Keith Jackson: Q&A With Robert Sarver

[Frankie 8,562]

In today's Record:

 

http://www.dailyrecord.co.uk/sport/football/mortgaging-ibrox-stadium-makes-no-5006216#rlabs=2

 

KJ: So where does Robert Sarver sit right now? Is it over or is there a chance you will try again, perhaps working with the Park Consortium and/or Dave King?

 

RS: That’s a good question. I’m at the same place I was when I issued my last press release. As I stated before, I really think what the club needs is more equity, not debt. Debt is more of an enemy than a friend to the club given its cash flow situation. So I am really more of an equity proponent. That’s where I’m at.

 

KJ: Do you struggle to understand why the board might be in favour of a £10m loan from Mike Ashley?

 

RS: I’m not privy to the board’s conversations and what their plan is. But from a distance, where I sit, the best thing for the club is equity and to actually have no debt. Taking on more debt makes no sense to me, let alone mortgaging the stadium. I’m not sure I understand that at all. I’m sure these people have a plan, I just don’t know what it is.

 

KJ: The problem is Ashley has control of the board. Were you seeking to change this by repaying Ashley’s outstanding debt?

 

RS: Yes, correct. My plan was basically to have the club debt free. That’s not to say at some point in the future there isn’t a reasonable amount of debt to have on a club. But it needs to be put in place once the club has cash flow and is on solid footing.

 

KJ: At any point in your bid, were you given proper access to the books ? Did you see the full extent of the financial crisis?

 

RS: It’s a public company so the books are public. What I reviewed was all public information. I couldn’t go any further than that because I never could get the board to engage with me in any kind of meaningful discussions as relates to a capital raise.

 

KJ: Did you find that odd? This is a company which is hemorrhaging money and yet they would not engage with you?

 

RS: Well, I understand some of the issues the board faces but if I were to put myself in their shoes I would have been looking at all options and investigating all options, including equity into the club. I’m not sure I would be so limited as to just look for more debt.

 

KJ: Did you feel a high degree of scepticism from the media and supporters?

 

RS: The feedback I got from fans was probably about 95% encouraging and I received a lot of it. That further confirmed my view as to how popular the club is and how large a following it has. Listen, I’m not saying I’m the wealthiest or the smartest potential owner for a soccer club but I felt I was pretty damn good option for this club at this point right now.

 

KJ: Don’t take this personally, but I used the phrase ‘shooting to miss’ when describing your offers as they were absolutely conditional on a level of shareholder support which you were never likely to achieve. Do you understand why people will view you with scepticism?

 

RS: Well, I’ve always had the view that you’re better off owning a smaller percentage of something that is really healthy and strong than a larger percentage of something that’s not. My goal was that the shareholders with the largest stakes would look at this as an opportunity to really strengthen their investment, not be negative towards it.

 

KJ: But surely the situation changed when Dave King and the Park consortium bought up 35% of the shares?

 

RS: It did but it shouldn’t have. In order for their investment to be strong and successful the club still needs significant equity put into it. It needs to get itself onto solid footing. So this shouldn’t have impacted upon their decision. I still think all the shareholders today would have been better off with additional equity in the club. Even if their ownership percentage would have been diluted I believe the value of their shares would have been better off.

 

KJ: But the guys who bought the 35% were making an emotional investment. It’s not a question of profit and loss for them.

 

RS: That’s good. They are the kind of shareholders you want. But I would look at it a little bit differently because one way or another the club needs to sort out its finances to be successful, regardless of who owns shares. When you look at the club itself, I wouldn’t say it’s in better shape today than it was a month ago.

 

KJ: But after your first bid was rejected were you not minded to reach out to these emotional investors? Surely if they had come over to your side it would not have been so difficult to achieve 75% backing?

 

RS: Yeah, maybe. I’m not sure. The board were the only ones who were really privy to that information because they had canvassed the shareholder base. Look, what I said all along is that it’s helpful for a club to have good local ownership. I thought that was a good idea but I was never in any meaningful partnership negotiations with them.

 

KJ: Could that change?

 

RS: Anything can change but from my point of view, until the board of directors formally decide they need equity capital, the investment isn’t for me.

 

KJ: Is this board putting the club in danger by increasing debt?

 

RS: Well they are in a weak position right now. As I’ve said, I don’t think at this stage debt is a friend to the club. I think equity is. That’s why I find it hard to get my had around what the board is thinking right now. I mean, the club has negative cash flow. Why would you take on more debt when you are in a situation like that?

 

KJ: The question Rangers fans wanted to ask you when you offered £30m of your own money was: Why? What’s in it for you?

 

RS: I saw it as an opportunity. The club needed a hug instead of someone kicking it around. I was prepared to give it a hug and the benefits for me would have been watching the team turn around and back to an elite level. That satisfaction would have been rewarding to me.

 

KJ: Come on, seriously, you must have thought you could make money from this somehow?

 

RS: Well yes, I think long term that soccer is a good investment because it’s watched by fans all over the world and it will continue to grow in popularity around the world. So yes, I did think it provided a good investment opportunity but the primary reason you get involved in sports is more about passion and competitiveness than it is about profitability and investment returns. There are easier to ways to make money?

 

KJ: So you’re saying this was money you could afford to lose?

 

RS: Well, you never want to lose money. But could I afford to lose it? Yes, I guess if you say it that way. But I looked at it as an investment in a business which could have been very successful long term, if it was put on a solid financial footing with the right management team in place.

 

KJ: But Scottish football is not in a good financial place right now. There must have been other more obvious options?

 

Ally McCoist banned from Fernando Ricksen's benefit match

 

RS: I agree. But sometimes the best places to look are the places other people don’t want to look. I think Rangers is a gem. It just needs some love and it needs to be polished.

 

KJ: You said if the Rangers fans need your help they only have to ask. What exactly did you mean?

 

RS: Given the rules of the London Stock exchange, I can’t comment any further. All I can say is I’m in a holding pattern. I’m following what’s going on and I hope things work out for the fans and the club. It’s a storied franchise and a treasure in the community. I hope it gets itself squared away.

 

KJ: If Dave King’s EGM is successful and this board is wiped out, it changes your position? Is this something you would welcome?

 

RS: I can’t comment. It’ll be up to the shareholders to decide in what direction they want to go or if they want to make a change or not.

[andy steel 0]

Given the rules of the London Stock exchange, I can’t comment any further. All I can say is I’m in a holding pattern. I’m following what’s going on and I hope things work out for the fans and the club. It’s a storied franchise and a treasure in the community. I hope it gets itself squared away.

 

Aha! It's a worldwide conspiracy!

[trublusince1982 243]

really like the cut of this guys jib. he bats away jacksons repeated tries to get a sensational head line like an elephant swatting a fly.

[JTP 0]

Sounds to me like he's waiting on the good guys gaining control and then he'll be more than happy to invest.

 

Easy to be sucked in but I also like the vibes from him.

[Frankie 8,562]

Personally while I doubt he's completely out of the picture I don't see him investing as a minority partner.

[der Berliner 3,742]

Personally while I doubt he's completely out of the picture I don't see him investing as a minority partner.

 

Yep. That said, maybe he and the good guys have to sit on one table and speak to one another about their plans and how to get on with things. Right now, the actual aim of the good guys is removing the board and Ashley's icy grip.

 

BTW, good that he continually points out that further debt is an enemy to the club in a national paper. You'd hope many shareholders read that carefully.

Edited January 20, 2015 by der Berliner

[craig 5,199]

His statement about equity vs debt is bang on the money.

 

An entity that is hemorrhaging cash simply cannot afford to take on any new debt unless at 0% interest - even then that isn't wise as they have no way to service the current debt let alone the new debt. The Board would be wise to heed what he is saying as it absolutely IS a fiduciary duty to protect the club's well-being - and if an equity offering is available but they accept new debt then that at least appears to be contrary to their fiduciary duty.

 

I like the way he speaks too. But at this point whatever he says is night on irrelevant as there is little he can do to change things, other than awareness.

[Zappa 0]

His statement about equity vs debt is bang on the money.

 

An entity that is hemorrhaging cash simply cannot afford to take on any new debt unless at 0% interest - even then that isn't wise as they have no way to service the current debt let alone the new debt. The Board would be wise to heed what he is saying as it absolutely IS a fiduciary duty to protect the club's well-being - and if an equity offering is available but they accept new debt then that at least appears to be contrary to their fiduciary duty.

 

That's a real worry at the moment because if we end up with £10m+ debt at the end of this season how and when do we pay it back and how much debt would we have at the end of next season? £20m+ ??

[craig 5,199]

That's a real worry at the moment because if we end up with £10m+ debt at the end of this season how and when do we pay it back and how much debt would we have at the end of next season? £20m+ ??

 

My concern would be regarding what the repayment terms are on the new debt. Admittedly we cant afford ANY new debt.... but if you assumed we could actually service what we have.... but then just look at what SDM did with his properties - if we granted security over Ibrox and MP to Ashley for the 10 mill loan and the loan repayment had to take place in a year we would be absolutely screwed because we know we cant pay that. If it were over a 20 year period or whatever then we could potentially repay it depending on league we are in and the custodians we have.

 

My suspicion is that they grant security over Ibrox and MP for a short term loan that they (and Ashley) KNOW we wont be able to repay - their tidy little way of selling MP to Ashley (even though he wouldn't be guaranteed to own the assets as they would be auctioned off and he wouldn't necessarily win that auction - though he clearly has the funds to outbid most people who would show an interest).

[der Berliner 3,742]

Of course, you would expect that e.g. merchandise sale is one way to cover part of the repayment of debt/loans. Now, if the one who is giving the loan is the same guy who rapes this very income stream, even the most "hard of thinking" director would know that there is hardly any way to repay that loan unless it runs for about 5 years? Not to mention conflict of interest, doing the best for the company etc.. Of course, you do wonder how quickly the money is actually required and which of the two alternatives will be faster.