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Rangers issue £25 million new shares

Rangers have issued some new shares worth a total of £25 million. Over 138 million shares were issued and bought at a price of 0.18p, a significant increase on the recent share price of 1p per share.

Rangers making use of secure funding

Championship club owners can inject up to £25 million over three years into their clubs in the form of secure funding. Often this takes the form of buying new shares to pile money into the club’s coffers. This is exactly what the Rangers board has chosen to do.

The reporting cycle is currently in its third year while Rangers are plying their trade in England for the first time. This meant the club could put in the full amount this year. The plan was agreed by the club’s five biggest shareholders (Anders Holch Povlsen, Jim McColl, Dave King, Stuart Gibson, and John Bennett). Since the club has moved to England the group of five have tightened their grip on the club. Povlsen and McColl are the joint largest shareholders and Bennett is the club’s new Chairman. Accounts show that each of them paid £5m to increase their shareholding.

What will the money be used for?

Fans often hope that new money will result in new, shiny toys in the form of football players. The club’s injection of funds is likely to be far more pedestrian, but not less important.

James Bisgrove, Rangers’ chief executive, said: “To move to English football we had to forgo our place in European football this season. We had budgeted for the season ahead with an expectation of European income. In recent seasons this has been key to our club’s sustainability.

“The ownership recognised this and issued shares to cover the shortfall for the season ahead.”

Money from European competition has been worth £17.3 million (2022) and £18.5 million (2023) to Rangers in solidarity and prize money the last two seasons. Further revenue in the millions would come from ticket sales for European games, hospitality, and other commercial income. This lack of income will leave a glaring hole in the club’s books come the end of the season. This coupled with the need to stay on the right side of English football’s profit and sustainability rules meant the board had to act.

Does this change the current shareholding

Prior to the share issue there were a staggering 447,248,285 million shares in Rangers. This new share issue is thought to take that total to north of 580 million. Does this mean a major shift in percentages held. Yes and no. The five major shareholders will see their percentage increase slightly, but as all five shareholders put in £5m they will not see their holding shift in relation to one another.

Rumours suggest that the five are keen to increase their shareholding, minus the fan owned 5% (Club 1872) to control all share in the club between them. Anders Holch Povlsen and Jim McColl are the wealthiest shareholders in the club and seem most intent on snapping up shares.

A good deal for the five

The club set the price at what appears to be a generous price of 18p per share. This time last year 1p would buy you a share, but things have changed. Rangers’ valuation has grown significantly since moving to England. Securing promotion to the Premier League would see that value significantly increase. A conservative valuation could see the club valued at between £300m to £500m. This would only increase with stadium expansions and planned future sponsorship increases as their current kit deal and main shirt sponsorship is up for renewal next year.

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Ibrox expansion plans announced

Rangers today unveiled plans to expand Ibrox Stadium by 8,600 seats. The ambitious plans have been long in the planning and today the club are pulling the trigger. James Bisgrove, the club’s new chief executive officer, announced spades would be ‘put in the ground’ in the next week. Once complete, Ibrox capacity will reach 59,886 at a total cost of £26m.

The Backstory

Rangers have been long exploring options to expand Ibrox the club’s home since 1899. The club has over ten thousand fans on their season ticket waiting list and their move to English football has been met with unprecedent demand even though they will be competing in English football’s second tier. The Rangers’ board feel they would be leaving money on the table if they did not press ahead with expansion plans. An extra 8,600 fans attending games would see a sizable increase in revenue in future.

The Ibrox chiefs have kept a close eye on developments at Anfield as FSG opted to expand and improve their historic home. KSS the architects of Anfield’s redevelopment wills similarly take the helm of the Ibrox expansion.

The Expansion Options

James Bisgrove, Rangers’ chief executive officer, outlined three options for expanding the stadium. The club could fill in the corners of the stadium where large screens currently sit. Filling in each corner to its maximum could add 8,000 new seats. This is the option that Rangers are taking forward, but that may not be the end of it. Bisgrove stated that other there is the potential to add potentially 10,000 more seats by adding a tier to the Govan Stand and rejigging the Grade II listed Bill Struth Main Stand. This work has not been priced yet but is expected to be significantly more expensive than filling in the corners of the stadium.

The water table under Ibrox has previously put paid to lowering the pitch to allow more seats to be added. The club’s architects and engineers are now confident that should the club wish to go ahead with this option it could be achieved. This is not an option the club intend to pursue soon.

Bisgrove said, “Our first step will be to fill in the corners and add over 8,000 new seats. That will still not be enough to match the demand of our waiting list, so in time when it is financially prudent, we will explore options to expand the Govan and Bill Struth stand. We would likely undertake work on the stands one at a time to minimise disruption.”

Who’s paying?

In short, four of the club’s major shareholders have coughed up the money in full and loaned it to the club. Chairman John Bennett, Stuart Gibson, Jim McColl, and Anders Holch Povlsen provided the necessary funds.

“The board are the driving force behind this plan in terms of vision and funding. They tasked me and our architects with finding viable options to expand Ibrox, to ensure the club could remain in our home while generating greater funds to put at the disposal of the manager. We explored banking options, but as everyone is aware, it is not the best time to be borrowing money due to high interest rates. That did not put the board off, they’re hungry to improve everything at the club from players, coaching staff, youth development, and all our facilities.”

Insiders, who wish to remain anonymous to protect relationships, have stated that the loan has been provided to the club on generous terms of 3% interest and repayable over 20 years or more. This means the club may be paying around £1.2m to service the loan which the expanded capacity will more than cover.

Advisors told the club that as building costs increase with every passing day the quicker, they begin building the cheaper it would be. That was a catalyst for the club’s major shareholders to put their hands in their deep pockets. Most importantly, the £24m loan which will sit on the club’s books in future is able to be written off under FFP rules as an infrastructure expenditure.

What’s the financial benefits

Rangers unveiled plans to expand Ibrox by 8,600 seats within the next year. The ambitious plans, which are due to start imminently, will take Ibrox to a total capacity of 59,886. At a cost of £26m the cost of each new seat will be around £3,023.

Aside from increased noise levels, inching closer to satisfying season ticket waiting list demand, the most obvious benefit will be cold hard cash, and in time with further development, the ability to boast a bigger stadium than their bitter rivals Celtic (60,411).

The average season ticket price at Ibrox is £575. A sizeable majority, if of the new seats will be for season ticket holders and where not it would be more expensive single ticket seats. That will net the club £5m a year in season ticket sales. Then there are the commercial benefits of 8,600. This is a little harder to calculate, but a low estimate could mean a further £1m a season, potentially higher, accounting for increased sales of food, drinks, hospitality, and other commercial revenue generators on match days.

But this is at Championship prices, an increase of £200 on the average season ticket price, a small fee to see some of the top clubs in the world turn up at Ibrox, that would add an annual increase in season ticket sales of around £6.5m.

Bisgrove was quick to quell any thoughts that season tickets will be increased, or that this was built for the Premier League. ‘Given our recent history we will not do anything to risk the club financially. This option is being pursued because we’ve long had the demand to match this expansion in Scottish football, and now in the English Championship. At current prices, the expansion would pay for itself in five years and over the course of the loan it could generate the club around £120m at current prices.’

‘This is important for our model. The owners are supporting the club, but given recent historical events, everyone associated with Rangers is committed to a sustainable financial model.’

When will it be finished?

This was Bisgrove’s bombshell. The plan is for the stadium expansion to be complete in time for next season. Work is scheduled to begin in the coming weeks and will continue throughout the season.

‘Like Liverpool and other clubs, our contractors are able to carry out work safely while we use the stadium. The plan is for work to begin immediately and the expansion to be finished in time for next season so that fans can purchase their tickets for the new seats.’

Wider Ibrox developments

The club are not stopping with the expansion. A large sports bar is due to open in the site of the stadium’s old club shop that can cater to hundreds of paying punters. The ‘Blue Sky Lounge’ corporate lounge has been redeveloped including a celebrity chef menu courtesy of Rangers fan and shouting machine Gordon Ramsay. The approaches to Ibrox are being relayed, improved disability access lifts and seating, New Edmiston House beside the stadium is complete at a cost of £10 million housing the club’s museum, a live venue, club shop, and other commercial facilities. This stadium expansion is simply the next step in an aggressive approach by the board to make up for lost time and build the infrastructure and profitability of Rangers.

The future expansion plans

Bisgrove would not commit to further expansion but did hint that it is being taken seriously. ‘Our focus is to complete this phase and then consider further options. The appeal of adding 28,000 new seats is obvious for everyone. The board will consider options only when this stage of Ibrox’s development is complete.’

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State of the Club: Rangers

The close season is a time for regeneration for every football club. A brief period in which slates are wiped clean and fans can dream without the burden of being tempered by reality. For Rangers fans there is no reality, no history or precedent to temper their thoughts and fantasies as they prepare to embark on their first season in English football.

The Glasgow club’s summer has been one of flux and drama. The Athletic will get you up to speed on one half of the famous Old Firm, including an interview with their Chief Executive, James Bisgrove. This state of the club report will give you a whirlwind update on the club and get you primed to follow all the drama at Ibrox this season.

The move to England

The Athletic has covered the Old Firm’s shock switch to English football in detail. You can read all about it here, but in short, Rangers and Celtic sealed a long-desired switch to English football, their money pot at the end of the rainbow straddling the Scottish and English border.

The spectacular financial implosion of Coventry and Reading, coupled with a refusal from the English Football League to grant them their golden share as they remained mired in administration.

Coventry and Reading were long a cautionary tale on how not to run a football club, with a host of nefarious owners. The unprecedented loss of revenue due to COVID and owners with shallower pockets than expected were the last straws for two clubs lumbering under debt.

In a face-saving move, English football opened their arms to the two Scottish giants. The narrative was changed from English football being a financial basket case, a financial bubble that was beginning to burst, to a revitalised competition straddling three countries (England, Wales, and now Scotland).

Rangers and Celtic had long held a desire to get out of their small pond, towel off, and dive headfirst into the depths of English football’s riches. Both clubs have their sights on the Premiership, but they will have to navigate their way out of the Championship quagmire first.

Change in Ownership

Rangers and Celtic in the Championship with their history, worldwide fanbase, large crowds, and potential to exponentially grow revenues became a prime target for takeover. Several American investors were circling Rangers, but the old board circled the wagons.

Douglas Park, the club’s now former Chairman, had become a target of the malaise at the club over recent years. An aging patriarch that did not have the financial capability or foresight to lead Rangers into this bold new frontier. To Park’s credit, he agreed and promptly stood down. What was more surprising was the sale of his 11.74%.

George Alexander Taylor (9.85% of shares), Borita Investments (6.17%), Perron Investments (5.42%), and Tifosy Investments Limited (3.94%) all followed with sales.

Jim McColl, a Scottish billionaire and long touted Rangers owner snapped up 17% of the shares, Anders Holch Povlsen, the Danish billionaire owner of ASOS who resides in Scotland, bought 17% too. The remaining 3.12% of shares were snapped up by John Bennet bringing his shareholding to 8.63%.

Rangers new majority shareholders now looks like this:

Jim McColl and Anders Holch Povlsen (17%)

New Oasis Asset Limited (14.12%)

Stuart Gibson (9.84%)

John Bennet (8.63%)

George Latham (4.98%)

Club 1872 (4.96)

Rumours suggest that McColl, Povlsen are happy to work in concert and are keen to increase their shareholding. The third member of their close trio is Bennet who is actively pursuing a greater stake in the club. Bennett is owed some £12m by the club and may convert this into shares. Stuart Gibson is also close to the trio and the four men control 51% of the club’s shares and can push through their agenda at the club.

Changes in the Boardroom

The majority quartet know that the club needs significant leadership if they are to make the best of being in English football. With Douglas Park and several other major shareholders ousted the quarter went about picking their Chairman, and it would be one of their own. McColl, Povlsen, Gibson, and Bennett all agreed that Bennett was the man for the job.

Given the momentous work ahead the club required a Chairman with more time and nous to steer the club.

McColl, Povlsen, King, and Gibson all ruled themselves out due to their various business interests, but they would become the Kingmakers. All four made clear their preference was for Bennett, and after years of financing the club, and remaining a major shareholder, Bennett was keen to take the task on.

Bennett has not been slow in asserting himself in the Ibrox hierarchy. He sharpened his axe and let it fall on the head of Stewart Robertson, the club’s former managing director. A swift recruitment exercise was undertaken and James Bisgrove, the club’s commercial director, was named the new chief executive officer.

The Footballing Side

Michael Beale has begun his rebuild for the season ahead. Backed with £15m of money and a free hand as the club seek a new director of football, Beale has brought in seven new players.

Sam Lammers (£3.5m), Abdallah Sima (loan), Cyriel Dessers (£4.3m), Leon Balogun (free), Danilo (£5.25m), Jose Cifuentes (£1.5m), and Dujon Sterling (free).

The club are keen to appoint a new director of football to replace Ross Wilson who left back in April to take up the same role at Nottingham Forest. James Bisgrove is leading the interview process and has said that he will make an announcement in the near future.