Rangers Half-Yearly Results Are Shockingly Poor - Analysis

Last updated : 28 March 2014 By Grandmaster Suck

 

Excluding the cash tied up in Rangers Retail we were down to £1.8m in the bank at 31 December. I am struggling to see how we will have enough cash beyond April. 

Our cash burn rate is c £1m per month until the season ticket money comes in so even after the loans of £1.5m and a possible dividend from Rangers Retail, we must be very close to running out of cash in May. We need investment urgently. 

The three key indicators of performance are Cash Balance, Revenue and Operating Costs.

 

1/  The Cash Balance is £3.5m.  

The cash balance is disappointingly low. To have shown a significant improvement this would really have needed to be in the £5-£6m region. It’s obvious the current Board are just hanging on for season ticket revenues, hence the need for the recently negotiated loans.

It should also be noted that £1,669,000 relating to Rangers Retail Limited (joint venture with Sports Direct) is not immediately available to the club.

 

2/  Revenue.  

Revenues excluding the Sports Direct income are down despite the club playing in a higher league. The revenue is £13.2m, of this £4.8m is from the Sports Direct deal, leaving £8.4m. Comparative figures for last year were £9.5m less £0.9m from Sports Direct leaving a figure of £8.6m.

 

3/  Operating Costs. 

Operating costs have not been reduced.

This years headline figure is £16.8m, but £3m of that is Sports Direct leaving a figure of £13.8m. Divide that by six and the monthly operating costs are £2.3m.

Comparative figures for last year - £16.6m for the 7 months the half-yearly report covered, minus £0.4m from Sports Direct leaves £16.2m, divide by 7 and the figure for last year was £2.3m

 

WHY SPORTS DIRECT MATTER

It is important to strip out the Sports Direct money as that gives a distorted picture of how the business is doing. It’s important to remember that Rangers and Sports Direct are on a 50/50 profit share but that its all Rangers capital which is employed in the venture. Assuming a 100% mark up on the retail sales it would take a turnover of roughly £5million for Rangers to obtain £1million after tax from that deal. £1,669,000 relating to Rangers Retail Limited is noted in the accounts as not being immediately available to the club.  Therefore the effective cash balance is just under £2million.

 

WHAT DOES IT ALL MEAN?

It means that the club is struggling very badly.

Without the loans from George Letham and Sandy Easdale the bills would stop being paid around Easter - even now the club is essentially existing hand to mouth and the current Board are reduced to threatening season ticket holders that without their cash the club will go into administration.

 

THE PROBLEM

The problem is that the current Board are the servants of the same block of shareholders who supported the disastrous polices of Charles Green. These figures show that they have failed utterly to cope with the challenges facing the club. Some of them may only have been elected at the AGM but their group has been in charge for a long time and they are responsible.

 

TRYING TO HOLD US TO RANSOM

Quotes from Sandy Easdale, Graham Wallace and David Somers all point to season ticket money being crucial - the implied threat is that if it is with-held the club goes into crisis. But then if the current Board resigned and was replaced by one we have faith in then the season ticket money will flood in.

 

THE SOLUTION?

Change. Change in the Board, change in policy, and change in the sage register. We need a huge injection of cash and Dave King is the only credible source of it. Other sources may exist but a majority of fans have no faith in any new investor brought in by the current Board - their agenda will be suspect.  Dave King is one of us and has already lost £20m investing in the club but he is prepared to do more.