Financial Experts Take on Rangers

[Guest metalliger]

http://www.eveningtimes.co.uk/sport/display.var.2483110.0.0.php

 

Murray being savvy according to him...

[calscot 0]

To be honest, I think it's an overly pessimistic view. I think Banks will have no problem continuing their loans to companies if they are manageable and where there is little likelihood of defaulting. Rangers fall into that category and while they may have trouble getting into much more debt, it is in the bank's interest to be cooperative with the club.

 

I can't even see other big clubs in worst positions than us being forced into administration if it looks as though they can trade out of their debt. Administration usually means you only get a fraction of your credit back, they only do it if that fraction looks a better bet than the amount they'd get if they do nothing.

 

For the moment I think Rangers are pretty safe and I think SDM is making poor decisions in an attempt to be financially prudent. It's not prudent, it's a gamble with �£10M worth of CL money, not to mention a gamble with future season ticket sales. Any fire sale should be in the summer when we have an idea about what next season will bring.

[Bluedell 5,614]

He's just repeating what I said 2 weeks ago.

 

Calscot, I doubt the bank are reducing our lending, but they also aren't increasing it either, and it appears we are about to run out of cash before the season ticket money comes in, hence the need to sell.

 

The banks aren't forcing us to do anything. They are just telling us to operate within existing limits which we are strugging to do.

[Super_Ally 0]

Maybe a bit of a simplistic view and would be far to big a gamble for SDM, but if the sum we need to raise through a transfer is just (in the context of his companies vast wealth) �£3mil, and the only way we are likely to recoup this is by severely weakening the team/squad by selling a key player, might Murray want to consider a loan from another of his profitable companies, gambling on winning the league and CL qualification and then take the �£3mil back from the CL money?

 

Been wondering this for the last week or so.

[Bluedell 5,614]

S_A, I don't think he has any cash to lend to us. His Jan 2008 accounts showed only �£4m of cash in hand, and they have around �£400m of loans to repay in the next 12 months IIRC.

[Super_Ally 0]

Fair do's. As I say was a simplistic and probably naive view. But thought it may have been an option. Obviously not.

[Bluedell 5,614]

There's another (fairly unpublicised) school of thought that suggests that the �£3m isn't for us at all, but is needed to allow a profit to be shown in the MIH accounts.

 

Not sure I buy into this, and believe the cashflow issue is much more likely, but you never know.

[Super_Ally 0]

There's another (fairly unpublicised) school of thought that suggests that the �£3m isn't for us at all, but is needed to allow a profit to be shown in the MIH accounts.

 

Not sure I buy into this, and believe the cashflow issue is much more likely, but you never know.

 

First i've heard of that. Why the need to suddenly be showing a profit? Just a symptom of the current financial climate?

[Bluedell 5,614]

Don't think it's a sudden need. It's possibly always been there. It could be due to some banking covenant?

 

However this school of thought also suggests that SDM was relying on JJB going under prior to 31/1 (MIH's year end) allowing Rangers to boost their profit by writing off the remainder of the �£18m we got upfront and in turn boosting MIH's profit. When that didn't happen SDM needed to get profit from elsewhere, hence the sudden announcement that we would sell virtually anyone.

 

As I said, it's not my theory, but an interesting and plausible one all the same.

[craig 5,199]

You will probably have seen it more than me BD but I can honestly say that in all of the financial covenants I have ever seen not one of them was tagged to profits.

 

That school of thought makes little sense to me.

 

I think the cashflow theory is far more likely.