Our position with Lloyds/HBOS - Time For Some Transparency.

Last updated : 08 January 2011 By Disco DeeJay

Once again like many Rangers Supporters, I am left mystified by the comments of Walter Smith in relation to our position with our Bankers - Lloyds/HBOS - followed by the Club's decision to readily release our own and the SPL's top scorer for the second time in 6 months.

I won't use the word 'sell' as Boyd went for nothing and by the time Miller picks up his severance pay off, we will have very little left.

I have a background in banking and passed my exams many years ago, but no matter how hard I try, when I look at our accounts, I cannot understand why Lloyds/HBOS are behaving in such a manner towards us.

Our published accounts to 30 June 2010 show that our Bank debt incorporating a Term Loan and overdraft facilities reduced by £3.7m last year to £22.3m (2009 - £26.1m).

This was despite paying off £8million in historic transfer fees (which left £1.2million still to pay).

The term loan, repayable over 19 years, stands at £19m which will mean repayments of £1million per year + interest.

So, if we had Bank Debt of £22.3m and £19m of that was a long term loan, then our working overdraft would be £3.3m, which is well within the £15m revolving credit facility (overdraft limit) that we have: £11.7m within it to be exact.

A football club's income is loaded to the beginning of the season in terms of season ticket sales, but Champions League participation this season will mean a hefty amount of Euros being lodged in our account with Lloyds/HBOS, before the season ends.

Our Champions League campaign this season has guaranteed us 9.2million Euros + TV Revenue (in 2008 Celtic got 6.2 million Euros) + gate receipts, which should easily total around £16million.

On top of that, we will get a further 200,000 Euros for qualifying for the Europa League, plus TV and gate receipts and another £300,000 Euros + TV and gate receipts should we get past Sporting Lisbon. That amount would, of course, increase with each round should we advance.

Putting things into perspective.

On 30 June 2010, we had an overdraft of £3.3 million, but the previous year we managed to reduce our overdraft by £3.7m, so assuming we have a similar year, that should be wiped out this year and leave us with a small credit balance.

However, we should do better than last year, due to a better performance in the Champions League bringing us an extra 1.2million Euros in points payments, compared to last year.

Also, last year we repaid £8m in historical transfer fees, we don't have that to pay this year (maximium should be £1.2m), so we should be well in credit at the Bank.

Allied to that:

Staff Costs have been steadily reducing over the last 2 years.

In the year to 30 June 2008 they were £34.3m.
In 2009 - £30.7m.
In 2010 - £28.1m.

That equals reduction of £6.2million in the last 2 seasons and a figure that will again be slashed this year.

Our Net Operating Expenses in 2008 were £56.8m.
In 2009 - £48.2m.
In 2010 - £43.8m.

Which is a reduction of £13million in 2 years and these will also be significantly reduced this year, meaning further profit.

By my conservative reckoning, by 30 June 2011, we should have somewhere in the region of a £10million credit balance at the Bank and our long term loan reduced to £18m over 18 years.

I haven't taken any of our summer transfers into consideration, due to a lack of accurate figures, but I would reckon that the transfer fees and wages for the players who left, should more or less offset the 3 who came in.

Our debt to equity (gearing) ratio was reduced last year to 38% (2009 - 47%). again a sign that we are heading in the right direction, though further reduction would be helpful.

Crucially, the £15m revolving credit facility with Lloyds/HBOS, was in place till 31 December 2010 and the only possible explanation could be that the Bank have renewed this at a much lower level.

If that is the case, then it could be down to cash flow, as I don't think the UEFA money is received for a few months yet.

If I am correct, then it really is a shocking act by Lloyds/HBOS, given that the UEFA money is guaranteed due to what we have already achieved in the Champions League this season.

Something about the whole thing stinks more than a Celtc supporters green and grey hooped top after four weeks of constant wear in the summer.

There is something that we are not being told and it is now time for the Club to come out and tell us what the problem is with Lloyds/HBOS and whether or not we are being strangled due to our association with the MIH Group, as to me, it is certainly not obvious in our accounts.