Rangers yesterday released their interim results for the seven months to December 31, 2012.
The figures show a trading loss of £7m against revenue of £9.5m, although once non-recurring items are taken into account, including a "negative goodwill write off" of £20.5m, Rangers posted a profit of £9.5m. Here, Charles Green, the chief executive, and Brian Stockbridge, the finance director, answer questions about the club's current and future financial states
You said you will make a profit next year. Will this be down to further cost cutting or increasing revenues?
Loading article content
CG: Both. The costs will come down, and the costs in the second half of the year will be less than the first half, but you'll also see revenues improve. We'll have [merchandise] from Puma [the new kit supplier] to sell, we'll have lots of commercial deals, we'll be looking at getting more income from media. It's not just, 'let's keep pruning costs'. Which third, or second or first division club's got an infrastructure cost base like ours? No-one, but we have to keep that intact because within two years Rangers will be back in the top division. Therefore it's vital that we keep that workforce and infrastructure in place so that we can capitalise on it.
You have agreed a deal with Sports Direct for the naming rights of Ibrox, yet have £21.2m cash in the bank. Why does the stadium need to be sponsored?
CG: Bringing an amount of cash in by naming the stadium – and that amount will vary upwards depending on the league that we're in – or the branding of Murray Park is vitally important. This is not money that goes into Charles Green's retirement fund, it goes into Rangers and we shouldn't lose sight of the fact that the team needs investment on the pitch, because it's only with a successful team that we'll get the support of the fans.
We had a meeting a few weeks ago with the supporters and invited Sports Direct. We had a presentation from Derek Llambias, the chief executive of Newcastle, who talked about how that worked for him at Newcastle, how that money bought Demba Ba and, after 29 goals, he sold him for £7.5m and bought [Moussa] Sissoko.
We had narrowed it down to two interested parties, but one of those was not prepared to commit until he knew what league we were going to be in. We don't even know what the league is going to be called, let alone what division we're going to be playing in. We will go ahead with Sports Direct and what we're doing at the moment is getting some visuals together. We'll get those up on the website so that the fans can see what the proposals are for the stadium.
In layman's terms, is it right to say that the "negative goodwill write down" is the difference between what you paid for the assets last summer and what they're now valued at?
BS: Yes, effectively. Part of the current accountancy standards require us to work out the fair value of the assets being acquired. When the assets were bought, there was no licence to play football, and a stadium is only worth anything as a football stadium, so that's why there was a low value when the company was acquired. I'd point out that DM Hall, the chartered surveyors, valued the stadium and Murray Park at £80m. We got another independent valuer in, and Deloittes also looked at it, and we chose to put it in at half that value. This is an accounting adjustment. We increased the value of the assets on the balance sheet and this goodwill write off is an accounting entry.
Some of the other non-recurring costs include the football debts?
BS: Yes. We had £2.8m of debts and as of now we've only got £250,000 to pay. There were some more at the year end that weren't currently due. I would say that the £250,000 is not due until between June and October.
Does the asset purchase, the £5.5m paid last summer, appear in the P&L?
BS: No, it wouldn't do, because under accounting standards you need to value the assets acquired. So when we put the topco structure in place to float on AIM [Alternative Investment Market], the assets are valued at these new, higher values. In terms of the numbers on the balance sheet and in the accounts, that £5.5m doesn't appear, but the larger number does.
How do these figures impact on Ally McCoist's budget for next season?
CG: Players will come in on September 1 who are out of contract, so they won't require any capital sums. There are players who will leave the club because we won't be renewing their contracts. We expect that the player wages will rise but will always be within one-third [of turnover], which we put in the [share] prospectus.
Last summer, the club signed SPL-quality players. Will that continue to be the policy?
CG: We want to get the best players we can. We're fortunate that players of a high calibre who wouldn't normally sign for a third or second division club are prepared to take the view that doing a one-year stint with Rangers as a springboard to going into the SPL is something worth doing. There's no point in signing players who are good for the league that we're in if a year later they're not going to be able to compete for a place. We want to get good players, but what I don't want to do is bring in a pile of good players who are at the end of their career.
Are you convinced McCoist is the manager to take Rangers to the Champions League?
CG: Ally had a dream of becoming Rangers manager and within six months of achieving that dream, the chairman had left the country, the chief executive had been fired, there was no finance director and he was working for the administrators. He's then not allowed to play pre-season friendlies. That's not the ideal preparation for a manager, then for me to be judge and jury on Ally's performance. Ally's not happy with where we are. We're all happy that within three more matches we're likely to have won the league, and that's fine, but in terms of how we're winning, I don't think anybody is happy. But the answer is not, 'let's fire Ally', it's 'let's all get our sleeves rolled up and deal with the issues to try to improve'.
You don't have a vote but do you believe league reconstruction will take place?
CG: Something has to happen. The big question is not 'is it 12-12-18 or 12-12-10-10?'. It's what's the governance? Are these two leagues that are merging solvent? Is there a Sky contract? What does it look like? These are all unanswered. Who's going to be chairman? What's the board? Who are going to be the executives reporting to that board? What's their mandate? Unless we get these bits right, then whatever format is picked will be back in trouble within two years.
The board recently asked Malcolm Murray to stand down as chairman, but a truce was struck. How would you describe your working relationship?
CG: I would describe it as like any family. People have differences of opinion round the breakfast table. I've always said that it's good and healthy for people to have differences of opinion. I've got a style which is perhaps not ideal for everyone who sits round the boardroom table.
I came into Rangers at a very difficult time and took on something that was very difficult to complete. I'm quite happy to be judged on what I've delivered. It's not really the burning question, how I get on with the chairman, it's how the board acts. What we have now is a board of a number of people with different skills. We've got Walter [Smith], who's clearly got a lot of football knowledge, Ian Hart, who's a pillar of Scottish society and who understands Rangers very well, you've got Brian Stockbridge, who's a very capable and qualified accountant, so we have strong financial controls. If you look at the other two non-execs in Bryan Smart and Phil Cartmell, one was finance director of Mercedes and the other one has got a wealth of corporate experience. We've got a lot of different characters, all of them have different opinions.
Malcolm Murray has a great skill set, he's a Rangers fan as well. It's inevitable if there's going to be any bigger clashes it's usually between the chief exec and the chairman, but I argue with Brian. In fact, I argue with the man I see in the mirror when I'm shaving in the morning.