The latest club to try to sell shares on the AIM Market are that of Glasgow Rangers. Chief Executive Charles Green announced plans to try to raise £20m from a share issue with a minimum by in of £500 being set for fans.
Initial reports have suggested a strong level of interest from fans and investors with The Sunday Times saying £9m worth of money has been “put in” already.
On a personal level, I am still considering my position to register an interest. Whilst I love the football club and have often dreamed of getting shares in Rangers, £500 is a lot to shell out just before Christmas.
But I admire Green’s confidence of raising £20m. He talks of many investors that are interested whilst he has also said that he will personally underwrite any shortfall if £20m isn’t raised.
There are a few issues though. In June after Green’s CVA proposal was rejected by HMRC, he proceeded to buy the assets of Rangers for £5.5m. Now the Yorkshireman values Rangers between £25-£30m.
What has changed since June for Green to feel the club is now worth five or six times the amount he paid?
Also, Rangers are hardly in an attractive position on the park at the moment. Languishing fourth in Division Three having not won away from home, there is no prospect of SPL and European football for the next three years.
If you look at their neighbours across the city, Celtic are valued at around £35-40m. And that’s because they are the SPL champions, are playing and winning in the Champions League and have more steady streams of income.
Green can’t count of any of that so why is he so confident?
Well as he points out, £500 is the price of a season ticket (well until this season anyway) and he agrees with what others have said that Rangers fans will invest at any time due to their emotional attachment to the Ibrox club.
However, it’s coming up to Christmas. There is still a squeeze on people’s disposable income so raising £20m will be very hard for Green.
You just have to look at how Sir David Murray had to plough in £50m of his own money back in 2004 when fans only raised £1m. And that was in far more rosier economic times.
And what of Green’s motives for the share issue? He says it will be used for working capital and to improve the playing squad.
I don’t think I will be the only Rangers supporter a little concerned if the money is being used for working day-to day capital at the club.
This season 36,000 season tickets have been sold whilst crowds have all been regularly over 45,000 which is a remarkable achievement for a Third Division club. Where has this revenue gone?
And with a transfer embargo in place until January 2014, will the money be put in a safe until then for the Rangers manager before he can improve the squad?
Football clubs aren’t the greatest business investments right now. But with McCoist still in charge and backing Green, this might be one share issue that might just have a successful outcome.
For Green’s sake he has to hope so.