Rangers FC no longer for sale

[Zappa 0]

One thing I can't for the life of me fathom is why the club would or could be sold so cheaply for the reported �£33m if Lloyds have a say in the matter. Obviously there's the issue of Lloyds wanting their money back from us and SDM's other companies, but if they're as heavily involved in the club and SDM's other businesses as we're led to believe, you'd have to imagine that they would be advising on financial matters that are sound and sensible rather than quick-fix fire sales.

 

My point is, that from a Lloyds bank perspective, surely they wouldn't actually want to see SDM selling his businesses for significantly less than they're worth? If the development of the training facilities at Auchenhowie supposedly cost �£25 million and are owned by RFC plc, how on earth could the whole company possibly only be worth �£33 million??

 

When you start from Auchenhowie, then include Ibrox stadium, other property and land as well as valuable players owned by RFC plc, the figure of �£33m all of a sudden seems obscenely cheap. It just doesn't make sense to me that Lloyds would sanction a deal whereby SDM is essentially giving the business away for coppers. In fact, it's tantamount to paying someone to take it.

 

Am I just missing something & if so, what am I missing here? The sale of the club for as little just makes absolutely no sense to me and I've got no idea why it would make sense to any financial adviser either. Is it possible that Lloyds are looking at SDM's overall investment in the club and view it as nothing more than a bottomless pit that SDM has been pouring money into?

[craig 5,199]

Zappa, you are only looking at the assets side of a transaction - ultimately what matters is the NET worth of the company - to look at just the assets held isnt the full picture.

 

Say Auchenhowie, Ibrox etc are worth 100 million... the 33 million looks very cheap, right ????

 

Wait.... what if we have mortgages or loans or any other type of debt on those properties and other things (outstanding transfer fees etc) which amounts to 95 million....

 

All of a sudden that 33 million isnt quite such a cheap proposition.

 

Although buying and selling party can negotiate the inclusion or exclusion of liabilities from the sale price the likelihood is that the sale will include the obligations of the entity, not just the assets.

 

NET position is key, not asset position.

[rbr 1,247]

Zappa, you are only looking at the assets side of a transaction - ultimately what matters is the NET worth of the company - to look at just the assets held isnt the full picture.

 

Say Auchenhowie, Ibrox etc are worth 100 million... the 33 million looks very cheap, right ????

 

Wait.... what if we have mortgages or loans or any other type of debt on those properties and other things (outstanding transfer fees etc) which amounts to 95 million....

 

All of a sudden that 33 million isnt quite such a cheap proposition.

 

Although buying and selling party can negotiate the inclusion or exclusion of liabilities from the sale price the likelihood is that the sale will include the obligations of the entity, not just the assets.

 

NET position is key, not asset position.

 

 

Just so I am certain about your point craig , if we had any of these debts/mortages on any asset it would show up on our accounts and be included in our debt position , correct or am I missing something here

[andy steel 0]

What's with the pop up adverts?

[Frankie 8,182]

What pop up adverts?

 

We don't have any ads on here...

[craig 5,199]

Just so I am certain about your point craig , if we had any of these debts/mortages on any asset it would show up on our accounts and be included in our debt position , correct or am I missing something here

 

Correct, unless they have any off Balance-Sheet type financing (things like letters of credit are off balance sheet - however, the notes to financial statements should highlight any material amounts of these types of items) - assuming the company doesnt try to hide them and makes the auditor aware of them, which they should be

[Zappa 0]

Zappa, you are only looking at the assets side of a transaction -

.

No, I only mentioned assets and only mentioned them because I'm questioning the supposed 'NET worth' or supposed 'value' of the club/company. Most people seem to be desperate to see the business sold to whoever buys it and few people seem to be questioning this supposed value or NET worth of the company!

Edited June 2, 2010 by Zappa
editing typo

[Union City Blue 0]

I can see several attractions for any businessman buying Rangers at the moment. The club are a veritable bargain right now, with debt free ownership handed over for a reputed, paltry �£33M. What other large, successful clubs in Europe could be snapped up for such a low fee? In fact, thatâ��s why I think if fans want ownership, they should certainly go for it now.

 

Not only will Rangers likely never be cheaper to buy, once some investment is put in and the shackles of debt gone and if the club get on a good financial footing and continue to be successful domestically, then stock is set to rise, giving any owners a handsome profit.

 

A debt-free, financially stable and successful Rangers must be worth at least �£50-60M. The main caveat (or even caveat emptor) is the European marginalisation of Scottish football due to TV money and the external investment which that former finance attracts. The resulting future difficulty of qualifying for the Champions League is a blow to the finances of the club and will be reflected in its future value.

 

So what else does a prospective owner gain from ownership of Rangers? I think there is a massive two fold attraction in owning our club for a very rich and egotistical man. There is a current fashion for multimillionaires or billionaires to own a football club as a plaything, a hobby, a business far more glamorous and less dull than the dry, day to day grind of the game of making money in most companies.

 

Some on the rich list collect art, or sponsor plays, or get into movie producing; some buy sports clubs be it football, basketball or baseball etc.

 

As Frankie recently said, with a big club that wins trophies most seasons and perpetually qualifies for Europe, ââ?¬Å?there is fun to be hadââ?¬Â at Rangers - possibly a lot more fun than buying a middling EPL club and for a lot less money. It could be the multimillionaireââ?¬â?¢s choice rather than the billionaireââ?¬â?¢s: the guy who buys a Ferrari but canââ?¬â?¢t or wonââ?¬â?¢t stretch to a Bugatti.

 

Buying a Premiership club brings glamour and lets you rub shoulders with the big boys� club, but where�s the fun when every other season you�re constantly looking over your shoulder at the relegation zone and on a good season finish about 8th having endured a few drubbings from the big four?

 

At Rangers you get a 5 star, 51,000 seater stadium almost full every fortnight with passionate fans ââ?¬â?? thatââ?¬â?¢s a great start to get the pulse going. You get a 137 year old club with an amazing history demonstrated by a trophy room few clubs can compete with. You get a piece of the Scottish establishment, a club whose importance regularly gets it on the front pages of the newspapers while dominating the back pages. This is in a country where newspapers are most often read backwards! And remember, Glasgow is still in the UK, not some developing country like Turkey or Romania, or for English speaking businessmen, a poorer EC country with a difficult language rarely used elsewhere like Portugal, Greece or Czech Republic.

 

You can even base yourself in London and not have to remember to take your passport to watch a game ââ?¬â?? or even worry about TV coverage as long as you have a Sky satellite dish.

 

But all that leads to the biggest prize of all for a rich man with a huge ego to stroke ââ?¬â?? the fame and celebrity. The likes of Ellis are known in certain circles but how many in Scotland had heard of him? As owner of Rangers he would be catapulted into the public eye ââ?¬â?? at least for 5M people. His name would be known to everyone ââ?¬â?? in fact heââ?¬â?¢s pretty well known right now for just window shopping. His view would be sought by journalists and commentators every week and his prestige while doing business would be fantastically enhanced.

 

He would no longer be Ellis the property developer; he would be the celebrity owner of the biggest football club in Scotland. People would be queuing to shake his hand and associate themselves with him. Business meetings can be done with the prelude of corporate hospitality at a game, after sitting next to the chairman in the director�s box, with the meeting itself conducted in the salubrious Blue Room.

 

It would not only be good for his business, but imagine the stroking of his ego. Imagine any self important, narcissism being constantly massaged. Instead of being a rich businessman that few know, he suddenly becomes a ââ?¬Å?somebodyââ?¬Â who even gets ââ?¬Å?pappedââ?¬Â on occasion while going for meals at classy places where tables are always available for him, and where everyone looks round, points and whispers when he walks in.

 

Unfortunately itââ?¬â?¢s only an attraction for an egotistical extrovert ââ?¬â?? which is why you wonââ?¬â?¢t see Joe Lewis taking it up. I think thatââ?¬â?¢s what attracted SDM and I think it will be the most likely attraction for a new owner.

 

Now if Ellis fits the bill for all of the above then the piece de resistance for this deal in particular - for a property developer of all people, is a vast area of incredibly cheap, prime real estate on the banks of the Clyde, just down from the city centre, with an iconic stadium at its heart which is ripe for huge development and has implicit planning permission for some impressive urban regeneration.

 

When you put all the pieces together, I think it�s very hard to see why a football loving guy like Ellis wouldn�t be very interested in the mighty Rangers FC.

 

Hello! Now that the thread has regained its sanity I thought I'd chip in.

 

That's a very interesting post there Calscot, some of which makes sense - some of which doesn't (at least in my eyes anyway).

 

Firstly, I agree that the price for the club is probably very low. Maybe not as low as it was a few months ago, but low all the same. However the club itself, has no particularly exciting intrinsic value from a financial point of view. Murray Park, maybe. Ibrox Stadium ....well I suppose if its valued as it is on Rangers/MIH's books then yes, but its book value is not its actual value. There is nothing that can realistically be done with it unless you wish to be chased out of the country. The car park....?

 

When you add in Rangers' historic fixation with losing money (and as you rightly point out, the future lottery which is the CL qualifications route), really you are buying something which - as it stands - may realistically lose you money every year if you're unlucky or perhaps break-even.

 

Andrew Ellis, from what I can gather is no egomaniac. His UK profile before March was non-existant, never mind in Scotland. By all accounts, nor is he a multi-millionnaire. Celebrity in Scotland might be nice for some but really, it's small fry compared to the bright lights of London which is why most of the quality traffic flies south. What he is, is a guy who sees that he can get a turn by borrowing money to buy Rangers, with an as yet unknown property angle. I think we'd all be stunned if his medium-term goal wasn't to repay his finance either by selling his stake at a profit in the future, taking profits as he goes, or a combination of both. That's what he's here for, not for the ride. I state that as fact of course, but seeing as everyone is so twitchy these days and we all have to prove everything we're saying perhaps I'll downgrade it to a strong opinion.

 

Now, talking of property I just can't see this 'uplifting metropolis' (yes i know you never called it that!) on the banks of the Clyde you imagine. I can't see the available land being connected to Rangers. And if it was, we are talking about major, major sums of money for riverside generation in a period where you'd struggle to see a crane which isn't working on a motorway within many miles of Glasgow. It just doesn't make sense. Having said that, I obviously don't know what the property angle is but I would suspect its something much more modest (although not necessarily trivial).

 

To be honest, I don't fear the asset-stripping potential. I just think the world's too wise to that kind of thing now and the scrutiny any new owner would be under at Rangers would be unbearable for most, if that's his plan. What I do fear is the possibility that his primary concern is getting Rangers as a lever to get something else. Unless someone has worked out how to get us into the CL most years, been briefed on and decided to do all the things we should have done in and around the stadium profitibly, and seeing as we've outsourced or sold almost eveything we ever used to own, it would seem that most potential gains are on the periphery of the actual club itself. Whether money-making facilities are put in place for happy shoppers or Rangers supporters remains to be seen; as does the identity of the ultimate beneficiaries of such said schemes (they may or may not be Rangers).

 

If Ellis buys the club, I'd have no doubt that he will be successful, that he'll make his money and he'll sell when he chooses. Anyone who takes this long and spends this much money in these times, is going to be 'sure' I'd say. What happens to Rangers as a club and as a football team is our main concern though and considering his sidekick Mr Gilmour only alerted him to the Rangers situation shortly before he set up his holdings company in Guernsey at the tail end of January, I think it's fair enough to have eyebrows raised as we wait and wonder what is going on. If he's managed to get plans nodded through to regenerate vast areas of land from Ibrox to the Clyde without any formal notification or even leaks coming from the Club or GCC or anywhere else in a period of 4 months though (and these things are also to the overall and long-term benefit of both him and Rangers), the guy clearly has the midas touch so fair play to him and God speed!

 

If he buys the club, I know what he'll say his priorities are, and I look forward to listening and the opportunity for us to ask questions. But I do honestly wonder how he's going to generate enough upside to feed more than one hungry mouth. I just keep wondering where the balance might be between Rangers FC and making money for Andrew Ellis and his mystery backers - and I must confess I feel a little uneasy.

 

Calscot, you'll appreciate I can't forensically defend my unease beyond my feeling of unease, just as you can't defend your optimism any more than you have. So I'm just getting it out there for the sake of discussion.

 

* all this assuming of course, that he takes over *

[craig 5,199]

.

No, I only mentioned assets and only mentioned them because I'm questioning the supposed 'NET worth' or supposed 'value' of the club/company. Most people seem to be desperate to see the business sold to whoever buys it and few people seem to be questioning this supposed value or NET worth of the company!

 

I'm confused.

 

You cant get to net worth unless you look at the debts as well as the assets.

[wabashcannonball 0]

Book value versus asset value, tangible real assets to intangible assets. When some one can work that out they will win a watch, until that time Murray decides any price.

The much quoted figure of �£33 mill. is not very mysteriously on the benchmark of buying market value at the then share price of market capital circa �£48 mill for the alleged �£33 million...buy cheap sell high, if anyone thinks that Minty is letting that one away, what can I say.

 

 

What puzzles me is why FF have closed their Ellis threads, the ones about solid info from top people in the know, about done deals etc etc just to be announced etc etc, on second thoughts I aint confused, there is only so much bollox even FFpunters will swallow.

Edited June 3, 2010 by wabashcannonball