Thursday, 8 January 2015

Why Rangers rely on Ashley

From the pre-new year hope which followed the snapping up of shares by the Three Bears, to the further fuel of inspiration caused by Dave King buying some of Artemis’ and Miton’s shares to make him the single-most largest shareholder of all, to then learn in one day that Rangers were £500,000 away from being wound up completely and then that NBA giants the Phoenix Suns’ majority shareholder Robert Carver had submitted an informal £18M bid for outright control…

Being a Rangers fan right now has become an absolute nightmare.

For three days fans truly believed a little beacon of light was at the end of the never-ending tunnel of despair, with four major players snapping up shares. But then supporters were brought straight back down to earth when news broke that Sandy Easdale’s loan of £500,000 stopped the Club ceasing to exist. Coupled with the news of Sarver’s interest, which the American has fully confirmed, and it is safe to say the non-stop saga of Rangers Football Club is not stopping any time soon, leaving us to just concentrate on the team.

No, the problem of insolvency now fully hangs over our heads, while, unfortunately, (depending on your view), Mike Ashley has complete and utter control. That £2M loan he gave some months ago has borderline given him the reigns, with the condition of said loan being that he was able to appoint two ‘representatives’ to the board, and the further £1M he provided essentially gave him the power to turn them into CEO and Finance Director. Derek Llambias calls the shots in the boardroom, while newly-appointed Barry Leach has control over the company’s finances.

With David Somers eager to do whatever Ashley wants (in order to preserve his own position as Executive Chairman) Mike Ashley, put simply, despite only having 9.5% shares, controls and owns Rangers.

It is not official, of course, but the man controls the three most powerful positions at the Club, and he has not had to pay a penny for said control. They answer to him, and him only.

Sarver’s bid was rejected by them, because Ashley refused to relinquish control, meaning Rangers are 100% reliant on him and Sandy Easdale for secure loans in order that the Club stays afloat.

Many fans may wonder why Ashley, if he has any of the Club’s best interests at heart along with his own business dealings (it is in his own interests that Rangers are profitable, in order to give his Sports Direct maximum exposure, particularly in the Champions League in the not-too-distant future), does not just invest money rather than loaning it.

Why? Because, like or hate him, he is an incredibly wealthy, successful businessman and men like these do not achieve that status by throwing money away into a black hole.

Rangers’ finances are a black hole – every ounce of money going into Rangers at this moment is keeping the lights on. It is going to creditors, energy companies, merchandise partners, subsidiaries, you name it. That money is not coming back, which is why the likes of Easdale and Ashley loan with security. Because they are not throwing their money away.

Would you?

Now, before the critics of this blog get ready with their keyboards, angrily preparing to cut me down in the comments section as a pro-Ashley/Easdale drone, I must assert the following:

I am absolutely not condoning the state Ashley and Easdale have ended us up in. That we are slaves to secured loans, assets (Macleod to name but one) being pawned against cash to keep us afloat is a disgusting state of affairs and we have been thoroughly manipulated, particularly by Ashley, into this state of affairs, whereby we basically rely on his loans to keep us in business.

However, the fact that in three years no one has invested a single penny into our Club, be it fan groups, hedge funds, wealthy individuals or otherwise is telling. No knights in shining armour have arrived to invest millions at us, other than via share issues, and that is standard etiquette for any Plc. All the hard offers of cash are for control, not investment. You will not see King, Sarver, Easdale or Ashley investing cash. And why? Because there is absolutely no return on it, and these people are not charities.

You do not get successful in business by chucking your cash down a financial black hole, and that is exactly what ‘working capital’ means – it means the cash that goes out to keep your undersoil heating working, the cash which pays for the WIFI bandwidth. It does not come back. Hence Easdale and Ashley only loan it.

Would any of us supporters honestly look in our bank accounts, take out a quarter and simply give it to Rangers to keep the lights on? Not a chance. Money is valuable, and even fans want a return on their investment – they want to see youth schemes, squad rebuilds, expansions to various community programs associated with the Club. None of this is possible when you require around £10M working capital just to pay your bills.

Rangers desperately need a rise in income, and that can only happen once promotion happens. TV cash will go up, sponsorship deals will bring in more, season tickets will increase and there will be a tiny outside chance of European football. Plus prize money in the SPL is far higher than outside.

It is an absolute state this Club has ended up in, a combination of Ashley’s manipulation and the natural loss of three years of income. It is worth remembering we are around £50M down per season basic income thanks to ‘demotion’. Not even the oft-touted £70M fans complain ‘went down the drain’ would have covered the £150M basic income needed to sustain the Club over the past three years, cash we would normally get in the SPL but only get a fraction of now.

With Ashley in control, we (like it or not) answer to him for now, and our absolute hope is he truly does deliver on what we pray he does, and gets us into the CL once we return to the SPL.

Getting to the SPL, however, is the sticking point.
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