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Rangers face football's new reality....


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Quite good article, analysing Rangers place within the Murray empire. Most of it is just conjecture and opinion and there is a sense that its not telling us anything new. Worth a read though.


Rangers FC, their fans, and their owner for the past 22 years Sir David Murray, are facing the realities of the new financial era.

The last time Murray’s business empire Murray International Holdings published its accounts was 16 months ago in December 2008, relating to the year 2007. The next set of accounts, whenever they appear, will detail the grisly year 2008.

This week, however, accounts did appear at Companies House for Murray Sports, the demerged holding company for Rangers, which revealed little, but did serve to highlight the gap between today’s climate and the expectations of the past.

It was 1988 when Sir David Murray paid the Lawrence family £6 million for a controlling interest in Rangers. The 1990s kindled hopes that smart money could turn Rangers into a mega-brand, persuading billionaire Joe Lewis to pay £40 million for a 25% stake in 1997.

But when Murray Sports “acquired” Rangers from Murray’s holding company in 1999, the transfer price for the 75% stake was set at £61m, with £60m of it a loan repayable to the parent group. Interest was to be rolled up on the loan, with the entire sum repayable in the event of the sale of Rangers. The accounts show the accumulated interest is now at £48m, which means Sir David should by now have earned an 80% return on his investment. Instead, any buyer of Rangers will probably consider the club’s debt to its bankers a high enough price to pay. While the paper value of Rangers shares on the Plus market is currently some £45m, financial sources say Lloyds Banking Group has valued Rangers at no more than £33m, around the level of its debt, with no value being put on its equity.

Lewis had sold back to Murray in 2004 at a hefty loss. One analyst commented: “Everybody who has got involved with Rangers and David Murray in the past has ended up losing money.”

Murray had already decided to put Rangers up for sale in 2007, according to the testimony of manager Walter Smith. That was the year that Rangers contributed £6.6m of Murray International Holdings’ £20.7m pre-tax profit, even though football accounted for less than 10% of the group’s £542m turnover.

That halcyon year saw MIH pay dividends of £5m, split largely between the chairman and his son David Murray junior, who runs the group’s investment business.

Rangers’ real worth, however, was still on the slide, as the accounts show a forced deduction of £34m, from the group’s £42m of operating profit, in reduced value of Rangers. That was equivalent to writing off the entire £32m injected by Murray into the club in a capital-raising exercise in 2000.

By the end of 2007, no buyer for Rangers had emerged – and the financial climate was deteriorating.

MIH began 2008 with £704m of bank loans, £406m of them repayable within two years. Its Premier Property arm, heavily backed by Bank of Scotland, will have had to enter negotiations with a new team at Lloyds on the back of big writedowns of property values.

The second half of last year saw Murray stepping down as chairman of Rangers, followed by the appointment of company doctor Donald Muir on to the boards of both Premier and Rangers. Murray would appear to have plenty of room for manoeuvre, with an 81% grip on an empire which two years ago had £112m of shareholder funds, with a strong steel business accounting for two-thirds of turnover in 2007.

But his empire is private, whereas Rangers, one of Scotland’s highest-profile businesses, has shares traded on a market and is under greater scrutiny. It published accounts two months ago showing a healthy £13m pre-tax profit for last year.

In fact, things are looking up for Rangers. One financial analyst commented yesterday: “In the past Rangers would have been worth a sizeable amount of money, not any more, but at least now they are getting healthier by the day. Celtic’s collapse is handing all the Champions League money to Rangers this year and almost certainly next year, with Celtic having to play three qualifying rounds. Couple that with the downsizing of the wage bill, not splashing out in the transfer market, and a couple of player sales, and by this time next year Rangers will be looking pretty healthy.”

A potential buyer emerged six weeks ago, when London property developer Andrew Ellis declared an interest in Rangers, but his intentions are mysterious. David Low, the football financier who helped rescue Celtic in 1994, told The Herald last December that a “sugar-daddy” with money to burn would be the likeliest answer to the prayers of fans for a saviour, and other analysts agree.

One said yesterday: “There are no hidden assets for a buyer, this is as good as it gets. They have talked about land at Ibrox for a casino or a hotel in the past, but not in the current market.”

He went on: “Rangers have continually lived above their means, and the irony is the club is getting run in the right way just now, and it will have to be in the future. Rangers fans are still under the misapprehension that there can be a new Dick Advocaat and Paul Gascoigne era but that has all ended and we are back to the level that Scottish clubs are able to compete at.”

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I'm quite accepting of a bread and water diet, it's what we had up until Souness came in. With the fan base we should still be the top spenders in Scotland and therefore most dominant domestically if we have the right manager.

However, if we want to compete in Europe (and competing means more than two points in the CL) then we need to get a lot better at global scouting (youth and senior levels) and youth development. I don't think anyone at the Club just now has the skillset or work ethic to put this into action.

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Have to agree there MrSifter, we need to be more enterprising and resourceful, we cannot go down the big spending route again, what we can do is have a business model where we can bring in players on the cheap and sell them on at a decent profit to not only help with the running costs of the club but also to reinvest in the team and scouting networks.

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