After the financial rescue package, we will still be net sellers in the transfer market, we will probably see David Murray exercising complete control with a potential 90% stake, and Azure Catering , Response Handing, etc will still be making money out of Rangers. Three Cheers for David Murray!
What’s the deal?
First the good new, the debt will fall, and …. that’s it. Having overseen the potentially catastrophic rise in debt over the past four years, David Murray will use another of his companies to bring it down to manageable levels.
But why should anyone else other than him invest now? If you’re a millionaire wondering if this is a good investment, then look no further than ENIC to see how lucrative investing in Rangers can be. Bought shares for £40m in 1997 and sold them last week for less than £9m. Dave King has seen a similar “return” on his £20m in 2000.
Will the fans stump up?
You can buy a share in the market for 83p or buy one from Rangers at 100p. The big difference is that the 83p goes to the previous holder while the 100p goes to reducing Rangers debt. For that reason alone it’s better to pay 100p. But shareholding fans do not have a history of putting their hands in their pockets. In the 2000 rights issue there were 15.38m shares were on offer, but only 9.82m were taken up. Of that, 9.36m were taken up by Murray Sports meaning that only 450,000 were taken up by others, representing a total of £1.6m.
If we exclude the Murray shares and the ENIC shares then this means that of the 2.08m shares on offer to ordinary shareholders, less than 1 in 4 was taken up. And this was back in early 2000 when Dick Advocaat was well on his way to a second successive league title and few were questioning David Murray’s financial acumen.
Murray ends up putting in most of the money.
As the owner of 86.3% of RFC, Murray needs to pay £49m to take up his own and Murray Sports rights. Failure to do so would see his shareholding fall and would send out a message of no confidence in the issue. If the issue is as “successful” with fans as the last one, then they would be putting up less than £2m and Murray ends up with over 90% of the club under his control. This makes us even more the plaything of our Custodian.
Where to now?
Coming after the transfer deadline, nobody will be in any doubt that the money is for repaying debt rather than strengthening the squad. In fact if we are “no longer net spenders in the transfer market” there is no cash for new players unless we sell first. Is this a recipe to improve the performance on the field?
As I detailed in a recent FF article, it is my belief that the future of the Murray International Holdings is impacted significantly by the financial strength of RFC. If RFC were to go into administration then it could have serious implications for the parent company. Given the pressure that HBOS have put on Hearts to sell Tynecastle, it would be naïve to think that they have not been putting pressure on Rangers too.
The main problems with Rangers appeared to be lack of investment in the squad, control of the club by an individual with no effective means of challenging him, and the siphoning off of profits which could have belonged to RFC into Murray controlled companies. After the rights issue the banks will no longer be knocking on the door, but all the other problems remain.