16 July 2013

Football vs Finance: Striking a Balance

by Andy McKellar | Deputy Editor

The destructive and disastrous tenures of David Murray and Craig Whyte propelled financial discussion to the forefront of sporting debate in Scotland as our proud institution was brought to its knees and subsequently banished to the Third Division. A new but largely undesirable emphasis was placed on balance sheets and boardrooms, replacing the natural focus with events on the football pitch, and the appreciation for financial prudence at Rangers has probably never been more intense.
There was hyperbole, ridiculous exaggeration and some downright lies peddled in relation to the financial situation at our Club as we were accused of being everything from tax-dodgers to the biggest cheats in British sporting history, but I don’t wish to dwell on that too much for fear of this article becoming no more than a childish rant. There are however lessons to be learned from our recent history and the need for change is something that we must openly embrace, even if it is initially rather uncomfortable.

If I am honest I believe that we have already made numerous mistakes since setting out on our supposedly exciting new adventure through the lower echelons of Scottish football, although admittedly hindsight is a wonderful thing. Some of the contracts dished out last summer were certainly not advisable, even when allowing for the chaotic circumstances at the time, but sadly we cannot turn back the clock. What we must do however is change and adapt and this is something Craig Mather spoke about recently when discussing the need for a balance between the football and business sides of things.
The Interim Results for the seven months to 31 December 2012 certainly suggest that we were some way off achieving that perfect equilibrium as a huge loss was posted during the course of what was an ultimately disappointing campaign overall. It was ‘job done’ and no more, but in truth we could have managed that with a budget much less than half of what we were spending. In essence we paid a hell of a lot of money to achieve not very much at all. So let’s hope we witness some changes as we progress to Stage Two of our journey back to the top.

The early signs on the football front are encouraging with a host of new arrivals checking in for the campaign ahead and with the added luxury of actually having a pre-season this summer. Fitness levels are being reported in rather encouraging terms and that is certainly good to see after some criticism of that area last season. In terms of the squad we are certainly looking stronger and I think most fans can afford to be somewhat optimistic about getting more for their money in the Second Division. But remember, there’s a balance to be found and questions still remain in that department.

While we still await the full-year audited accounts it is difficult to be entirely accurate however there is enough information in the Interim Results to allow for some concern. A £7M loss in just seven months was always going to make headlines and that of course is before you consider various one-off expenses which take the total loss for that period closer to £10M. Ouch.

There were of course some problems such as paying the previous squad’s wages before they abandoned ship and chased their pot of gold elsewhere. Then there were problems with merchandising and such likes caused by issues at JJB. Elsewhere costs would still have been pretty high due to the set-up that we inherited from our time in the SPL and I’d like to think steps have been taken to improve efficiency and minimise needless expenditure in our day-to-day running. It’s certainly needed.

The sad truth of the matter is however that we are probably still spending too much. Our wage bill is unlikely to have reduced significantly from last year’s due to our new arrivals and that will account for a very large proportion of our annual expenditure. As a result questions have been raised about the IPO money and just where it has gone. Reports suggest that only £7-8M remained in the bank account at the end of last season and when you consider that we held £21M just six months previously, you can understand why some fans are worried.

I had hoped that our IPO money would have been stockpiled to the best of our ability to allow us to invest in our squad upon our return to the top-tier. While our free-agents and young players would be good enough to see us through the SFL, we were always going to need to spend money when we returned to challenge for the title. Now the question remains, where is that going to come from now?

A new share-issue or alternative means of finance may always have been required at some point. It may however be needed sooner than expected and perhaps also on a larger scale. It is therefore disappointing that we seem to be squandering the cash we built up last season and all to achieve very little. SFL2 for example was won last season with a squad which cost no more than £350k per annum to run, and while that obviously can’t be expected at Rangers, it does appear that we are using a sledgehammer to crack a nut.

The counter-argument of course will be that we needed to invest in the squad again to keep the fans interested and to improve the quality on the park. Without that it could be debated that season-ticket sales would have dropped and this again would harm our progression. It may certainly be put forward by those in charge if poor financial results follow again and, while there is perhaps some truth in it, I’m not so sure we can use that to justify needless spending, should it occur.

Maybe I’m wrong, and I’d be delighted if that was the case. Perhaps cost-cutting measures and improved revenue streams are already making an impact on our current financial position and perhaps the Interim Results provide a more lopsided picture than some may imagine. I certainly hope that this is the case however doubts remain and, after everything we’ve been through, I’d rather ask questions and be proved wrong than choose to blindly bury my head in the sand and hope for the best.
As supporters we probably deserve to have a much greater say in just how Rangers Football Club is being run. We pay our money in each year via various sources and, in the past, have not been shown the respect we deserve. It is a shame that we cannot and did not bring ourselves together to purchase a larger proportion of the club we all love but that’s another argument for another day. Right now we have to simply remain vigilant, to quote Alastair Johnston, and ask questions in the hope that somebody supplies us with the answers.

We’ve been promised improved transparency and openness. Let’s hope we get it, alongwith the crucial balance that Mather has been seeking.