Why rebuilding shouldnt always be done the Green Way

“Do you wish to rise? Begin by descending. You plan a tower that will pierce the clouds? Lay first the foundation of humility.” The words and thoughts there of St Augustine the Latin philosopher and theologian. A Wise choice of words I believe when looking at how to aspire to greater heights though I suspect they would be sadly lost on one man north of the border. If you’ve fallen from grace before you consider how to rise again wouldn’t you be better off to show some humility in doing so? It seems not so in the case of Rangers new owner Charles Green who some might say has gone on the record with some ill advised comments aimed at City rivals Celtic and the state of Scottish football financially.

When the old company went into administration it owed up to £134 million to unsecured creditors before it was eventually liquidated. Whilst the exact financial knock on affect is yet to be seen on Scottish football of the old clubs liquidation it’s widely predicted that it will have a massive detrimental effect and could potentially see some smaller clubs pay the ultimate price and go to the wall. Given this fact and claims from clubs like Stenhousemuir FC that they will have to scrap their youth system in order to be able to survive and you would think that Rangers new owner Charles Green would be somewhat careful in regards to what he has to say about building for the future.

Charles Green it would appear is akin to a bull in a China shop.

Yesterday saw Rangers win their Ramsden’s Cup first round tie away to Brechin City 2-1 in a tightly contested cup game which went into extra time after Rangers has taken the lead within the first five minutes. The good news for the Scottish game is that the travelling support is believed to have contributed around £30,000 to Brechin City’s coffers, the bad news is that it seems Green can’t resist having a dig at City rivals Celtic. Before the game Green went on record as stating he believes that his new company will be financially stronger than current Scottish Champions Celtic in a year.

Rangers are aiming to follow in the footsteps of Scottish league teams Gretna and Livingston who have both successfully climbed their way through the leagues and into the Scottish Premier League. Despite no longer receiving income from European matches after their subsequent relegation and punishment for liquidation for at least three years Green is confident about the new club’s short term financial prospects.

Green went on record stating; "If you look at the balance sheets at the end of next season you should see the strength of the two companies.

"We are in the third division and Celtic are in the SPL and what I'd like you to do is promise me at the end of the season, when all the games are played, examine the balance sheets of the clubs and tell me which one is strongest.

"Let's see who has got the strongest balance sheet. We've not got the debt that any of these clubs have.

"On the last day of the season I would really enjoy some clever financial analyst looking at the balance sheets and debt-to-equality ratio of every club in Scotland."

Yes – these are the words of a man who’s just set up a new company after the demise of the old one which went into liquidation owing £134 million to unsecured creditors. Ladies and gentlemen, boys and girls, members of the jury do you think it is wise to start trumpeting the fact that you haven’t any debts whilst the old Rangers went into liquidation owing so much money? Do you think it’s wise to bring such matters up when clubs in the Scottish Premier League like their English counterparts have spent beyond their means in an attempt to keep their position in the league which in the case of the SPL and like La Liga has been dominated for so long by just two teams? Celtics debts if any will have been contributed to by trying to compete with the old Rangers Company in the first place. You’ve been allowed to continue to use Ibrox; an all seater stadium with a capacity of 51,802 so for every home game if you only charged a tenner and sold out every seat your match day income would be over half a million alone before programme sales, food and drink sales etc where included into that tally. Given that many of the team’s highest earners have been removed from the wage bill will be another testimony to the chances of ending the season in the black and not in the red for once.

So whilst you might be correct in your claims Mr Green wouldn’t it be wise to just think them rather than say them as if you are some sort of moral hero. Whilst you may not have been the man that created so much debt in the first place there are many, many people who will have suffered as a consequence being amongst those who were owed part of the £134 million. Do you think they want to have to read the types of comments that you raised yesterday? Just one more kick in the balls as far as I’m concerned.

So Mr Green would surely stop there would he not making ill advised comments and rubbing the noses of others into the ground that have lost money after the old companies liquidation. No it appears Mr Greens levels of decorum are akin to a snow ball rolling down the side of a hill; by the time they stop they have created a full on avalanche.

So having been so disregardful of the old company Rangers part in the debts now acquired by fellow members of the Scottish league he then sets about a vitriolic questioning of the future financial viability of Scottish football.

Green as part of negotiations to acquire membership of the Scottish FA agreed a deal which will allow Ranger’s matches in the Third Division to be shown as part of the SPL’s broadcast offering. Something I’m sure wasn’t offered to the nine other teams competing in the Scottish leagues bottom tier. Watch how Mr Green distances his new company from the mistakes of the old one yet still retains Ibrox and all its potential benefits. On why they agreed to the deal;

"We signed up to the TV deal because we don't want to be held responsible for the downfall of Scottish football," Green told the Rangers website.

 “This is not the end of the problems for Scottish football”

"But someone is responsible for the demise.

"It's the end of the problems for Rangers but it will be the beginning for many other clubs. I think it will hugely difficult for Scottish clubs.

"There is no doubt Scottish football has been going downhill and if you look back in history, as I can as a non-conflicted outsider, to 14 years ago when the SPL was formed and since that time Scotland hasn't qualified for a major competition.

"Incomes have not grown and there really has to be a look at where Scotland as football business is going."

Yes Mr Green really did say the words "But someone is responsible for the demise.” Would that be the same way someone in the old company was responsible for such huge levels of debt which are set to have a knock on affect on the whole of Scottish football?

"If we had come to the table with a clean piece of paper then we wouldn't have signed up to the agreement but the realities are there have been historical misdemeanours and this is the price we have paid," Green said.

"We were on the outside trying to get membership of the SFA and they set the rules and the regulations.

"I'm interested to see how things will be applied in the future because this is not the end of the problems for Scottish football.

"We'll make a lot of friends along the way I'm sure and while our former friends have the difficulties they are going to face Rangers and the fans will have an enjoyable few years walking through the divisions."

Mr Green also indicated that there shouldn’t be any job losses as a result of Rangers having to start the new season in the bottom tier of Scottish football whilst clubs like Stenhousemuir are looking at having to scrap their youth system and community support workers in a bid to stay afloat.

So for Mr Green everything is bright for Rangers whilst piled somewhere in a back office in the Ibrox stadium are the past of misdemeanours of Rangers pilled under a carpet ignored and nothing to do with his new company. The new club has washed its hands of the problems of the past and distanced themselves as best they can from anything that went on previously yet are indebted to have transferred £5.5 million worth of assets into the new company including Ibrox which should see them finish this season in the red whilst other clubs are struggling to survive and having to cut costs.

With the starting line in sight for Pompey in the next few days let’s hope that Mr Chanrai has the common decency to keep his mouth firmly shut as we head into the future. We can’t and won’t shy away from the mistakes of the past as we look to rebuild for the future.

Counting the cost of the beautiful game

There is an expression that in life there are some things so precious that you cannot attribute a price to them, seeing you child take their first steps in life for example, precious and treasured memories that will live in our hearts and minds forever and a day. Reality dictates that everywhere else in our lives there are costs involved and none more so than in the game of football.

In the week that Scottish Premier League clubs voted against allowing the Rangers newco entry in the top tier of Scottish Football, Stenhousemuir FC of the Irn-Bru Scottish Football League Championship Second Division outlined in a statement the impact on their club financially and on the part of Scottish football as a whole if Rangers were to find themselves playing in the bottom tier of Scottish football.

The following contracts total £15.7 million per season in the Scottish Leagues and all include termination contracts should either of the Old Firm clubs not be involved in the SPL.

Loss of Sky broadcasting payments of circa £10 million per season.

Loss of ESPN broadcasting payments of circa £5 million per season.

Loss of Sportfive broadcasting payments of £2.7 million per season (overseas broadcasters)

Loss of Sponsorship of £1 million per season.

Additional new broadcasting deal with income of £3 million per season.

The inclusion of Rangers into the lowest tier would see Stenhousemuir lose the SFL central payment aligned to the SPL settlement payment which would total £50,000 per season. Whilst that figure might pale into comparison to the sums in the leagues south of the border, for a club of their size it will have a real detrimental effect and as such costs would have to be cut accordingly to make savings. The demise of one football club will it seems have as detrimental effect on the leagues as losing the ITV contract did several season previously south of the border.

In the statement the clubs outlines that having already made commitments to the playing staff for the season significant savings would have to be found in other areas such as having to scrap the youth system entirely. Some of the staff who oversee their community programme would have to be made redundant. This won’t be an isolated case in Scottish football either. Many clubs I am sure will have to follow suit and scrap their youth systems to and in the very worst cases of some small Scottish sides, the threat of administration will be a very real threat indeed.

The loss of revenues into the Scottish game and the culling of youth training will see the standard of the game diminish which will in turn have a future impact on TV contracts and sponsorship with companies not wishing to invest in a market further reduced of quality.

In a tough worldwide economy the supporters of other clubs are finding themselves punished for the actions of just one club that they have never themselves ever supported. Why should the fans of a club like Stenhousemuir FC be punished for what did they do wrong or the sets of fans from any other teams who will equally be effected? Why should hundreds of youngsters be denied of the chance to be able to turn professional because of the conduct of one football club who flew too close to the sun and got their fingers burned? The grass roots game in Scotland will be praying for rain in the forthcoming weeks and the seasons that follow if some sense of normality is to be resumed but how many people will be left counting the costs of others mistakes and just how many teams will be left cometh the hour when the decision what league the newco Rangers will be allowed to play in this season?

Football is now more than ever a game of the haves and the have not’s.

The irony at the demise of one club in Scotland and it’s not impact across the board can be summed up south of the border where the English Premier League has just tied up another record breaking broadcasting rights package which will see Sky TV and BT pay a joint total of £3.018 billion for the privilege. Now compare that to the poultry sums of £15.7 million set to be lost in the Scottish game or the loss of just £50,000 and the effect it will have on Stenhousemuir. It’s hard to believe the land of Scotland and England joins together the two countries Premier Leagues are so far apart.

But whilst the English Premier League on paper seems to continue to thrive underneath the surface the levels of debt do not dwindle as clubs spend beyond their means and above their levels of income. Lessons are still not being learned and we remain in danger of the threat of teams being forced into administration or out of very existence despite record levels of money coming into the game at the very top level.

This week saw the news that Manchester United, the largest football club anywhere in the world, were once again seeking fresh investment to pay off some of their estimated £423 worth of debt by filing for an initial public offering of shares in the US.

The club claims to boast a worldwide following of a staggering 659 million fans. With another huge cash injection from broadcasting revenue and sponsorship deals with worldwide firms including DHL pouring into the clubs coffers how may you ask did the club see its cash and cash equivalents on its balance sheet drop to £25.6 million as of March 31^st this year down from £150.6 on June 30^th, 2011.

Since the bitter takeover of United by Malcolm Glazer and his six sons in 2005 fans have cited that the family has saddled the club with too much debt and left them unable to compete against rivals or be able to compete to buy or retain the world’s top players. The shift in financial power and the league title to city neighbours Manchester City will only add fuel to the fire and the anger of the fans.

Further anger will be shown after the filing in the US showed that not only has the family borrowed from the club, something they are legally entitled to do, but that at least one of the Glaziers son’s also brought the clubs debt which earned him a higher rate of return on the money than the family was paying on its borrowings; All legal and above board.

Whilst it remains unclear why the family borrowed the money from United back in 2008 or what the funds were used for, the filing shows that at the height of the global financial crisis in December 2008, the six sons were given £10 million in loans for at least five years from the club for ‘general personal purposes,’ to be repaid at an interest of 5.5% At that time commercial banks were charging on average an interest rate of 11.44% for a two year personal loan in comparison according to the US Federal Reserve. Furthermore between October 2010 and January 2011 Kevin Glazier, members of his immediate family and a Glazer family company bought $10.6 million of Manchester United senior secured notes in the open market that they placed an 8.375% interest charge on. In April 2012 the Glaziers were paid a dividend of £10 million which I’m sure you won’t be surprised to read and discover was subsequently used to pay back the original loan that had been made to the family.

What should remain paramount to this entire network of interest rates, borrowing, lending and debt levels is that prior to the £790 million takeover of the club by the Glazers in 2005 is that Manchester United were entirely debt free yet the league ratified a deal to allow the Glazers to saddle the club with the burden of debt, not themselves but the club itself having been totally debt free. Let us not forget that the club had seen a move by Australian media mogul Rupert Murdoch’s Sky TV to buy the club some years before in 1998 which would have seen him pay 875p a share for the club which has been rubber stamped by the board in September of 1998. The deal however was rejected the following April by the Monopolies and Mergers Commission and the DTI.

In the case of Manchester United moves are being made to raise funding to pay off the debts however in the case of Portsmouth FC who now find themselves in the 3^rd tier of English football having been relegated last season following a ten point deduction the agreement in principle to a new CVA to take them out of administration will mean that the club have legitimately been able to shed £107.3 million worth of debts in two seasons without having to even paid a penny on them according to the administrator from their first administration Andrew Andronikou with up to £40.1 million being owed to the HMRC. The club found itself back in administration after the arrest of club owner Vladimir Antonov on charges of fraud and embezzlement lead to the clubs parent company CSI going into administration before the club itself subsequently again went back in administration.

Under the terms of the new CVA non-football creditors will be paid just 2p in the pound on monies owed whilst footballing creditors i.e. the players, agent’s et al will be due all monies owed to them by the club. However the deal is dependent on the club being able to remove the large earners off the clubs wage bill before anything is finalised and Pompey boss Michael Appleton heads into pre-season with just ten senior pro’s set to return to training and no goal keeper in place having released first choice GK Jamie Ashdown as well as Matt Gledhill and Daniel Nizic.

Once again those most affected by the actions of a few remain the fans and local businesses as well as the UK tax payer though unlike in the case of Rangers FC the fall of Portsmouth FC won’t have such a disastrous knock on effect to other clubs as it is about to north of the border.

The question remains what is being done to stop a possible meltdown of the highest order in English football. Whilst UEFA’s Financial Fair Play system will see attempts made to stop clubs living beyond their means and getting into debt, this will only affect the clubs playing in Europe each season and won’t stop the problem which has seen clubs like West Ham and Bolton build up levels of debt of over £100 million each. Wigan Athletic chairman Dave Whelan has called for a wage cap to be introduced and was joined this past week by West Ham Co-Owner David Sullivan who expressed his opinion that a cap should be introduced. The high levels of revenue being poured into the English Premier League haven’t seen debt levels decrease, but increase further as clubs wage bills continue to rise and money going out of the game in the form of fee’s being paid to agents. These levels of debt can only be sustained for so long as we have seen in the case of Portsmouth FC and it’s surely only a matter of time before we start to see some of the middle size clubs being caught out which will start to have a ripple effect through the leagues.

Sadly as always I fear it will be at the point of no return for some when things are finally ever changed.