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Rangers plans share issue to secure future

IbroxRangers Football Club hopes to raise further funding to secure its long financial viability after reporting an operating loss for the year.

Figures announced last night show the extent to which Sports Direct owner Mike Ashley is propping up the ailing club through loans and retail sales. He has injected £3m into Ibrox and sells merchandise and is now seen to be pulling the strings.

Chairman David Somers, said there were “testing times ahead”. The failure to get approval for a share issue in 2013  meant that the club had to borrow money and continues to do so. Loans of £1.5m from George Letham and Sandy Easdale have been repaid, but lower attendances have hit operating revenue.

The club saw a 32% increase in total revenue from £19.1m to £25.2m in the year ending 30 June 2014, with the majority of the uplift due to the first full year of the retail venture with Sports Direct. This resulted in a 375% increase in retail revenue from £1.6m to £7.6m. The club had a cash balance of £4.6m.

Gate receipts and hospitality receipts were down from £13.2m to £12.4m, a direct result of the lower match day attendances from both season ticket holders and walk-ins.

The club said its “brand perception” helped offset this shortfall through increased revenue from sponsorship and advertising which were up from £0.8m to £1.5m. Proceeds from ticket sales were also adversely impacted by the decision not to increase prices of either season or match day tickets from the previous season.

Season ticket sales were down from 38,228 in 2012/13 to 36,039 in the 2013/14 financial year, resulting in a fall in revenue from £8.1m to £7.7m in financial years 2012/13 and 2013/14 respectively. The average home league attendance also fell from 45,111 in the 2012/13 season to 41,444 in 2013/14.

Other Operating Income rose from £1.7m to £2.1m, a 22% increase, mainly as a result of hosting both Scottish Cup Semi Finals and an increased associated uplift in matchday catering revenues.

The senior management team has carried out an extensive review of the entire business operation at the club since the board was reconstituted almost half way through the fiscal year. This has resulted in a cut to the cost base.

Operating losses almost halved (down 42%)  from £14.4m to £8.3m. Staff Costs are down 18% from £17.9m to £14.7m with the biggest reduction coming in a £1.9m fall in salary costs following the manager’s decision to take a salary cut together with a reduction of the wage bill and termination payments in the playing squad.

The club savied £700,000 by cutting staffing levels from 146 to 122 in this period.

Other Operating Charges were up from £13.3m to £16.4m due mainly to the increased costs of sales in the retail business that is to be expected with the improved performance in the retail operation.

In the post-reporting period the board raised £3.13m (before fees and expenses) in  a share issue which provided additional working capital required during the current financial year.

Somers explained in his statement that South African businessman Dave King’s consortium was one of two potential funders who were unable to provide immediate proof of funds and identity details.

Somers said: “The board were informed that the consortium comprised eight members in total and details of the identity of each consortium member was requested by the board together with proof of funds. The consortium required the board, as a condition of progressing these funding discussions, to obtain the prior consent of more than 75% of shareholders to support their proposal to provide equity funding. The board were unable to obtain the comfort required by the consortium from shareholders without details of consortium members and the proof of funds, particularly as other proposals had provided this certainty and represented immediately available sources of finance.”

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