Reasons for listing…

With the news today that the Rangers franchise are opening ‘registration of interest‘ in their planned public flotation on the AIM market, I thought it was a good time to come out of semi hibernation with a few thoughts:

Reading the press statement released by the franchise, this stuck out at me immediately…

Rangers said the funds raised would be used to strengthen the player squad, improve facilities and provide additional working capital.

Now, while others will be along later to analyze what they are doing in far more depth, its worth us looking at the above statement, and the reason for listing.

A company usually lists for a few reasons.  Either to provide capital for expansion, or to return money for private investors.  Rangers clearly are making out it is for ‘expansion’.

But how can a club, who are banned from signing anyone over the age of 18 until at least January 2014, need to sell shares to ‘strengthen the player squad’?  Isn’t this something they cannot legally do?

The next statement they make is:

“Playing at the 51,000 seater Ibrox stadium, which is Scotland’s only UEFA elite club stadium, and benefiting from the world class 38-acre Murray Park training facility, the club has been a major force in Scottish football for decades.”

This tends to suggest their second excuse of ‘improving facilities’ is rubbish as well.  Why would a club, playing at what they claim is the best stadium in Scotland, and with a world class training facility need to improve facilities?   Maybe it is convenient that their last reasoning is in fact last…

“provide additional working capital”

So, at last, a ‘debt free’ Rangers is finally admitting that it is living beyond its means.  As I said a few months ago, and many said before and since, the current Rangers model is just not sustainable, without the fans buying into it.  Last year it was Ticketus… season books sold that the fans would have to buy to keep Rangers afloat.  Now they are being asked to invest in a ‘club’, in full knowledge that if it all goes wrong, the next ‘Newco’ will claim to be the same club, but ask them to buy shares again in their ‘newco club’.

Now, why would they be asking for ’20 million’ in a floatation.  Do they need that much working capital to get them back to the SPL (will the IPO prospective contain the quotes from Green that he will not let them play in the SPL) ?  My calculations a few months ago suggested they were only a few million a year short, even with their ridiculously over paid squad.

Wikipedia has a very easy to understand section on IPO’s including this section on ‘Reasons for listing’, which starts…

“When a company lists its securities on a public exchange, the money paid by the investing public for the newly issued shares goes directly to the company (primary offering) as well as to any early private investors

The last three words are my emphasis…

Anyone who mentions ‘Ticketus’ shall be immediately added to the Vanguard Bears list of enemies.  The question that remains is whether Rangers fans are about to be ‘duped’ again, and whether, this time, they will listen to the warnings coming from everyone outside the Ibrox and the MSM.