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Cutting back to the chase

By raising the possibility that the Rangers players might take a 15% pay cut as one solution to the club's need to reduce costs, Graham Wallace, the Ibrox chief executive, has emphasised the extent of the problem he is wrestling with.

Rangers players were asked if they would be willing to take a 15% pay cut yesterday. Picture: Colin Mearns
Rangers players were asked if they would be willing to take a 15% pay cut yesterday. Picture: Colin Mearns

In a sense it was a starting point, since it was unlikely that the players would agree, not least because they have contracts of employment, many of which were signed as recently as last September. It will not be the solution, though.

By his own admission, Wallace needs to cut the outgoings at Ibrox. By some estimates, between £500,000 and £1m a month needs to be saved, and it is always cash flow that generates the crisis points for football clubs. The first months of the year are also the toughest, since season ticket money tends to have been spent. Brian Stockbridge, the financial director, told supporters last year that there would be around £1m cash left in April, without taking into account any commercial uplift, but the former chief executive Craig Mather has since left, with a pay-off.

Money is tight at Rangers and difficult decisions need to be taken. To reduce the wage bill, players need to agree to leave, or at least be incentivised to go. That requires cash as part of a pay-off.

Lee Wallace, for instance, has made it clear that he has no desire to leave for England. Emilson Cribari, too, has no intention of moving on this month. Dean Shiels wants to stay. Even David Templeton, peripheral this season, would be unlikely to receive the same wage elsewhere.

The breaking of yesterday's story about the 15% pay cut alerts other clubs that Rangers players are available, if they did not already know, but also introduces doubt into the minds of the players. If a pay cut is being mooted, what does the future at Ibrox hold? It remains unlikely, though, that any will leave unless it is to comparable deals elsewhere.

There is also the question of why a 15% cut was raised with the players without it also being stressed that the executive team would do the same. Wallace has, also, recently brought in an external consultant in the shape of the former Arsenal and Liverpool finance director Philip Nash, so players would be entitled to ask why they alone ought to bear the brunt of cuts.

The situation at Ibrox is fluid, but significant. There are other questions, such as why has the Stock Exchange not been notified of Charles Green's shares being sold to Sandy Easdale? The proposed deal has been in place for some time, but does not yet appear to have happened.

There are three potential solutions to the current scenario. The first is to bring the business on to an even keel - if that can be done in the short term - then launch a fresh share issue to raise more funds.

Dave King, the former director, is keen to lead this round of fund­raising and has made it clear publicly that he wants to invest in the club. Alternatively, loans could be secured against Rangers' assets, or costs could be cut dramatically and the business could rely solely on season ticket income, since commercial revenue streams remain diminished while Rangers are outwith the top flight. The latter would significantly diminish the strength of the squad.

There is no doubt that costs need to be cut at Ibrox and decisions made by the previous two chief executives are causing problems for Wallace to deal with now.

Ally McCoist has taken a pay cut and the squad could conceivably be smaller for the rest of this season and not affect the team's promotion hopes, but it still needs investment as Rangers seek to return to the top flight. Costs can also be cut

on the business side, but if Rangers are to rebuild and attain the club's former status, then new money is required.

Solutions lie to hand, since more than one high net-worth Rangers fan is prepared to put money into the club, but as part of a fresh share issue. Wallace has addressed all of these matters in the past, and there was also talk before the agm that the board had investors lined up. Perhaps they are waiting for a streamlined business model?

But in the meantime, there are pressing issues to be dealt with immediately.

Administration can be avoided, but some difficult decisions need to be made. That includes cuts, but

also opening the club up to fresh investment.

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Finance

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