End of the Road for King?

ByTrisidium

End of the Road for King?

Since Dave King & Co took over TRFC a year and a few months ago, there have been, almost daily, reports of the imminent demise of the club, or King, or both. At the same time, again on a daily basis, there have been those who proclaimed the imminent ascendancy of the club to the top of the pile.

Up to now I have subscribed to neither theory on the basis that the former was wishful thinking based on very little evidence, and that the latter was something that Santa had passed on just before he disappeared up the chimney.

Not that I am the oracle on these matters. I confidently predicted that a reasonably healthy Rangers would see out the season clinging on to a top six place, and not for a moment did I imagine they would be sitting on the second top rung of the league ladder with half the season behind us.

Of course the notion that the newly promoted Rangers would provide serious competition for Celtic was always fanciful given their resources, and few of us on here would have raised little more than a titter at the very idea that they would; but that imminent demise theory has always had traction – a traction which until now never took hold in my mind.

The reason for that is simple. King & Co had a plan. The plan involved gaining proper control of the company via dis-application of preëmption rights and doing a soft-loan for equity swap (the company already has control of the club), building a consensus among the major shareholders, divesting itself of the onerous contracts, and enlisting as much financial support from the fans as possible before challenging an admittedly financially superior but somewhat mediocre Celtic for the league title.

The latter theory was probably based on the not unreasonable idea that a good manager with mediocre players can realistically overcome superior players with a mediocre manager.

King & Co had a plan.

In the meantime, King & Co would keep TRFC afloat with soft loans which gave them, as creditors, more and more clout come the day that the PLC (RIFC) needed to be ditched along with its shareholders, who had been expertly kept in line via some very good PR control of the MSM.

Three things have gone wrong with that plan;

1. King & Co seriously underestimated Mike Ashley’s ego and his capacity for resentment. Consequently, the onerous contracts are here to stay, income streams for the team and manager throttled, and that consensus remains elusive. In its absence, they board can do very little other than posture for fear that Big Mike will drag them into court yet again.
2. Compounding the problems caused by the short-fall in income, Celtic became and raised the stakes in the game by hiring a manager of some pedigree – a manager who against the odds, delivered an extra £30m into their kitty by qualifying for the Champions League.
3. The tight control of the media appears to be slackening.

In short, I think the board have been guilty of believing their own hype, and underestimating the enormity of the task before them. But doubts are most assuredly creeping into their thoughts. They are running out of time and money.

The stark reality for those on the board who are providing the soft loans at Ibrox is this; they will have to keep providing those loans just to stand still in playing terms. That is a situation that some on the board now see as unsustainable, and they may turn the soft-loan tap off.

How likely is that to happen?

The club (TRFC) owes its parent company (RIFC) something in the region of £26m. The parent company is running a £4.5m structural deficit and owes King & Co around £15m.

the board have been guilty of believing their own hype, and underestimating the enormity of the task before them

I would suggest that the overall position is far worse than it was five years ago and if no major new investor was willing to come forward then, it seems difficult to see why they would do so now.

I will forgive Rangers fans if they say I am painting a bleaker picture than the reality suggests, but even if I am, one thing is clear, the current situation is unsustainable. Even if the soft lenders were to revisit their cash reserves ad infinitum, the club would fall foul of, and be sanctioned by the FIFA Fair Play directives. Something desperately has to change.

Firstly, that consensus. Ashley needs to be coaxed out of the ‘enemy’ camp. He could still be an ally of course, but that will mean King has to go. If King is still there by the end of the season I believe that the current alliance on the board will crumble, the soft loans will dry up, and of course unless a high net worth individual comes along to bail everyone out, the PLC could easily go into administration.

A few months ago, I would have thought that impossible, but maybe not so much now. I doubt there are many Rangers fans who don’t realise that King is the single biggest obstacle to any accord with Ashley, but perhaps more importantly, there are also, finally, some rumblings among the fans and in the media that King’s unequivocal promises of £30m for the team have simply not been honoured.

Douglas Park and others would like to see King gone – and Ashley needs to be coaxed out of the ‘enemy’ camp.

It is rumoured, although we cannot corroborate, that he is unable to get funds out of South Africa (this being part of his plea agreement with his SARS business). It would explain the failure to deliver on the cash promises, but his personal dispute with Ashley makes it unlikely that a solution can be found that involves both, and Park and others are aware of that. If King was as big a Rangers man as he has led us to believe, one would expect that he would be happy to step aside for the good of the club.

My belief is that Douglas Park and others would like to see King gone, and recent press coverage (not Gordon Waddell’s piece in the Sunday Mail but the recent Daily Record piece sniping at King) reinforces my belief that the unity of the current board is falling apart.

But even with King out of the picture, even with a new found boardroom unity including Ashley, the club is still a bucket with a £4.5m per annum hole in it, owing £26m in loans to RIFC. It also has a refurbishment bill for the stadium conservatively estimated at £15m, and a significantly inferior (to Celtic) playing squad and manager.

All this whilst the life is still being choked out of merchandising, the reality that football clubs in the 21^st century don’t have lines of credit at the bank, and ST sales are maxed.

The income ceiling has been reached, and that £4.5m annual shortfall can only increase – especially if better players are sourced.

That is the very definition of unsustainable.

In order to meet the expectations of the fans, potential investors in the club won’t get change out of £50m, and of course those investors would be unlikely to see a return on that investment for a considerable period.

So aside from the personality clashes which are hampering the smooth running of the business, the traditional aspirations of Rangers, the size of the fan-base, and the costs of an infrastructure commensurate with that are a problem. These aspirations, in the short-term at least, are also unsustainable. They are the aspirations that saw RFC fail catastrophically, and they will, if nothing changes, do the same for TRFC.

If Dave King jumps or is pushed, the first task for a new board, if it is to succeed will be to build a consensus around survival, not immediate on-field success. PR goals need to be set to manage expectations.

I think the end of the season will see significant changes at Ibrox. The permutations of what happens next at Ibrox are too many to mention, but all of them, other than the sugar daddy or a healthy dose of realism lead us back to 2012. Of that I have no doubt.

That realism needs to include a willingness to dispense with a preoccupation over the possibility that Celtic will have a record-breaking run of league victories. It also needs to recognise that the old traditions of Rangers, where they were expected to be the top dogs in the league, are gone – perhaps forever.

And a sugar-daddy? Yes, there admirable individuals in boardrooms all over the country who constantly go into their own pockets to pay bills and keep the doors open and the lights on at their clubs.

However, the amounts required to make Rangers a top team are way in excess of what anyone outside of Stamford Bridge or the Etihad can manage. Stewart Milne doesn’t do it at Aberdeen. Dermot Desmond doesn’t do it at Celtic. And why should they?

What Rangers fans should be asking is, “Why would anyone?”

I earnestly hope that the current Rangers survive. Scottish football needs them as much as it need any other club. We all regret the demise of Third Lanark and Gretna. We feared for Hearts and Dunfermline before they emerged successfully from administration. All of our clubs add colour and sparkle to the game, so the loss of any of them is sad. And whatever side you are on in the OCNC argument, no one can deny that tens of thousands of fans are emotionally invested in Rangers’ future, and that they are well placed – financially in the long-term – to compete at the top.

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