Dave King - Go Figure

Dave King – Go Figure

The Rangers are back and hogging the headlines despite Celtic claiming 7 in a row and on course for a Double Treble.

Well done Dave King and everyone involved at the Rangers PR Machine. You played a blinder.

Stevie G has arrived, shouted “Bring it On”, shook a grimacing Jimmy Bells hand and duly departed, at least until June 1st when he will take up his place within the mythical brown brogues of Ibrox management.

Only thing left now is the small matter of money.

You see, while every headline and commentator keeps telling us that Stevie G is a millionaire and isn’t coming for the money there are a few financial issues that Dave King ( Will cover his proposed Monday Press Conference later in Part 2..a Press Conference called when The City of London and The Takeover Panel are all on holiday btw!)

Lets start with a quick off the top of the head list

Wages and Payoffs

  • Graeme Murty has asked for his complete salary paid up in full. Cue another lengthy round of discussions ala Caixinha and Warbuton. Speaking of Caixihna, did he actually bring any backroom team with him when he arrived bar appointing JJ?.
  • Speaking of which, Whats gonna happen to Jonathon Johanson?..whatever it is he does at Ibrox. If he is going, he will need paid off too!
  • Theres talk of Stevie G bringing a whole host of folk up from Liverpool to cover coaching and the weans, will they supplement current personnel and therefore double the wage bill or will the current incumbents then need paid off too.
  • You know for all this talk about Stevie G not coming for the money, that’s fine if not a little far fetched but what about his team. What incentive is there to up root yourself from a lucrative and stable job at Liverpool to come join a precarious position 200 miles away in Glasgow. You can guarantee wage and bonus increases all round for anyone agreeing to travel north with the new manager..cue more cash needed to fund their expensive arrival.

Squad

Lets be generous at this point and say Rangers have a squad that can openly compete for 2nd place in the SPFL. We all know their limitations and we all know the squad is nowhere near competing with Celtic on a bad day ( losing to 10 men at home!) let alone compete on  level terms.

Thus we have major questions for Dave King that clearly Gerrard has had assurances over:

  • How many of the current squad will still be around come June 1st?  The ones, including loanees, leaving for sure are:
  • Some loannees may want to return of course but clubs like Brighton wont be like Hamilton Accies and will actually ask for payments rather than promises.
  • How many of remaining players will actually be wanted? Those with more than 1 year on current deals include some players that I doubt Stephen Gerrard will even have heard off let alone rate..although he will know Jordan Rossiter from the Liverpool FC Clinic no doubt:
  • And that brings us to the players with 1 year left on their contracts
  • How much will it cost to pay players like Bruno Alves up to leave? Ask yourself, would you walk away from an excellent salary knowing you were low on confidence and form therefore its likely you would struggle to impress any other club?
  • Lee Wallace, stick or twist? Will the fans be happy seeing a stalwart hounded out the door or could forgiving him be taking too big a risk for a player renowned for a bad attitude in respecting his managers.
  • How much is any sales of players actually likely to generate. Often managers are forced to sell before they can buy..judging by current squads estimations on Transfermarkt, its not looking too good for reaping any profit to re-invest and that includes Chinese teams with 11 million to spare!

 

And of course, that isn’t even touching on bringing players INTO the club. We have already had the talk of bringing in 33 year old ( ie no sell on value) Martin Skrtels of this world, a guy earning a fortune and beloved in Turkey remember, clearly utter nonsense based on current finances and any monies generated from players exiting from current squad.

So…the question is…where will the money required to enhance the Rangers squad come from?

  • Season Books – The club are likely to sell 45-48’000 season books which should generate around £25 million. Not too shabby at all
  • Hospitality – The Stevie G factor will help boost corporate sales as folk will want to grab a selfie with someone who has actually held the European Cup.
  • Shirt – Hummell will be laughing now that Gerrard is on board. That £3m a year deal will look like a bargain if all goes well.
  • Advertising – The boards around the ground should also be popular to advertisers knowing the coverage for Stevie G will be worldwide if not only UK wide.

So the above is good for say up to £40m which is a good income for the club.

The problem is the money coming in, immediately goes right back out the door. Rangers continue to drain money like a sieve. The last few years have seen no balancing of the unaudited books and last years £6.8m LOSS had to be backed up with a promise of £7.2m  to cover projected losses from Dave Kings family trust(cough!). That £7.2 million was to cover £4m for this season and £3.2m needed for next season..lets ignore if that £4m even appeared this season and just go straight to asking will that projected  £3.2m still be enough for next season under Stevie G?

The club currently has loans from Close Brothers which are secured and also have Directors loans which Dave King likes to call “quasi-equity”. The intention for the Director loans was to convert into Equity in the form of club shares. This is a vehicle often used as it can have benefits for all parties concerned when covering a cashflow shortage for a company. This problem for Rangers is they are not listed on any market, they have no NOMAD acting on their behalf to generate share interest and most important of all, the bottom line is that there has never been a dividend paid on current RIFC shares as dividends are paid from leftover profit, which has never been achieved. Its all very well having your club at heart but any Rangers director who has majorly dug in to help the clubs cashflow problems recently will be praying for a share issue to reimburse his goodwill and the news for them is rather mixed.

For you see, that asks us to now consider the biggest elephant in the Blue Room..The Takeover Panel.

 

 

The Takeover Panel are regulators to ensure folk do not act unreasonably when dealing in ownership of a company or its shareholdings. Dave King was judged and found guilty of acting in concert with other Directors and duly ordered to make an offer to purchase all available shares in the company. This decree is standard for anyone in control of over 30% of a companies shares. Its standard stuff and yet Dave King has did everything in his power to avoid facing his responsibilities.

The Takeover Panel currently await his depositing £11m in an escrow holding account that will underwrite the share offer he must make to current RIFC share holders. Dave King has missed every deadline demanded by the courts and no one is confident this share offer will ever materialise.

That however throws up quite a spanner in the works.

Dave King cannot hope to hold a share issue ( talk is 25p a share) for millions of new shares in RIFC whilst in contempt of a court order dealing in previous share manipulation for the same company. Its crazy to think he could even dare try.

Which then brings us to the big question…Will Dave King walk away from Rangers?

Walking away can take many forms. Rather than being lumbered with £11m of shares he doesn’t want or need, Dave King could quite easily take a few options

  1. Walk away entirely..sell his shares and step aside as the hero who brought Stevie G to Ibrox. The fans and current directors ( that remain) can just Forget the money problems, legal bills,  and financial basket case he created and just remember him as a true blue hero who will always be welcome on the Marble staircase. Would walking away get King off the hook with the Takeover Panel and allow a new share issue to be made?..its hard to tell how committed they would be to pursuing a man whose lawyer declared penniless, who was no longer a board member of a UK company. This could also remove the threat of the Cold shoulder and therefore satisfy any other potential or current stakeholders in Project Stevie G. Then again, The Takeover Panel  may still want blood and go after the other members of the concert party.
  2. Pass his shares to the side and take an honorary role. This would be sleakit and cunning, something Dave might find appealing given his past. He could sell his shares to a company that he doesn’t appear to have direct links too but in fact has control over, ie another “family trust” style outfit and then control from the sidelines whilst bestowing an Honorary President role on himself. Therefore he would rid himself of legal responsibilities and take all the kudos. Its doubtful Rangers fans or the SFA and SPFL would care as once again a Rangers Director plays fast and loose with the rules. The share offer can then be made without any dark Dave King shadows hanging over it.
  3. Stay as is and stump up the money. Cant see it happening but maybe he’s had a change of heart or developed a conscience. This would then free up any new share issue worries.
  4. Stay but bring in new investment. Talk of Far East investment and even Michelle Mone coming to Ibrox fill the city. All rumours of course but if Dave can find some more folk willing to launder, I mean invest cash in the current set up , and of course cover his current Takeover Panel problem, then that could result in quite a colourful show including a new share issue..once the hype dies down the questions will start flying in…what happens to current shareholding standings, will other directors be glad to see investments diluted, will shares to Equity be rejected as per rumours on Phil McG and John James sites..has Douglas Park dug himself into a very deep hole? How much can Club 1872 bail out Rangers holding company before questions get raised

The other big problem is a new share issue itself.

Rangers have never had a share issue that could be viewed as a success for the Ibrox outfit. It is true that Charles Green made so much money off the share issue but how much went near Ibrox? Its bad enough not being listed or having a NOMAD to cover share dealings but in the cold light of day, share issues need willing buyers and given no dividends ever being paid, its doubtful any reputable corporate investors would be willing to step forward with a big bag of cash. This then requires smaller groups of investors and Joe Public.

And therein lies the rub..

David Murray famously had to get the ill-fated MIM company to underwrite £50m of a £51m share issue in Rangers because there was no uptake. The Rangers fans may have unending love for their club\company\holding company but when it comes to stumping up cash, the debenture wary rangers fans ensure their arms don’t quite reach their pockets. Club 1872 might spend all they can but it wont be enough to bankroll Stevie G.

So that’s where we are…we await Dave Kings Press Conference and cue the media hype…lets hope its a good one with plenty to review afterwards!

*******BREAKING NEWS*******

Raman from STV reporting now that the Press Conference has came and went, not so much as a fanfare but more a fart in a wind tunnel.

Davie King has told the press that a share issue will be announced in the hope of raising £6m, and no current external investment on horizon

That’s SIX million, not sixteen, not sixty, but SIX million ( as Celtic Collectibles @CollectCelticFC noted on Twitter, we got that for Virgil sell on to Liverpool!)

Given the losses at Rangers year on year, the £7.2m notes needed to get books through an audit, the current loans, including secured and Directors, its pretty much a ridiculous announcement to make and im raising quite a cynical eyebrow here thinking a major game is being played out in the background..this is just another squirrel from our Dave I reckon.

There is no chance Stevie G will see hide nor hair of this money as it must be needed for something else entirely. Something with a rather immediate timeline or deadline by the sounds of it and pretty ominous if not completed asap.

Lest we forget, any share issue generates money for THE Company not for the Club. There is no legal need for any monies to be spent on the club itself, worth keeping that in mind folks.

Raman at STV also noted that the Press asked Dave King on Takeover Panel and why he hadn’t yet made an offer to buy shares from current shareholder AS PER LEGAL REQUIREMENT and King says that he has asked for an extension ( another one! but remember there is no-one in The City to check that with today as its a Bank Holiday and doubtful many Scottish Media folk will remember to  call them to follow up tomorrow!) and stated its all to do with getting an Escrow account in UK set up and that “proof of funds” are there. Which sounds like hes making promises yet again. Im sure the SFA and SPFL are taking this all in and ready to call him to task!

The 6m is a curious figure though…I keep thinking that’s exactly what Club1872 have to spend.

Given that’s controlled by Dave Kings right hand man it should be straightforward to get the cash into Daves hands…the problem is any share issue has to be offered to ALL existing share holders first so Im wondering is this why Paul Murray jumped ship in disagreement.

If the Board issue new shares, holdings get diluted but £6m at shares at say 25p a pop ( once again Club1872 paying way over the odds like they did to buy Ashleys shares!) that’s only 24 million shares which doesn’t seem a great deal normally in business but is in fact 1/4 of all current Rangers shares..see holdings below:

Shareholder No of Ordinary Shares held % of issued share capital
New Oasis Asset Limited 11,869,505 14.57%
Club 1872 Shares CIC 8,732,254 10.71%
George Alexander Taylor 7,575,000 9.30%
Alexander Easdale 5,256,110 6.45%
Douglas Park 5,000,000 6.14%
Julian Wolhardt 3,632,500 4.45%
River and Mercantile Asset Management LLP 3,523,059 4.32%
George Letham 3,299,515 4.05%

The questions Im now thinking are

“Does selling 24m shares to Club 1872 seemingly hand them the controlling interest over Kings perceived holdings ( even though his guy effectively controls Club 1872!)”. Does this then mean that after all the delaying tactics,  King can once again challenge the Takeover Panel as he is no longer holding over 30% in concert!

How does Douglas Park and the other Directors who put money in for cashflow problems feel seeing a share issue that will not reimburse them and in fact cost them in respect to shareholding percentage? I could of course be wrong but I doubt Douglas is going to involved in buying any more shares given his current undertaking and debt position and he isn’t being offered a debt to equity option here as that wouldn’t actually generate any monies for the Company.

Will The Takeover Panel escalate proceedings against King asap now hes announced this move..they already feel he acted wrongly against shareholders, would they allow him to go after more of their cash? Does Dave know all this and is playing a double bluff…cue an angry Takeover Panel and poor wee Dave saying “Look guys I tried but they wouldn’t let me work my magic so I have to say cheerio!” and cue much lamenting from Scottish media and financially ignorant fans.

Will we see Dave back again or will he next pop up at Liverpools Champions League final…I doubt he will be back here before June 1st  if at all.

 

Conclusion

Only time will tell how this will play out but something is going on…cause if its looks like a dead duck, smells like a dead duck and lies prostrate like a dead duck, its probably somehow connected to Dave but he will claim he never saw any duck, honest to god, he has proof, but not on him just now, elsewhere of course!