Short overview of Business finance

[Bluepeter9 5,167]

A few people have questioned in various threads about why the proposed stadium money cant be released for players.

Its fairly simple. Player fees and wages have to come out of revenue generated by the club.

The clubs revenue is made up (in the main) from ticket sales, sponsorship, TV money and money generated through league position and cup sucess PLUS any transfer fees. JUst take it as a RULE that businesses can NOT run at a loss. If a business generates a loss this has to be paid for either from profits from previous years or from a loan (from Banks, shareholders etc.) or by an injection of Capital (Equity) . No business can sustain running at a loss indefinately. In a normal business when Equity is invested the person or company making the investment is buying a future share of any profits or taking a gamble on the share price rising AND having the ability to sell that share at a profit. In football this equity investment most often does NOT generate a return as clubs tend to invest profits (if any) in playing staff/improvements so the only way to get a return is to sell out, which most shareholders in football clubs realise will not happen (and very seldom at a profit). They do it as they are fans. (This is why I fear for Man Utd. - the Glaziers are not fans - they are in it for a return and will look to take profits out of the club or sell it on to make the profit - note this can be done sucesfully and is what Fergus McCann did at Celtic - he bought in cheap - teurned the club around financially and sold out again 5 years later - and I admire his business accumen in doing so).

With the exception of the fan shareholder - people dont put money into clubs for players - while players have a nominal value the only real value in a club is its ground and stadium (and the fan base which can be sold to).

Now redeveloping the stadium and creating an ibrox village is different because it will attract propert investment/investors and they will be looking for a return on their money - they will NOT be investing for the good of the club they will be investing for the return. However their investment is backed by solid property. Basically this is just like a mortgage on your house. A builder builds it and makes a profit - you buy it with borrowed money, the finance company/bank makes a return on thier capital by charging you interest and if you fail to keep up the repayments they own the property and will sell it off to get their return.

Rangers will borrow big time to do this development - now SDM and / or Rangers are likely to own a lot of the land outwith Ibrox already and the structure of the whole deal will be interesting (and when more details coem out I'll post them) but basically I think there will be a company that develop the village and Rangers will 'Buy' (or lease) the stadium from them - in return they will use the stadium to generate income for the club through attendance / other events and reinvest the extra profits in bettter playing staff/facilities.

The two pots of money running the club and rebuilding the stadium / area are separate and the development money is NOT available for new players (unfortunately!)

[Briton 394]

While I've always disagreed with this thing about football just being like other business's, I think very few people go into it to make money, I agree with the gist of it. I'd be happy to see this proposed investment in out infrastructure and future and can't believe some people are saying the money would be better spent on players.

[Frankie 505]

As BP9 suggests Rangers wouldn't finance the monies involved per se so one can't say use any monies for players instead.

Because of the fact SDM owns much of the adjoining landbank, he'd be selling the land to the investors while possibly using his own internal companies (MMG, PPG) to create the majority of development.

The building of a new Ibrox would be just one part of the deal and because of the money involved, I assume that SDM would be hoping the new stadium would be paid for by the money made from the project as well as any new sponsorship of the stadium.

In many ways it could represent a risk to his own parent group and as such, my main concern at this stage would be that will Rangers FC still own Ibrox Stadium (or the new one) after the fact. Murray has previous for trying to sell the stadium and lease it back.

[Adam 0]

Thats the only thing that worries me, Ibrox needs to be owned by the club. I wouldn't want a company owning the stadium leasing it out to us because its less money we'ds have for wages and transfers and the day to day running of Rangers FC.

I am slightly worried but it is an exciting prospect, to have the biggest ground in Scotland would be the symbol of what we are and thats the only team that matters (really biased here sorry) in Scotland.

Giving us a stadium to match the size of the club!! exciting times indeed!!

[Bluepeter9 5,167]

In many ways it could represent a risk to his own parent group and as such, my main concern at this stage would be that will Rangers FC still own Ibrox Stadium (or the new one) after the fact. Murray has previous for trying to sell the stadium and lease it back.

This, I think, is bound to be a serious option, and one that scares me as well - However there cant be many organisations that could generate the income that the stadium would so it may be ok. All the Italian teams lease there stadiums (usully from Local Government) and they do OK and in fact Stadium sharing is quite normal in Italy - ( LOL - can you imagine sharing with the great unwashed ?)

[Adam 0]

In many ways it could represent a risk to his own parent group and as such, my main concern at this stage would be that will Rangers FC still own Ibrox Stadium (or the new one) after the fact. Murray has previous for trying to sell the stadium and lease it back.

This, I think, is bound to be a serious option, and one that scares me as well - However there cant be many organisations that could generate the income that the stadium would so it may be ok. All the Italian teams lease there stadiums (usully from Local Government) and they do OK and in fact Stadium sharing is quite normal in Italy - ( LOL - can you imagine sharing with the great unwashed ?)

I thought Italian football is riddled in debt? wheres Del Juve? He'll know

[Frankie 505]

This, I think, is bound to be a serious option, and one that scares me as well - However there cant be many organisations that could generate the income that the stadium would so it may be ok. All the Italian teams lease there stadiums (usully from Local Government) and they do OK and in fact Stadium sharing is quite normal in Italy - ( LOL - can you imagine sharing with the great unwashed ?)

The events of 1971 mean our stadium should always be owned by the club/fans.

A lease back is not an option IMO.

[BLUE CYCLOPS 26]

I don,t profess to be a finamcial wizard but one thing does concern me about this proposed new stadium.

Broadly,I am in favour,I think it shows that we ARE the no.1 club. We have always been first and best in Scotland.

If the report in todays Express is accurate,the funding is in place for a new stadium. The figure mentioned is £280m.

Now,if this stadium is to be bigger than the Emirates in London and that cost £430m,then we are building a bigger stadium for less money.Thats my one concern. I don,t want to finish up with a flash plastic hovel like the Poundstretcher stadium across the city. All image no substance,fur coat and no knickers. We have a reputation of 1st class facilities and we must not drop our standards to compete with them.

[dummiesoot 16,080]

I don,t profess to be a finamcial wizard but one thing does concern me about this proposed new stadium.

Broadly,I am in favour,I think it shows that we ARE the no.1 club. We have always been first and best in Scotland.

If the report in todays Express is accurate,the funding is in place for a new stadium. The figure mentioned is £280m.

Now,if this stadium is to be bigger than the Emirates in London and that cost £430m,then we are building a bigger stadium for less money.Thats my one concern. I don,t want to finish up with a flash plastic hovel like the Poundstretcher stadium across the city. All image no substance,fur coat and no knickers. We have a reputation of 1st class facilities and we must not drop our standards to compete with them.

Arsenals stadium costs inculded purchasing the land required, they moved stadium remember plus you also have to remember the costs of building in London are huge compared to Glasgow.

[Briton 394]

As BP9 suggests Rangers wouldn't finance the monies involved per se so one can't say use any monies for players instead.

Because of the fact SDM owns much of the adjoining landbank, he'd be selling the land to the investors while possibly using his own internal companies (MMG, PPG) to create the majority of development.

The building of a new Ibrox would be just one part of the deal and because of the money involved, I assume that SDM would be hoping the new stadium would be paid for by the money made from the project as well as any new sponsorship of the stadium.

In many ways it could represent a risk to his own parent group and as such, my main concern at this stage would be that will Rangers FC still own Ibrox Stadium (or the new one) after the fact. Murray has previous for trying to sell the stadium and lease it back.

A few hours before I first saw this story my brother-in-law was telling me at a family do about a guy he had taken skiing holidays with a couple of times, in fact he'd just flown in from one. He told me he was a Scottish millionaire developer and he'd just purchased a large plot very close to Ibrox Stadium. Probably totally unconnected but I rarely get the chance to spread rumours. Thought it was a coincidence as the first thing I saw when I got home was this story. Another brother-in-law was going on about Everton's new ground so next time I see him I'll be telling him about our more ambitious plan (even though I struggle to believe it's true ).

[Frankie 505]

Interesting stuff mate - care to find out the name and pm me it...

[ricksen_da_best 2,034]

So..Chelsea would be Feecked if roman abramoivch jumped ship today?

Same with hearts..if romanov left they would be down and out, there almost that anyways

[J_RFC87 761]

So..Chelsea would be Feecked if roman abramoivch jumped ship today?

Same with hearts..if romanov left they would be down and out, there almost that anyways

Pretty much! Who would like to take on a £300million debt, while progressing with the team and trying to win the premiership?

As BP9 said, that size of debt isn't sustainable in the long run, same applise with Liverpool and Man Utd. Arsenal seem to be doing ok since they sold Highbury.

Hearts are bordering on meltdown.

[Bluepeter9 5,167]

So..Chelsea would be Feecked if roman abramoivch jumped ship today?

Same with hearts..if romanov left they would be down and out, there almost that anyways

Pretty much! Who would like to take on a £300million debt, while progressing with the team and trying to win the premiership?

As BP9 said, that size of debt isn't sustainable in the long run, same applise with Liverpool and Man Utd. Arsenal seem to be doing ok since they sold Highbury.

Hearts are bordering on meltdown.

To be fair to SDM he has set up the structure of Rangers so that even if he walked away we as a club would be in good shape. Stuff like writing down the debt was put in as Equity and the only way he can get that out is to sell. However as a large magority shareholder if he sold (in the worst instance) to an asset stripper we could be in trouble but I believe he has a lot more integrity than that and even if he does sell out it will be to someone he trusts - and hopefully with enough conditions to stop us going the hearts way - basically they are finished financially without Romanov - (ditto Chelsea). I think we, as fans, need to be very wary of wanting some rich 'person' to buy us and invest a lot - it leaves us fickle to their ways.