Crack Squad to sift through Rangers £25 million debt

A crack squad of bankers have been put together to cut £25 million debt from Rangers. The Ibrox club have suffered during the current financial crisis, causing some of their loans to be put under the microscope.

Bank of Scotland bosses have hand picked a team of bankers to examine how the club can pay back much of its debt. Experts believe the bank could demand repayments of £20 MILLION over the next few years, cutting the Rangers debt down to around £5million.

Rangers Chairman Sir David Murray has already slashed some stadium jobs and told manager Walter Smith to axe eight players in the summer. However last night media reports gave warnings that more cuts could see Rangers facing a decade living in Celtic’s shadow.

A Bank of Scotland insider revealed, “The debt has been deemed too big and it was felt the time had come to start clawing back some of the cash. The credit crunch means there’s no such thing as easy money any more—we cannot keep loaning companies big money against assets that leave us exposed.

"We don’t want Rangers to suffer on or off the pitch so we’ve pulled together some of our best brains to make sure that the club comes down as gently as possible. But the current situation cannot possibly continue. Ultimately, this is big business and, I’m afraid, sometimes it hurts.”

Stephen Morrow, Professor of Sports Studies at Stirling University, warned fans that the bank’s crackdown could see their club “in the wilderness” for the next ten years. He said, “This will make it even more challenging for a club like Rangers to compete. In some ways, Celtic’s financial basis is different—they’ve been run in a different way which has left them less exposed. If Rangers have to pay back, say, £15-£20million over the next few years, there’s a risk of a big gap opening up between them and Celtic.”

It is believed the specialist lending team of bankers will study the club’s estimated £25million debt before making a string of recommendations to claw back some of the club’s loans. The options would include selling off assets, such as players, trimming overheads, selling other assets or attracting more investment.

Professor Morrow added, “What you’ve got with a mature business like Rangers is that the business has developed—there’s only a fixed number of games they can play, they’re playing those games to capacity crowds and there’s a TV deal which is not going to get any better. Once you’ve brought players’ wages under control then that’s it, there aren’t many more ways to lever huge sums of money into the club. Unless someone comes along and gives you the cash, the only other way is to sell some of your assets and that means players.”

Rangers’ finances are tied into chairman Sir David Murray’s companies, Murray International Holdings—which the bank owns around 10 per cent.

The club debt has risen at an alarming rate—despite Rangers’ run to the 2008 UEFA Cup Final. Last year it stood at £21.6million but is believed to have reached around £30million before the bank stepped in. Half-yearly figures released in January show the club’s turnover is 50 per cent lower than 2006. And they are facing a 71 per cent jump in interest payments to nearly £8,000 a day. The credit crunch has hit the club hard as Murray International Holdings’ huge commercial property assets have plummeted in value.

Last night insolvency expert John Shields said, “Murray International Holdings is built on steel, property and football. The bottom has fallen out of the market for steel and property, so the football cannot carry on being a loss-making luxury. The Bank of Scotland has specialist lending teams whose job it is to protect the bank’s money. Those men in grey suits will be looking very closely at the Rangers balance sheet and may suggest pruning the Ibrox staff.

"The team will probably be three-strong and they’ll spend up to six months poring over Rangers’ accounts and working with the club to identify where the savings are. They should have a strategy in place for when the transfer window opens at the end of the season and then guide the club through until it closes at the end of August.

"We’re in a recession so season ticket revenue could fall, corporate hospitality has been cut, the Murray Park Academy hasn’t delivered enough young players. The only way to raise revenue short-term is to sell players. Usually, the fact that the club has a wealthy parent company would be enough to satisfy the banks. But Murray International Holdings has taken a hit as well so Rangers is more exposed than it would normally be.

"David Murray is a realist—he is trying to bring a sound business structure to the club which is essential for it to survive but if the bank is now restructuring the debt then there may be even deeper cuts on the way. I think the fans need to rally round the chairman at this time, not barrack him for putting his neck on the line.”

Sir David recently admitted Rangers had lurched deeper into the red, losing nearly £4million between June and December 2008, with £1.4million paying off interest alone. An early exit from European football at the hands of Lithuanian minnows FBK Kaunas in the Champions League this season cost the club around £13million in potential revenue.

During January’s transfer window, Murray sanctioned the sale of star striker Kris Boyd for £3.8 million in a bid to rake in cash. Boyd was on the verge of a move to Birmingham City but the deal fall through when personal terms could not be agreed. Goalie Allan McGregor and captain Barry Ferguson, on salaries of £25,000 and £30,000 a week respectively, were linked to a move to Newcastle United which also fell through.

Walter Smith’s squad is to be trimmed to only 20 in the summer after failing to offload Boyd in January. But Murray has insisted that long-term loans were keeping the club stable, saying, “What I’m doing is not panicking. We have a financial facility with the bank and we must work within that framework.”

Now that strategy has been thrown into uncertainty and earlier this month, Rangers admitted twenty backroom staff would lose their jobs. John Macmillan, general secretary of the Rangers Supporters’ Association said, “It’s a pretty bleak picture—the fans won’t take kindly to this. Most really don’t care about who owes what to whom, so we may see a split between the club and the fans over the next few years.

"But the club must recognise that it’s not the fans’ fault that Rangers are in such a mess—there’s been mismanagement and unwise signing policies which continue to this day. The way through this crisis is to put bums on seats, not to penalise the fans. The club should look at lowering prices and even letting in kids for free.”

Source: News of the World