walter Smith, the Rangers manager.
News has been circulating that the Lloyds Banking Group have taken over the running of Rangers having forced David Murray to step down, news rejected by David Murray's son. It seems either a new owner needs to be found or the bank will run the business in a way that minimises its debt. Newspapers have reported that Barry Ferguson's £1m sale and the removal of 10 fringe players from the wage bill came as a result of an audit conducted by Lloyds. There was even reluctance to give David Weir a one-year, pay-as-you-play contract! A couple of weeks ago a Lloyds employee, Donald Muir, was voted onto the club's board of director in a move which was seen to show a lack of confidence of the people currently at Ibrox. Muir will represent Lloyds on the board and is classed as a "business transformation specialist". He is likely to oversee a radical overhaul at Ibrox, something that Lloyds allegedly forced upon Rangers under threat of being put into administration.
So what of the future? It is difficult to say. It seems that the entire first team squad is available for sale should any offers come in and a new owner is being actively sought. Only a takeover is likely to prevent a mass sale of first team players and replacement by youth players. But Rangers lack many assets on the pitch who would generate meaningful income and there is a real shortage of people willing to invest in a football team in the current economic situation. This is particularly true when you consider Rangers opportunity to generate more income is restricted as they are in the Scottish Premier League with no real avenue of escape.
Rangers are almost 90% owned by Murray International Holdings whose most recent accounts showed a net debt of £760 million, £704 million of which is in the form of bank loans and £432 million payable within the next one or two years. With Lloyds owning around 10% of MIH and currently in the process of trying the prevent the government lifting its stake from 43% to 60%, they will be keen to reclaim the £30m borrowed by Rangers and to address the financial issues of MIH.
It seems odd that a team reportedly only £30 million in debt are in so much trouble when you compare it to the monumental debt of some English and European clubs. However, the unravelling of Rangers fortunes has been rapid and shocking. This is a club who for the last 20 years have paid top dollar for players in the form of salaries and transfer fees and have reaped the success on the domestic front. Those days of profligate spending look like coming home to roost and the one saving grace may be Lloyds awareness of the negative implications of forcing such an institution as Rangers into administration. That might be their only hope!
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