Rangers: Split Personalities
For an awkward few days in July 2012 there appeared to be two “Rangers” football clubs on the go. One was what is now called “emerging from administration” – by going into liquidation. And the other was seeking permission to play at Brechin City in the Scottish League Challenge Cup – permission granted by the Scottish Football Association creating an entirely new membership category, specially, and so far solely, for them. There appeared to be two Rangers on the go again last week. One was in court, claiming that their finances were secure and that fans’ threats to withhold season-ticket monies were not a “major concern.” The other was lambasting fans – in a club statement published during the court case – for “creating financial difficulty for Rangers” which could “only damage the club.”
Rangers are currently the subject of a covert takeover bid – albeit one hidden in relatively plain sight – by South African-based businessman and lifelong fan, Dave King. King, however, does not want to pay market rate for Rangers, or any rate at all if possible. So he is using fans’ current discontent to deprive Rangers of much-needed season-ticket renewals income, unless or until “fans” receive security over Rangers’ Ibrox Stadium (initial demands for security over Rangers’ Murray Park training complex have been dropped, for reasons as yet unclear). The vehicle for this was to be a “season-ticket trust” on which fan organisation the “Union of Fans” (UOF) said they had been working. This “trust” became a limited company, “Ibrox 1972” (1972 being the year of Rangers’ European Cup Winners Cup…er…win), with King and ex-Rangers captain Richard Gough as directors. And its launch inspired the highly-accusative club statement.
Rangers want to counter this campaign and maximise season-ticket sales because of attempts by ex-commercial director Imran Ahmad to “arrest” £620,000 of Rangers’ money until February 2015, when his claim that they owe him £500,000 (5% commission on commercial contracts he negotiated) comes before the courts. He had to demonstrate that Rangers’ finances were too precarious to guarantee payment to him if he won, unless they ring-fenced enough of their finances to cover such an eventuality. A previous attempt in late-February failed when Judge Lord Tyre ruled that there was no “substantial risk” of a Rangers insolvency.” Since then, however, a possible slump in season-ticket sales has taken tangible shape in Ibrox 1972. And auditors’ reports in recently-published accounts cited the potential slump as a “material uncertainty” casting doubt on Rangers’ future “as a going concern.”
Thus emboldened, Ahmad returned to court last week. However, he failed again. Presiding judge Lord Armstrong believed Rangers claims that their finances were secured by a hitherto unheralded confidence from institutional investors in the board’s management. So, with the onus of proof on Ahmad, it was little surprise that he lost…although there is talk of him appealing at the time of typing. To the layman, ring-fencing £620,000 might have threatened Rangers’ very existence, rather defeating the object of the court proceedings. Post-season income has reduced to a dribble – Rangers admitting that renewals have been “slow.” Yet operating costs remain unsustainably high. Some might even have wondered if Rangers would have £620,000 left to arrest after May payroll.
But Chief Financial Officer Philip Nash claimed that season-ticket renewals were “slower, rather than lower, than expected,” – an interesting distinction – but would eventually reach expected levels as it was “only a matter of time before fans realised” that “purchasing season-tickets through trust is not possible.” CEO Graham Wallace forecast £2m in season-ticket sales over the “next 10-to-14 days.” And Rangers QC Alan Summers claimed that (unspecified) institutional investors “would step in to avoid the prospect of…insolvency.” Courtroom tweets from the BBC’s Alasdair Lamont said Summers “meant institutional investors” would “provide…equity release” not “loans.” No timescales were forthcoming. But courtroom tweets from STV’s Grant Russell said Summers was claiming that Rangers is “financially secure.” And Ahmad’s claim “one way or another would be met.”
Perhaps wary that this differed from public perceptions, there was a concerted effort to belittle the UOF campaign. Ahmad’s QC Kenny McBrearty repeated UOF claims that only 2,000 season-tickets had been renewed since forms went out on April 10th. Without correcting this, Summers labelled the UOF a “small group” which had only collected 6,500 pledges, adding if that was the “scale of threat” it wasn’t a “major concern.” He neglected to mention that those pledges were made inside a day. Summers also denied that Sandy Easdale called Rangers’ finances “fragile” when the BBC shoved a microphone under the club director’s nose on April 24th. The BBC headline, “Rangers finances are ‘fragile’ warns shareholder Sandy Easdale,” suggested that BBC sub-editors thought Easdale meant finances when he said: “The situation is fragile” and “the club is in a fragile position.” But Summers said Rangers had a statement from Easdale “(outlining) his actual view.” McBrearty called it “astonishing” to suggest that Easdale was talking about “anything but club finances.” A “curious disagreement,” Russell tweeted, correctly.
Institutional investors’ confidence won the day. Lord Armstrong ruled that while: “there is some scope for concern” about Rangers’ finances…it can’t be said there is a real possibility” of Rangers “being insolvent” when Ahmad might be due payment. But while Armstrong was examining the evidence, Rangers issued a statement noting “with dismay the launch of Ibrox 1972,” dismissing its prospects of success, condemning “absurd” and “disgraceful” attacks on CEO Wallace’s “integrity” and “professionalism” and concluding, starkly: “Season-ticket sales are the largest single source of income…and only the club and the team will suffer if some of this income is withheld. Any decision not to renew season-tickets can only damage the club (and) harm the very institution that is so dear to us all.” One wonders how Lord Armstrong would have reacted had that been submitted to him. It may not have altered his ruling, given the high burden of proof on Ahmad. But he might have asked for the “basis of institutional investors’ confidence” as McBrearty had in condemning their “meaningless assurances.”
The truth will out…and soon. Early indications are that very few fans have renewed – Rangers’ refusal to release renewal figures may be significant, and certainly can’t be down to arithmetical complexities. And some fans are neither supporting Ibrox 1972 nor renewing, preferring to stay away from Ibrox altogether until the current board goes.
Wallace’s MUCH-publicised “120-day review” into Rangers’ business, apparently, “appalled” fans even though none of them read it, because as promised, Wallace presented only a summary of his findings. But Wallace might have been better served by publishing the full findings to, for instance, explain what actually undermined his AGM claims about the club’s ability to fund the season. The summary stated: “At the time of the AGM, the board believed that there was sufficient cash to fund the club through the current season. However, the Review processes discovered issues in operating procedures, commercial contracts and strategy, all of which were more serious than anticipated.” But what were these issues? Were there, as reported, some financially unsavoury discoveries in finance director Brian Stockbridge’s proverbial desk drawers after he left in January? (And Wallace’s critics should remember that he sacked the seemingly unsackable Stockbridge).
Reports abound of “onerous”, “unbreakable” commercial contracts, from Charles Green’s era – and they are clearly financially onerous if 5% commission on Ahmad’s deals equals half-a-million quid. Who were these with, for what services and at what cost? And did Wallace assume Rangers still had the “unsecured facility of £2.5m,” referenced in the 2013 accounts and base his “near-term” financial forecasts on that facility, only to discover that it was a myth perpetrated to get the accounts approved on a “going concern” basis? It is very possible that Wallace addressed the AGM in good faith. And details of what the “review processes discovered” could directly counter shareholder and investment banker Phil Maher’s curious complaints to Police Scotland that Wallace criminally breached the Companies Act. Maher might as well sue the Met. Office for issuing “misleading” weather forecasts. Yet Rangers’ response was equally daft: “Mr Wallace has no knowledge of a complaint which, if put to the club, has no grounds.” So Wallace has knowledge of a complaint with some grounds. Or does he not know of any complaint but knows it is rubbish?”
Meanwhile, his personal integrity has taken a concerted booting. His remuneration was revealed when Rangers shareholder Billy Paterson exercised his rights of access under the Companies Act. “100% bonus” screamed the headlines, although if Wallace cures Rangers’ financial ills he’ll earn every penny of what otherwise is just another example of Ibrox executive pay profligacy. He has also been accused of lying about why payment processing company First Data withdrew credit and debit card facilities. Wallace said “one of the main factors” in First Data’s decision was “the extensive negative coverage of calls in some quarters for supporters to refrain from or delay purchasing season-tickets.” The UOF called this an “attempt to lay the blame…at the door of UOF and Dave King.” And they discovered – handily – that First Data “first alerted Mr Wallace” of their concerns “on 23 January…a full month before Dave King and the UOF spoke about the idea of a season-ticket trust.” Yet while the UOF were quick to reveal that these concerns came “just four working days” after Wallace’s “conceptual discussions” over 15% wage cuts, they have been less quick to reveal the actual correspondence, which would in turn reveal the truth of this matter.
But no Rangers saga would be complete without a mind-numbing contribution from Ally McCoist. In an embarrassing Q&A in the Daily Record newspaper, McCoist made his usual pleas of fiscal ignorance, claiming: “I would love to see where the finances have gone”, when his back pocket remains the best place to find £1.5m of them. He also had “no idea” if he was “the highest-paid individual at the club for a long time?” And, on May’s ruinously expensive player recruitment, it was suggested that: “You were a part of giving these players contracts.” “That’s totally unfair,” he snapped. “I told the club the boys I wanted to sign – and they got them.” Timeously re-leaked, documentation contradicted both these claims, re-revealing that McCoist initially hid his salary and fully recouped his autumn 2012 wage cut. And ex-CEO Craig Mather’s alleged objectives included “player wage control,” which involved “agreeing each player deal with Ally.” Of all Rangers’ lying liars, McCoist remains the worst.
The battle is now hardening with May 16th being the season-ticket renewal deadline. Ex-Ibrox star Lorenzo Amoruso gave an impassioned plea on Dave King’s behalf – a lengthy tug at the heartstrings, as close to emotional blackmail as anything of which the board have been accused. Then fellow Govan legend John Brown added his support, urging the UOF to re-instate demands for security over Murray Park because “it is a prime site.” And King may soon be the subject of a Financial Conduct Authority complaint over whether his season-ticket non-renewal campaigning and constant bad-mouthing of directors is an attempt to drive down Rangers’ share price. Whether this is anything more than a “tit-for-tat” response to complaints about Wallace remains to be seen.
Meanwhile, Wallace’s review summary stated that if “season-ticket sales…are materially less than anticipated” the board would consider “allotting 43.4m new ordinary shares…to existing shareholders,” – the afore-mentioned “equity release” by institutional investors. With season-ticket renewals reportedly below 10,000 (5,000 below, say some), the board may need that option. Certain directors have already bought shares in a bid to boost confidence. Chairman David Somers increased his shareholding and James Easdale increasing the shareholding he “controls.” But whoever wins this battle, Rangers fans won’t. They cannot gain security over Ibrox for reasons already well-publicised. Indeed, they may already have all they can hope for with the board’s most recent offer to promise never to sell and/or leaseback Ibrox…cross our hearts and hope to die. And King, who may have his own view on how that board offer affects his ambitions, won’t win any time soon, because he wants to buy Rangers on the relatively cheap from administrators rather than from current shareholders.
Indeed, the only real “winners” might even be…Celtic, three-in-a-row Scottish champions. If Rangers keep their nonsense going, it could be “three-in-a-row with (at least) seven to go.”
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