The problem for a company or private equity firm is, quite simply, that the profits are not there. The problem for the supporters is that they would have to acquire the financing. That means developing the prospectus, business plan and management team which could convince the ordinary supporter to part with the millions that would be required.
So that leaves us with the individual investor or the consortium of investors. The individual investor is the classic model. He is probably a supporter but the club is a hobby or a diversion from the real business of making money. The consortium of investors is a group of rich men or women each willing to invest to acquire the club. The advantage of the consortium is that it is likely to bring a range of management, football and business talent. The disadvantage is the risk of internal conflict.
Acquiring Rangers is no different to acquiring any company. The buyer attempts to buy 51% of the shares. This means persuading Sir David Murray to sell and at a price acceptable to both sides. An acquirer will look at the club, its assets and liabilities, its cash flow and operations and decide what they are willing to pay. They will factor in any additional investment such as buying players, upgrading Ibrox Park, buying back merchandising rights from JJB or branching out into new commercial ventures.
Sir David Murray knows that he cannot recoup his overall investment. He also knows that Rangers, as it is run today, is barely profitable, that it can only be profitable with Champions League football and that requires continued investment. He may be at a point where that and the pressure on the rest of his businesses will make him more flexible on price.
The credit crunch has not wiped everyone out. There are plenty of shrewd people who have survived with their wealth intact. If the price of Rangers comes down, they could well be tempted to make an offer, especially if they are supporters at heart.
Value investing is the name of the game and Rangers could represent excellent value if a new team is able to complement the football side with first class commercial management supported by major capital investment.
HILLHEADBEAR