The way the deal is structured, this upside passes directly to Murray's subsidiary, Premier Property Group. It is possible that some of this upside will end up at Rangers, but this will be at PPG’s behest. Given we are all part of the “Murray family of companies” should the deal not be structured so that the bit that needs it most – i.e. Rangers – ends up making most of the profit?
The Basis of the Deal
RFC pays Premier Property Group £1 for the car park, and that could be the end of it. Yes there is the possibility that a further substantial payment will be made, but only if Las Vegas Sands gets all the necessary approvals for a Casino development and subsequently leases the car park from RFC.
Rangers only need to make this payment if it believes that the lease income from LVS justifies paying the amount required by PPG. If not, then it ends up owning a piece of land that it bought for £1. And, unless Rangers already owns the Car Park, LVS will not undertake the expenditure necessary to secure its approvals and so without this deal, there will be no Casino. Voting yes to Resolution 9 at the AGM looks like a no brainer, but is the deal being structured to give the best of the deal to Rangers or PPG?
Is the Albion Car Park deal better for Rangers or David Murray?
In theory this hardly matters as David Murray owns 86% of Rangers and almost all of Premier Property Group, but given the relative strengths of the two companies – PPG made a profit of £8m in the last available accounts – it would be nice if Rangers did better than PPG out of the deal.
What is the Potential Cost to Rangers?
The deal is structured in three parts. Firstly, £1 up front; secondly, agreeing to pay an uplift if the casino goes ahead, and thirdly, issuing a Standard Security to Premier. Starting with the standard security first, it clearly states that its purpose is to secure for PPG any uplift in value of the Albion Car Park as it is today and any future value as a casino site, or anything else other than a car park.
The amount of the uplift is impossible (for me anyway) to calculate, as it will depend on Chartered Surveyors’ valuations of the site as a car park and as a casino at some indeterminate point in the future.
It is, however, possible that some of this money will find its way back to Rangers. The Standard Security states that the money will go first to repaying any liabilities which PPG has secured on the land, and that any surplus goes to Rangers. What are these liabilities? Well we don’t know and it is possible that as the project proceeds that PPG could borrow more money on the property. PPG also has “absolute discretion” over how these liabilities are paid off.
Would you bet on a Casino?
I ask myself whether or not the Albion Car Park is the ideal site for a Las Vegas style casino resort, but I guess the proximity to Glasgow Airport and the M8 makes it a good site. But if LVS thinks it is a possibility, then it should be worth a gamble - £1 down now and any further payments only coming due if the casino gets built.
But PPG also looks like being a winner, especially since Rangers is picking up all its costs (solicitors, surveyors etc) in the transaction, and it will be interesting to see how much, if any, of the uplift payment finds its way to Rangers.
You would think that having come so far down the line on the deal the directors would have a fair idea so feel free to ask them the outstanding questions at the club’s AGM.