Rangers have to keep an eye on their spending or face financial woe again

[Frankie 8,182]

Interesting stuff from Michael Grant in today's Herald

 

http://www.heraldscotland.com/sport/opinion/rangers-have-to-keep-an-eye-on-their-spending-or-face-financial-woe-again.21493542

 

 

 

IT is a simple question with an answer which manages to be both surprising and somehow all too familiar: which Scottish club has signed the most players this close season?

 

The answer is the same club that has suffered the greatest financial implosion of them all, but can still look as though money burns a hole in its pocket. Rangers.

 

Two questions regularly being asked around the game right now are "where are Rangers finding the money" and "are they heading for trouble". At the time of their £22m share flotation in December, it was well enough known that the club was losing £1m a month. That was a staggering revelation and a damning indictment of the business model implemented by Charles Green's consortium. Rangers shifted a phenomenal number of season tickets last year and the take-up for the share issue was impressive, too. But for the new regime to be haemorrhaging so much cash every month beggared belief.

 

Ever since, there have been plenty who feared â?? and just as many who hoped â?? the club was sleepwalking its way back into insolvency. To them, it still looks very much as though Rangers must be living beyond their means and repeating, albeit on a much smaller scale, the failures of judgment that got Sir David Murray into such catastrophic trouble in the first place and left him passing the buck to Craig Whyte.

 

In fact, there have been cost-cutting drives since the share issue. Carlos Bocanegra, Dorin Goian and Neil Alexander have just been moved out, taking around £45,000 off the weekly wage bill. Although Craig Mather is the interim chief executive picking up most of the money Green was on, Imran Ahmad will not be replaced as commercial director, which amounted to a considerable saving. Neil Murray, Tommy Wilson and Pip Yeates left as chief scout, reserve coach and physio respectively, with only the scouting role earmarked to be filled again (because a good scout will eventually pay for himself many times over). Some other staff around the club have also gone. Around £1m has come off the maintenance bill.

 

But it still costs around £1.5m per month to run Rangers and it works out that only around £1.1m is coming in. Season-ticket sales for the coming campaign stand at almost 28,000 after the deadline for renewals last Friday, with the figure expected to reach around 36,000-37,000 after they go on general sale. That amounts to about £10m to add to the £7m-£8m left in the bank from the share issue. But the fact remains: Rangers are running at a loss, and at a loss taken seriously enough within the club for jobs to be under review with the likelihood of a number of redundancies around Ibrox. They have to put a brake on spending. Mather has been asked by the board to cut costs and, inevitably, one of the routes he must go down is a cold, dispassionate look at which areas are carrying some expendable fat.

 

To those of us on the outside there seems to be only one answer to that: the playing department. Rangers have a squad of more than 30. This summer they've signed Scotland's No.3 goalkeeper from Kilmarnock (giving him a substantial wage rise), two of the best players from two top-six clubs (Motherwell's Nicky Law, Jon Daly from Dundee United), a Honduran internationalist (Arnold Peralta), and experienced former players Steven Smith and Richard Foster. None of those could remotely be described as extravagant deals and the wages are lower than the outrageous £6000-per-week plus bonuses given to Ian Black. But it still amounts to a considerable outlay for sledgehammers to crack a nut. Rangers are still only in the third tier, remember.

 

Although moving on Goian, Bocanegra and Alexander (Kane Hemmings has been the only other departure so far) means the players' wage bill will come down, it is still way above the target figure of around £4m. Ally McCoist has wanted a centre-half all summer but signing an eighth new player, which would increase the size of his squad by four bodies since the end of the season, would be impossible to justify if staff who have been a part of the furniture for years get a tap on the shoulder and their P45.

 

Throughout the vast majority of his career, McCoist knew only big squads at Rangers, lots of players, options for every position. It is those who are most ingrained in the club's customs who are bound to find it hardest to adjust to austerity, even after the destruction of last summer's exodus and the Scottish Football Association registration embargo. Frankly, he has already built a squad which should be comfortably good enough to win not only SPFL League One but the SPFL Championship, as well, without the need for further additions.

 

But if he does try to land a defender, it surely isn't going to happen until more players have been moved out. Rangers know they are still losing too much money, just as McCoist knows the manager doesn't operate within a bubble. When it comes to pressure to make savings, no-one's exempt.

[Chibmark 15]

Can't really argue with that. It's what many of us have stated already.

[UCF2008 0]

If reports are to be believed about the payoffs for Goian and Boca then the only way we should be moving any players on is if an offer comes in.

[der Berliner 3,283]

We have heard it or thought it all before, the only difference is that the chap earns money for it.

 

Obviously, it is all interesting to note that these people's minds revolve around the only club that is signing players (because it was not able to do so for about a year-and-a-half ... at least not the people the manager really wanted) and keep (yeah, that's a wee bit cynical) players in the job, while other and not least ex-SPL teams free dozens of them. It is obviously outragous that SPL-players sign up for a third tier team while the club hoping for European glory loses half their SPL-runner's up side. How dare they behave like normal business is resumed? They sure can afford it.

 

Well, apparently they can. For the time being. While it is all good - or bad - to talk about the club losing money still, which is conjecture from previous information, even if that is the case, ending the financial year with a reasonable debt after the fallout from last season is nothing new for anyone interested in football. You can count on one hand the clubs in Europe (sic!) who make a profit (most of which most likely by selling players at over the odd prices to England or Russia). While this is not good for Rangers, i.e. apparently losing money, the priority for the club after this horrible year is to create a team capable of winning trophies and play the sort of attractive football people would expect from Rangers. All little pieces of the jigsaw that sees our club being restored in stature, something that will sure attract people to it as well. People like that masterbrain - who has for whatever reason vanished behind his PC screen again.

 

We are all cautious about what is going on, look at the finances and the spending. Yet, we should not by default assume that we have utterly braindead people working for the club right now either. They all have seen and witnessed what happened at Ibrox too and are all well aware that another such state will not come around again. Be that Smith, Mather, McCoist or Stockbridge. We sure should not blindly follow their course, but neither should we ride another wave of hysteria.

 

 

NB: Goian and Bcanegra were supposedly on 18k each, Alexander probably at 15k. By the above report's stats, that would be "5,5 Blacks" we could sign instead of them.

Edited July 1, 2013 by der Berliner

[andy steel 0]

Its a fair enough piece as far as it goes, but it misses out one crucial perspective, that of the fan. Understandable since I assume Mr Grant is not a Bluenose.

 

The people running the club, who must develop a revenue stream to keep the club solvent, understand that in order to retain the fanbase they need either trophies or at least a decent team. Another two years of last years' dross would see many Bears disappear - it happened before &there's no point pretending it wouldn't happen again.

 

They're faced with a Janus problem - they can spend low and keep solvent, but it will impact on the overall income to the point where it risks financial trouble, or they can spend higher, keep the income coming in but risk financial trouble. Its not as simple as 'Rangers should not spend money on players' - that thesis will also lead to trouble.

[der Berliner 3,283]

BTW, just noted the Herald's article on Goian leaving (with a golden 500k handshake according to his agent), stating that he was on 8,2k a week, a mere 10k less than what the Sun claimed over the weekend. Numbers, damned numbers ... (if you divide 500k by 52 (weeks), you end up with 9.6k a week, BTW.)

 

Early release proves rich reward for Goian

[calscot 0]

I don't quite get an early release payment where you get ALL the money - what is the point? It's a lose - win situation. If nothing else, keeping him and paying him but not playing him gives leverage for a smaller pay-off where he can leave and play for someone else and even take a big wage hit but earn the same, and at least his career is still fluid.

 

If the pay-off is a full wage then if you keep them, considering players as non-emotional, you at least have their services if there is an injury crisis.

 

Sounds to me like the pay-off may have been something like half his wage - and what we'd have to pay if he went on loan. That would certainly make more sense.

[Calgacus 8]

They must have saved some money by paying him off,

[der Berliner 3,283]

They must have saved some money by paying him off,

 

WHat wonders me is that they did not wait till any transfer offer comes in. Obviously, the player is in easy street. He could just sit tight and wait, receiving his weekly wages till something happens. On the other hand, at his age, who will pay a fee and offer him similar terms (who will obviously come under scrutiny again). He's in a win-win situation. For the club it was probably the best solution paying him off and be done with it. You do wonder whether Bocanegra was more generous.

[calscot 0]

PS I think our last years wage bill of 7m probably had half of it made up from the wages of those who TUPEd over; just the five of Bocanegra, Goian, McCulloch, Wallace and Alexander probably made up between 3 and 4 million if they were on an average of say 14k a week.

 

I still think a lot of the money we lost last year was front ended costs and hangovers from the previous company. This will probably be another expensive year but the budget should settle down to match the income in the third and fourth years.

 

It would be good to see the audited accounts to find out what the real figures are. I also still think that the reputed losses we made of a million a month, were probably just over a few months, and the attempt to extrapolate to the year was erroneous.

 

There has been a lot of money wasted on pay-offs, made up fines, stupid loan arrangement fees, and legal fees that really shouldn't really have materialised.