Our club's future - the unpalatable truth

[Frankie 8,136]

First of all, a Happy New Year to all Gersnet's subscribers; after a few weeks R&R; it's good to be back online and reading the varied opinions across the community! And it's with that initial greeting that we can immediately ask ourselves if indeed 2011 will be a prosperous time for our club. As ever the answer isn't easily found.

 

Of course we started the year rather badly. After an icy December of cancelled game after cancelled game, it was no surprise to see our lack of sharpness affect our performance against Celtic. Added to the inconsistency we've seen throughout this season (despite being top) I wasn't expecting a great display on the 2nd, though I was disappointed with the familiar motivational problems rearing their head again.

 

However, as ever, the reaction afterwards was overly negative and, as Monday's night's win over Kilmarnock showed, rumours of our demise have been greatly exaggerated. We may be four points behind our rivals but we're more than capable of winning our games in hand and retaining top spot - with or without Kenny Miller.

 

On the subject of Scotland's most prolific striker, fans are again worried about his probable sale and, given the mixed messages coming from the club regarding Lloyds Banking Group's involvement, I certainly share in their concern. After all �£20million of European income should surely enable our manager to strengthen his squad in January in order to help facilitate the same CL revenue next season? Do we really need to sell in order to buy?

 

A quick (and empirical) look at our finances tells us we're have around �£27million of debt after reducing this from the �£32million in 2008/2009's figures. Moreover, last year we used around �£9million of our European income to pay off any remaining transfer fees owed to other clubs. This means, instead of reducing our debt by only �£4-5million as in the 2009/2010 figures; we can hope to at least double that when we report in 2011. Therefore, with a decent Europa Cup run, we could easily find our debt almost halved by the start of next season.

 

Now, that's great news in anyone's book but it doesn't automatically mean we'll have huge transfer 'war-chests' this month or even in the summer and beyond. The simple truth is that unless the club is bought over we'll remain reliant on MIH/LBG for ongoing finance. Thus, it is exactly because the CL income from the last two seasons has been so essential that the bank will be so reluctant to loosen the purse strings given our CL involvement is less than guaranteed (as Champions or not) next season. Their view will be that for their �£22million long term loan to be repaid in full, they will have to ensure the club remains on an even keel - without or without the European gravy.

 

As such, while they may not be taking the �£20million from this season in one lump sum; they may 'suggest' to MIH that this money is used to reduce the long term debt in part once more while the rest is kept back for a 'rainy day' in seasons we don't qualify for the CL Group Stages. After all, without these monies we struggle to break even and unlike other clubs we don't appear to have the financial philanthropy of a mega-rich owner to guarantee our fiscal viability.

 

I appreciate none of this is the kind of news that makes us smile. In this long, cold winter (someone please close that transfer window quick) positivity is hard to find so we may just have to content ourselves with realism. Unfortunately, that realism tells us that the days of huge transfer budgets every summer are gone. Indeed, the only huge fees we'll see nowadays is when we hope to move on our better players in order to supplement our operating expenses enough to keep the club competitive.

 

Furthermore, even if we do manage to attract a new owner; I wouldn't expect a whole load of difference from this model. Craig Whyte (or rather certain journalists) have suggested an annual budget of �£5million each season if he takes over which, although conservative at first glance, is actually quite high (and possibly impossible) without major European dividends. We did spend around �£5million on transfers this season so is it any wonder we'll struggle to spend more as it stands?

 

Again, I understand this is quite depressing when you juxtapose your Giovanni van Bronkhorsts with your Richard Fosters. Ten years is a long time in football and we are not just in a new climate but a new era. Monday's Ibrox Scottish Cup crowd shows just how difficult it will be to keep fans interested in a declining product with increasing prices. In a recession, the choice of �£30+ on a night out at the football or paying for your fuel to get to work for the week is a tough one. Unfortunately, these difficult choices extend to the club (and their bank) as well.

 

All in all, I think as a support we need to examine the future carefully as we head into a new year. Sure, we want our club to be ambitious and our investment should entitle us to improved clarity from Rangers when it comes to finance going forward. But if we want to be taken seriously as partners, then we have to be realistic in what we expect.

 

The unpalatable truth is that the 1990s have long gone and we're closer to bust than boom. To that end, prudence continues to be our buzzword so such vigilance requires patience and wisdom if we want our club to remain successful on all fronts. Like every bear, I look forward to meeting our challenges head on and urge everyone involved with the club to work with us in that regard.

 

Here's to #54!

Edited January 12, 2011 by Frankie

[Stimpy 0]

Sobering, truthful and a damming insight into 'Mint Murray's tenure.

[pete 2,494]

It is a juggling act to be honest and I wonder regularly if it is such a bad thing that no one comes in in the summer. We gave out 1.2 million on Beattie. Has that money made the difference on where we came in Europe? In my view it was just a hopeful panic buy to make up the numbers. There were a lot of players we could have got for that price who would have at least been more mobile than Beattie. We probably had better options in our own Ranks than spending that kind of money on an overweight has been. I would hate to think that we spend 10mill or whatever, putting us more in debt and then do a Kanaus and crash out of Europe, leaving us further in debt. It sometimes just feels like maybe a good idea to bite the bullet for a couple of years, only replacing that what leaves and then kick LLoyds out the door for good, starting a new life in the black zone.

[Zappa 0]

Without the Champions League group stage pot of gold it could potentially require a decade of spending very little before we're in the black zone pete. On the other hand, another 2 or 3 seasons in the CL group stages without spending too much and we could maybe be debt free.

[Frankie 8,136]

Sobering, truthful and a damming insight into 'Mint Murray's tenure.

 

I prefer to look forward than back and while SDM is certainly deserving of our criticism, we need to use our valid complaints wisely if we're to be a real part of the club.

 

I sympathise with the club's position and I don't think we have much to gain from playing the blame game. However, the situation is poor, communication with the club's biggest remaining investors dreadful and Murray remains the sole person responsible for this.

 

We need to be asking questions of him to find the solutions we seek.

[Frankie 8,136]

It is a juggling act to be honest and I wonder regularly if it is such a bad thing that no one comes in in the summer. We gave out 1.2 million on Beattie. Has that money made the difference on where we came in Europe? In my view it was just a hopeful panic buy to make up the numbers. There were a lot of players we could have got for that price who would have at least been more mobile than Beattie. We probably had better options in our own Ranks than spending that kind of money on an overweight has been. I would hate to think that we spend 10mill or whatever, putting us more in debt and then do a Kanaus and crash out of Europe, leaving us further in debt. It sometimes just feels like maybe a good idea to bite the bullet for a couple of years, only replacing that what leaves and then kick LLoyds out the door for good, starting a new life in the black zone.

 

It's easy to look at individual transfers or investments and pick out the bad ones.

 

Ultimately, buying players is a risky business and there are no guarantees which makes the Beattie purchase (and the car racing thing of last season) look even worse when prudence is supposed to be the guide.

 

There is a fine line between careful investment and wastefulness. To be honest, Martin Bain is paid a lot of money to ensure we stay on the right side of that line. Is he representing value for money?

 

As ever there are more questions than answers but we seem to have few people asking in the right places.

[pete 2,494]

Agreed.

 

Have we actually ever had a last minute signing that has been any good. The ones i can remember were all failures.

[rbr 1,247]

It would be interesting to find out exactly how much we are short if no C/L money , next season see'sthe begining of UEFA changing the Europa league into a smaller version of the C/L with TV money being pooled etc , in fact the round with Sporting Lisbon will be the first time they have done this .

 

The prize money is also going up and given we are guarenteed 3 home matches and will also be seeded , hope must be high that we can ( this is worst case scenario for this season ) at least qualify as one of the best 2 .

 

Now early figures would work out at approx �£7 million possibly �£8 million which is almost half the C/l money but is still serious dough.... question is would that be enough to stop a loss occuring

[calscot 0]

When you see how much we've cut back in wages and other costs as well as vastly reducing liabilities and interest fees, it feels like we shouldn't need much from Europe these days to break even while servicing our long term debt.

 

I think the main problem is that the bank now want the debt paid back much more quickly than the original agreement which means we effectively need to make a decent, near guaranteed profit to meet those payments. As the lowest risk strategy will be to budget for the worst case scenario, we've got a few years to go where our finances will be squeezed so tight, we'll still be gasping for air.

 

 

 

After we're debt free, I can see a scenario where we only spend what we have in the bank and we'll have to save before we spend. That seems a good long term, low risk solvency strategy but can make make success hard to come by as you never gain much without some opportunism - which is why you'll never get rich by putting your money in a savings account.

 

Celtic suffered badly in a similar way during 9iar and ironically, still almost went into administration due to poor success at home and in Europe, dwindling attendances and boycotts leading to low income - so history does not really support such a strategy.

[Bluedell 5,329]

It would be interesting to find out exactly how much we are short if no C/L money , next season see'sthe begining of UEFA changing the Europa league into a smaller version of the C/L with TV money being pooled etc , in fact the round with Sporting Lisbon will be the first time they have done this .

 

The prize money is also going up and given we are guarenteed 3 home matches and will also be seeded , hope must be high that we can ( this is worst case scenario for this season ) at least qualify as one of the best 2 .

 

Now early figures would work out at approx �£7 million possibly �£8 million which is almost half the C/l money but is still serious dough.... question is would that be enough to stop a loss occuring

 

2009 - loss of �£12.6m

2010 - profit of �£4.2m

 

CL is said to be worth around �£17m, so the numbers stack up (kind of). Replace �£17m with �£8m and we are still looking at a �£4m loss....although that's very simplistic, but it shows that we've still a bit to go.