Rangers FC no longer for sale

[Frankie 8,182]

Great post to compliment Cal's UCB...

 

I don't think anyone was being unrealistic in their appraisal of the situation - just trying to be a bit more optimistic than some have been of late.

 

The only certainty amongst this sea of speculation is none of us know what Ellis' plans are so, until we do, none of us should be backing a horse with a jockey unknown to us all. By the same token, while gentle cynicism is probably agreeable, neither should we be writing him off.

 

The clock is ticking!

 

PS: I'm in Newcastle on a mate's stag weekend from early Saturday so I can just tell I'm going to miss more big news!

[rbr 1,247]

Great post to compliment Cal's UCB...

 

I don't think anyone was being unrealistic in their appraisal of the situation - just trying to be a bit more optimistic than some have been of late.

 

The only certainty amongst this sea of speculation is none of us know what Ellis' plans are so, until we do, none of us should be backing a horse with a jockey unknown to us all. By the same token, while gentle cynicism is probably agreeable, neither should we be writing him off.

 

The clock is ticking!

 

PS: I'm in Newcastle on a mate's stag weekend from early Saturday so I can just tell I'm going to miss more big news! :whistle:

 

great , just looked what happened the last ime you went away

[Frankie 8,182]

A man is entitled to some much needed R&R over the close season...

 

I'll be back on Tuesday to knock heids together if required!

[calscot 0]

Firstly, I want to say I don't think my post was optimistic in any way, it was just pointing out some of the possible benefits of buying Rangers that seemed to have been forgotten among the doom and gloom of the current, unfortunate position our club finds itself in. Some couldn't see why Ellis would even look at Rangers, whereas I think I could see some of the attraction.

 

The old girl may have lost some vivacity, is no longer a stunner, is a bit on the thin side and comes with little dowry but she's still a quite a good looker and has feminine wiles and homely skills nonetheless. And with a bit of love and care, a good, healthy diet, some regular exercise and bit of money on new clothes and a make over, and she'll scrub up to do you proud.

 

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....?

 

The club is a pretty solid going concern with incredibly loyal "customers" which gives it plenty of value in the business world although I agree that when buying a football club, there is not really any money to be made from football operations and indeed you are expected to pump money in. However, if we look at it as a rich man's hobby then where is the problem in that? Even your average bloke buys fancy cars, motorbikes, golf clubs and memberships, boats etc and they all cost money with no return apart from whiling away some time somewhat enjoyably. That does not make them cheap or free.

 

And when you do look at the book price, the stadium, the training facility, the players and other tangible assets may be worthless as a non-football venture but then pretty much so are most factories with their machinery, a warehouse, or supermarket. They are worth far more doing what they already do and even more as a going business concern with loyal customers and a healthy sales ledger. If you want to run a top quality, highly competitive football business in Glasgow's west end, then there is no better facility than Ibrox stadium - and no way you could build such a stadium for �£33M never mind get 47,000 people to patronise it.

 

If you're into running a successful football club then Rangers are a pretty damn decent investment which puts paid to the argument about convertibility of assets.

 

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.

 

I don't think many people (maybe apart from the Glazers) who realistically think they will make money from football operations, no-one is that naive. The number of people that have ploughed money into clubs is well documented; however, they can usually afford it and tend to turn that cash into equity a la Abramovic.

 

There is a big "but" - money can be made outside football operations as SDM has demonstrated, by subcontracting other services to your own companies. That's not withstanding the influence of club ownership can have on your personal business standing and the profits to be made on the increase in trade on the back of that. If some freak on Big Brother can make a career or business out of being seen on a freakshow, then there has to be some tangible effect on famous club owner. In this case the money spent can either be seen as a loss leader or publicity fees. The amount of free publicity that comes on the back of being owner of Rangers must be worth quite a bit.

 

Anyway, to try and make a profit from a football club itself is a crazy idea and breaking even is the benchmark. If you can break even and keep a club successful, you raise it's stock and your profit comes when you sell. With Rangers you are in the fortunate position of buying a club at the bottom of the market while it is still very successful domestically, the only way is up and to me it seems a shrewd buy.

 

You can even pay yourself a substantial wage while sitting on the board. To make this profit the only thing you have to achieve is to run the club well and keep it successful. Keep it lean but keep it competitive. Then sell it when the market is more buoyant - perhaps when UEFA get a grip and change things to help the smaller countries like us, maybe even by just introducing a Euroleague.

 

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.

 

He's flirted with clubs before so he does have a history - albeit there does seem to be property angles that he tries to exploit. Glasgow may be small fry compared to London but there is the big fish in small pond compared to little fish in an ocean scenario. He's no shark in London and Scotland may seem out of it but it's got half the population of the capital city and a lot less fish swimming around, never mind big ones.

 

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.

 

The property angle is an obvious link but he's also a football guy so the two are a marriage in heaven for him.

 

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).

 

I think you're underplaying the profit to be made in property. We may be in a recession but Ellis made his money that way and he's not going to retire any time soon. Property is his business and he will continue in that vein. All he needs is the next banker of an opportunity and it's difficult to see where he can go wrong here.

 

We're just coming out of the recession and the economy is gathering some momentum. We have a new government which wants to get the banks lending and more housing built to meet demand. It might not quite be time to start building but it seems to me to be the exact right time to be planting the seeds for starting in a couple of years.

 

When you think about the profitability of property you just have to think about even with the crash, property prices have doubled in the last 8 years ââ?¬â?? however, wages and materials have had a slower pace of rise and so profit margins are that much higher. The only thing that has bulldozed the building industry is cash-flow due to great borrowing and investment followed by a complete lack of demand.

 

That is not a long term problem and the slack will soon start to be taken up. When that happens, building will continue apace.

 

There may not be a burgeoning metropolis waiting to arise around Ibrox but when you think about the desirability of quality riverside apartments near any city centre around the UK and it�s easy to see the potential. The land will be cheap, the council easy to deal with and the location and situation are pretty good. When you build enough homes you need amenities which also need built and so there is a knock on effect. Even a modest project of a few hundred homes has the ability to bring in 8 figure profits.

 

Doing that while keeping the club sweet and raising its value while paying yourself a few hundred thousand a year as chairman seems like a good living to me.

 

I pretty much agree with the rest of your post so I�ll stop here as it�s already a bit long.

[Frankie 8,182]

Cal:

 

I don't disagree with much you've written there but what makes the capability of Ellis being able to develop the area more likely than MIH via PPG?

 

Current cash-flow is an obvious one of course but surely if money was to be made in this respect, MIH would have followed this through before now?

[maineflyer 0]

Cal:

 

I don't disagree with much you've written there but what makes the capability of Ellis being able to develop the area more likely than MIH via PPG?

 

Current cash-flow is an obvious one of course but surely if money was to be made in this respect, MIH would have followed this through before now?

 

I would have thought that if a property deal is still on the cards for the surrounding area, it will involve both Murray and Ellis, not one or the other.

[Frankie 8,182]

I would have thought that if a property deal is still on the cards for the surrounding area, it will involve both Murray and Ellis, not one or the other.

 

Possibly true I guess - I definitely don't think we've seen the back of our esteemed custodian - but what does Ellis bring to the table that Murray didn't already have?

 

It doesn't seem to be personal finance so are we to assume Ellis has found the kind of investment Murray (and probably AJ) couldn't over the last 4 years or so?

 

If such a deal has been found it may explain the delay in finalising it. Certainly I can't see many investors wanting to end up like ENIC or Dave King.

[maineflyer 0]

Possibly true I guess - I definitely don't think we've seen the back of our esteemed custodian - but what does Ellis bring to the table that Murray didn't already have?

 

It doesn't seem to be personal finance so are we to assume Ellis has found the kind of investment Murray (and probably AJ) couldn't over the last 4 years or so?

 

If such a deal has been found it may explain the delay in finalising it. Certainly I can't see many investors wanting to end up like ENIC or Dave King.

 

Murray would obviously be having some difficulty financing deals at the moment, which would limit his access. He also has something of a tarnished reputation in the local business community. However, he still has considerable wealth outwith MIH and I doubt if he'd be above using his shareholding in Rangers to leverage himself into a property deal that could well have an extensive list of participants. That would suit Murray, it would suit Ellis, it would probably suit Ellis's partners, and it might or might not suit the banks.

 

This could be complete simplistic bunkum of course. But it also might not be too far from the truth.

[calscot 0]

Cal:

 

I don't disagree with much you've written there but what makes the capability of Ellis being able to develop the area more likely than MIH via PPG?

 

Current cash-flow is an obvious one of course but surely if money was to be made in this respect, MIH would have followed this through before now?

 

I'm only looking at it from a layman's point of view and more of a musing than any real insight and don't profess to have any more knowledge than your average guy on the street.

 

However, I can think of a few factors that could make a difference. From what I've read on here it seems SDM wanted a catalyst to the project, a jewel in the crown which would bring a large amount of outside financing to give the project critical mass. He put his money on the super casino and his number didn't come up.

 

He also had fingers in so many pies that perhaps he couldn't raise the money needed for the investment and we know where his companies are at now. The recession and his current predicament has shown how much he was already over-stretching his companies and the financing of projects and so it seems to me that it's no wonder he didn't pursue the Ibrox area when he didn't have the capacity to implement it. It seemed to be something he was keeping on the back burner until something big came along to kick start it off and bring in the finance.

 

He certainly doesn't seem to be in a position to pursue that avenue now.

 

Part of it could also be that he seems to be (or have been) a far bigger player than Ellis, and so he wanted a slice of a bigger pie. From what I gather SDM was worth about 650M whereas Ellis is worth something like �£30M. It seems likely that SDM would be looking for returns of a magnitude higher than Ellis who would obviously be happy to add say �£5M to his worth which would be a significant increase, but in the past would have been small change to SDM.

 

Without a centrepiece the potential is probably a lot more modest - but right up the Ellis street.

 

Another factor could be timing. Sometimes, if you have a locale you have to wait until the city spreads until it reaches the edge before it becomes prime development land. You need to wait till all other more central options have been exploited before people start looking slightly further out. With the super casino this wait wasn't so necessary so maybe with the recession now pulling out the timing is more imminent.

 

SDM wants out of football while Ellis has toyed with being involved in the game in the past and been frustrated; perhaps he sees this as a great chance to kill two birds with the one stone.

 

Maybe it's like finding a holiday home which you can let out in summer to pay the mortgage and which also has a few surrounding acres where you can build a set of stables to make a profit from. You get a holiday home you can enjoy for free and also extra money from the stables on top. You still can't quit your job but it's a pretty attractive proposition...

[maineflyer 0]

Good thinking Calscot. I like the way you're prepared to develop your thinking by doing the work to set it out on 'paper'. A lot of what you're writing does need examination. Let's face it, there eff all else to do until there's some action.