11 October 2012

A Fair Share

by Peter Ewart | CRO Contributor
So Charles Green has done the rounds of North America and the UK. He's hired the expensive advisers with the silly company names. The press has been onto it and the ‘non-Rangers fans’ blogs have been off the scale writing about it to help feed their obsession (Google any perm of Rangers shares Charles Green IPO AIM and you'll see what I'm talking about). It can only mean that the share issue is nearly upon us. 

It has been two short months since most of the 36,000 people renewed their season tickets and now the water is being tested as to how many will be interested in a share issue from the club. I have read with interest in the accounts of what Charles Green has had to say over in the States, Canada and the UK. In all honesty it's been pretty short on detail around the share issue itself, why it is happening now and in particular what the money will be used for. 

We can expect an information pack/prospectus for the share issue to be available to us shortly. There is not much point guessing what will be in it, but there is also no harm in having your questions lined up for when it is released. 

The minimum investment is to be £500. And when I say investment I don’t see it as an investment in the true sense of the word. I doubt many of us will see it as a nest egg. For fans it will be primarily an investment of the heart not the head.


But in saying that we should be looking to assess the current state of the club and what our investment will be used for. Charles Green will be looking for substantial sums of money from us after all.

Here are the questions that I'll be looking for the answers to:
Situation
What financial state is the club currently in? What has been done or will be done with the season-ticket money which should be used to cover the running costs?

How much has CG’s consortium put into the club? How much of the £5.5m paid for the club has been turned into a shareholder debt repayable by the club? Has any more capital been injected into the club in the form of loans? 

What is the current cash balance held by the club?
Motivation
Look out for the explanation of what the club intends to do with the money raised from the issue. I don’t find the ‘giving the fans an opportunity to invest in the club so history doesn’t repeat itself’ etc at all convincing. We are owned by money men and they want to make money. If there was a quick buck to be made, they would make it. (Or are we the quick buck?)

We can't spend it on buying/registering senior players prior to 1 January 2014 so why a share issue to fans now? 

Put it another way: If you handed Charles Green £500+ to spend for the club what would you want him to do with it? Spend it on players? Youth development? Return for the investors that bought the club? Property development/regeneration project i.e. the remnants of the G51 project? A bit of all of the above?

What are the consequences if the IPO does not attract sufficient interest? Is it being underwritten?

I am splitting hairs here, but when Malcolm Murray was wheeled out to make a statement in very prompt response to the article by Bill Miller advisor John Prichett this week Murray referred to the share issue raising “many millions in additional revenue”. I do hope he meant
capital.
Valuation For valuation read ‘price’. The current consortium bought the club for around £5.5m. By the time Craig Mather was investing another £1m in mid-July it was reported he bought 10% of the club, so the valuation had roughly doubled - it was twice as expensive to invest. Somewhere around two to three times what the original consortium paid seems about right for the upcoming issue. Above that and we would be paying a high price for opportunities and possibilities - worldwide TV rights, stadium naming, growth in overseas markets and other partnering opportunities - that seem a long way from being realised and will depend on the on-field progress too.

I make no apology for asking these questions and look forward to having them answered shortly. I also understand that the emotional pull of buying a piece of the club that we nearly lost is almost irresistible, whatever the price, but the fans have been steadfast and magnificent and we deserve a fair share. Peter is a regular contributor at the CRO. He can be reached on twitter at @Seasider06 or via email: pewart@thecoplandroad.org