Flotation of football clubs in which fans are encouraged to take a stake have gone out of fashion. The recent offer of a stake in Manchester United was a debt reduction measure aimed at (supposedly) sophisticated institutional investors.
Flotation of football clubs in which fans are encouraged to take a stake have gone out of fashion. The recent offer of a stake in Manchester United was a debt reduction measure aimed at (supposedly) sophisticated institutional investors.
However, Rangers are swimming against the tide. Rangers chief executive Charles Green recognised that many previous retail offerings had resulted in losses. He told the Financial Times, ‘Some people will buy £500 of shares (the minimum investment) and put the certificate in a frame and put it on the wall,’ he said. Indeed, someone once had a business once offering single shares in clubs for this purpose, the ideal birthday present for a fan.
He went on to argue that many others would make far more substantial commitments in the expectation of making a long-term gain. He told the Pink ‘Un that clubs such as Arsenal and Manchester United had demonstrated that fans making small, long-investments could profit from holding stock in their favourite clubs.
It is up to Rangers fans to decide whether they want to buy the shares to back the club and to seek appropriate financial advice if they view them as an investment. As a general point, I would observe that Manchester United shares became available for purchase in very different financial circumstances in which the club faced fewer immediate challenges than Rangers do now. Indeed, before they became generally available, the story is that the former owners went round buying pockets of small shares from widows of former supporters, no doubt at a good price.
The prospectus calculates that it will take Rangers three promotions to return to the Scottish Premier League (SPL). However, Mr Green said that the club could return as early as next season if there was a restructuring of the divisions, although that might not go down well with other Scottish clubs who want to see Rangers work their passage back.
Mr Green clained that if it took three years to return, there would be no SPL by then because it wouldn’t survive without a television contract and there would be no TV contract if Rangers was excluded for that length of time.
Mr Green reckons that a successful flotation might see 20 per cent of the ownership in the hands of the club’s backers, 20 per cent with fans and 60 per cent held by institutions. Mr Green is a venture capitalist who was once chief executive of Sheffield United.
The existing backers of the club, 19 in all, originally raised funds at 50p a share to resurrect Rangers and have since committed a total of £12m following further private placings at £1 a share. Their shareholdings will be diluted (reduced as a proportion of the total) by the new offer. They are hopeful that the new business might be valued at £35m and £50m.
The club has other fund raising plans. They are negotiating partnerships with British Land, Cancer Partners, Ardmore Group and the Marriot and Holiday Inn groups. They are building a megastore and two new bars in the stadium. They have plans to rebuilt the defunct railway station outside the stadium.
They are looking for a new sponsor that may involve renaming the stadium whilst retaining ‘Ibrox’ in the title. They are tapping into their large fan base by opening five new shops, including one at Glasgow Airport, one in London and another in Belfast. They are continuing negotiations with adidas and Puma to manufacture the shirt for next season.
The new owners have recently entered a 51-49 joint venture with Mike Ashley’s Sports Direct ,after the collapse of JJB Sports, to sell Rangers’ products. Mr Ashley, who has shown that he can bring in the Wonga, wants to take a stake in Rangers.