Radical Fiscal Changes required at Ibrox: Who's got the Stomach for it?

[Zappa 0]

There was a fairly negative response from someone on the main site, so I thought I'd post it here along with my reply:

 

 

I share concerns about Rangers but I would suggest some of this is touch misleading but I am sure written with the very best of intentions.

 

The author is suggesting that job cuts are required now as:

 

“They've pretty much failed on all counts on that front because not only do we know that job cuts and cost cutting is required in order for our club to survive 140 days never mind another 140 years, but we know that Green & co started doing it after saying they wouldn't, then lied about it, making up fairy tales about Neil Murray's suspension, Pip Yeates leaving to focus on his own business and who knows what else?"

 

We know that job cuts are required to survive another 140 days? Sorry but this could come straight from the pen of madPhil. That is absolutely untrue and baseless. £22 mil was raised by Rangers shares which were fully paid and audited. Cenkos raised it. Deloittes audited it. It was announced to the LSE. The money is held in Metrobank London and yes some will have been used but that is to be expected. There is certainly no impending financial crisis at Rangers and it is poor to suggest it.

 

As for Green was job cutting by stealth, it would seem the oddest of approaches to save money by axing a chief scout although the treatment of Neil Murray was disgraceful. Cutting cost would surely mean jobs going in admin, finance, media, sales, ticketing, advertising, corporate etc etc etc. and if Rangers were in desperate need to save money, this would be the areas that would take the biggest hits.

 

The original idea was to keep these jobs and expertise intact for Rangers getting back to the top as the article says. There could be an argument that jobs should have been shed at the very start but to be fair, Green did address this way back and said they would keep ordinary people in their jobs and build that into the financial recovery plan. I am not convinced that the axing of Ally's team (it was not a rumour) was not performance related. Most Rangers fans are deeply disappointed with the results, fitness, training, tactics and signing targets. There have been a lot of direct complaints to Ibrox and on line. Empty seats are lost revenue and how many times have you read about fans not going back to watch the football served up. It was blunt and clumsy no doubt from Green but to read it as cost cutting is wrong in my opinion. He was concerned about the performance and the impact on the finances.

 

I think IA is dead in the water but Brian Stockbridge is not treated fairly in the article. He has been changing many of the old inefficient ways of doing things behind the scenes. It is cost cutting whilst protecting jobs, some might say that should be applauded.

 

An example would be Security was brought in house (and is owned 100% by RFC despite other rumours). It is being run by the long standing head of security, David Martin who has done an amazing job saving the club significant costs to the tune of significant six figure sums. In the old world of Rangers for example, we paid MIH an astonishing £10k a week for tax and legal services despite having a bank of accountants and lawyers paid by the club. Stockbridge target is to have the club trading in profit by the year ending June 2014 and has a financial plan in place.

 

Boardroom and coaching cost are always contentious. That would include looking at the £50 - £60k salaries of the part time non executive directors and the coaches but again it seems targeted on Ahmad and Stockbridge. Hopefully when Ahmad goes, a commercial director can be appointed at a fraction of Ahmad’s current salary.

 

In summary, I think making assumption that there is pending financial doom, there is no financial planning in place and the only way forward is cutting jobs is wrong.

 

My replies to that:

 

Hi Gordon and thanks for pointing out the mistake. It wasn't intended as a literal comment, but nonetheless should actually have read "140 weeks" rather than "140 days", but I missed the mistake while editing prior to submitting the article.

 

 

Gordon, I must apologize because I didn't see the tab to read your full reply the first time I was on here to post replies.

 

Anyway, the bottom line for me and the reason for writing this is that I don't believe for one minute that the salary/wage structure is sustainable while we're not in the top flight. It simply can't be. So, yes I do think there's a problem and I do think costs are going to need to be drastically cut to address that problem.

 

The club is making significant losses and bridging the running cost shortfalls with the IPO cash. Malcolm Murray as much as admitted that much in his statement about the Mather appointment today.

 

There's several problems with them doing that though: Firstly, before the flotation the fans were given assurances that the money raised would NOT be squandered on general running costs and yet it would appear that's exactly what's happening. That rings 22 million alarm bells in itself.

 

Secondly, the IPO cash is not a bottomless pot of gold or a magic money tree. I'd bet my life that the IPO cash has already been heavily dipped and that a chunk of it large enough to not be shrugged off is already gone.

 

Thirdly, with the prospect of at least another 2 full seasons playing outwith the top flight in the lower leagues of the SFL with reduced ticket revenue, no significant wedge of prize money or broadcasting income, reduced sponsorship, advertising etc etc etc... I'm absolutely staggered to think that anyone at all at the club is still earning a top flight SPL salary. It makes zero sense. Absolutely none, but that's exactly what's happening.

 

Lastly, Brian Stockbridge is clearly not fit for the job if he thinks he'll have the club running at a profit by next June. Unless there's significant cut backs as I'm suggesting in the article, I think what will really happen is that by next June, the club will still be running at a loss and the IPO cash will be embarrassingly depleted with almost nothing to show for it.

[Zappa 0]

They did say some of the money would be used for working capital purposes.

 

Not when they were trying to sell the whole IPO idea to the fans before the prospectus came out. It was actually stated that NONE of the money raised would be used for general running costs. That then changed when the prospectus revealed that several million would be set aside for general running costs. That would be fair enough, but I don't believe for one minute that the figure stated for general running costs in the prospectus will be adhered to. In fact, it wouldn't surprise me at all if we were to find out that more than that figure has already been used for running costs.

[plgsarmy 111]

There was a fairly negative response from someone on the main site, so I thought I'd post it here along with my reply:

 

 

 

My replies to that:

 

Hi Gordon and thanks for pointing out the mistake. It wasn't intended as a literal comment, but nonetheless should actually have read "140 weeks" rather than "140 days", but I missed the mistake while editing prior to submitting the article.

 

 

Gordon, I must apologize because I didn't see the tab to read your full reply the first time I was on here to post replies.

 

Anyway, the bottom line for me and the reason for writing this is that I don't believe for one minute that the salary/wage structure is sustainable while we're not in the top flight. It simply can't be. So, yes I do think there's a problem and I do think costs are going to need to be drastically cut to address that problem.

 

The club is making significant losses and bridging the running cost shortfalls with the IPO cash. Malcolm Murray as much as admitted that much in his statement about the Mather appointment today.

 

There's several problems with them doing that though: Firstly, before the flotation the fans were given assurances that the money raised would NOT be squandered on general running costs and yet it would appear that's exactly what's happening. That rings 22 million alarm bells in itself.

 

Secondly, the IPO cash is not a bottomless pot of gold or a magic money tree. I'd bet my life that the IPO cash has already been heavily dipped and that a chunk of it large enough to not be shrugged off is already gone.

 

Thirdly, with the prospect of at least another 2 full seasons playing outwith the top flight in the lower leagues of the SFL with reduced ticket revenue, no significant wedge of prize money or broadcasting income, reduced sponsorship, advertising etc etc etc... I'm absolutely staggered to think that anyone at all at the club is still earning a top flight SPL salary. It makes zero sense. Absolutely none, but that's exactly what's happening.

 

Lastly, Brian Stockbridge is clearly not fit for the job if he thinks he'll have the club running at a profit by next June. Unless there's significant cut backs as I'm suggesting in the article, I think what will really happen is that by next June, the club will still be running at a loss and the IPO cash will be embarrassingly depleted with almost nothing to show for it.

 

Zappa, it sounds as if Gordon has a very good grasp of what is actually going on.

[simplythebest 0]

There is a danger of people simply deciding Stockbridge is wrong for the job because they don't like that he was part of Green's original group.

[Zappa 0]

Zappa, it sounds as if Gordon has a very good grasp of what is actually going on.

 

He does have information, but I'm speechless that he doesn't think there's a problem with using up the IPO cash to cover running cost shortfalls while there's club staff still earning top flight salaries when the club's revenue streams are so massively reduced and we're playing in the lower leagues of Scottish football.

 

Gordon, says Brian Stockbridge has a target of the club running at a profit by next June. Well, that's only going to happen legitimately if there's some serious cost cutting and I'd also like to know what Stockbridge's forecast is for how much of the IPO cash will be left by next June.

[forlanssister 3,050]

There is a danger of people simply deciding Stockbridge is wrong for the job because they don't like that he was part of Green's original group.

 

If you lay down with dogs you get up with fleas.

 

There's a subtle campaign been going on to put distance between Stockbridge and Green, not everyone will easily fall for it.

[tangent60 0]

The number one cost for Rangers (and any football club at the higher end) is player wages. Number one.

 

That in my view, was what Green was seeking to cut, and it was unpopular, naturally, on the footballing side of Rangers. (He was doing other things also by the way, such as agreeing new sponsorship contracts.)

 

And although Green has now departed, it is my belief that Rangers must not fall into bad habits, such as spending outrageous sums of money to bring too many players near the end of their careers to the club for a final pay-day, with little or zero prospect of a sell-on value for the club after their contract comes to an end.

 

My personal opinion is that the model must be to bring good quality, young, hungry players to the club, who can be "trained up"/improved (physically and technically), who can succeed, and who can move-on later for as large a transfer fee as possible. (This, largely, is the current model of our friendly rivals from across the city, which explains why certain journalists and other parties constantly talk-up certain players and attach ridiculously over-estimated values to them, while proclaiming faux "fears of losing them". Rather, they are in fact keen to "lose" them and repeat the process.)

 

If Rangers are to be self-sustaining (and popular with city investors), I'm absolutely convinced that the "selling club" model is the only way forwards.

 

Outside that, the only other solution is new investment (and that can't be found in perpituity), and possibly new ownership by parties able to be benefactors (rare, in my view). If there are parties out there who are suitable for that model, I'd rather only hear about them after any deals have been done, and certainly not before-hand.

 

All of the above merely my personal opinion of course.

Edited April 24, 2013 by tangent60