Comment 

Rangers IPO likely to appeal to fans, not investors

Ken Wieland

Charles Green, chief executive of Rangers, was in London last week trying to drum up investor interest in the Scottish football club's upcoming Alternative Investment Market (Aim) listing. He wants to raise £20m on London's junior stock market before Christmas.

Despite Mr Green's enthusiasm, the upcoming float - as with most football initial public offerings (IPOs) - will appeal more to fans than hard-headed investors. According to press reports, thousands of supporters have already registered their interest, pledging up to £15m.

Debt-ridden Rangers Football Club went into administration in February, and Mr Green, leading a consortium of investors (Sevco), bought the trade and assets from the old club's administrators for £5.5m in June. It means that the new club - The Rangers Football Club Limited - is debt-free.

That happy state is unlikely to last long. At least that's the view of Emmanuel Hembert, leading principal at consultancy AT Kearney. "They will need to buy players to get back into the SPL and compete in Europe," he says. "So debt is inevitable."

As punishment for going into administration, Rangers was booted out of the SPL, Scotland's top division. It now languishes in the country's fourth tier, but Mr Green maintains that there remains financial upside for the 54-times Scottish champions.

For one thing, Rangers is a global brand - with more than 5m fans worldwide, according to Mr Green - and can claim one of the UK's largest fanbases (more than 40,000 season ticket holders on average). Moreover, Rangers has control over its own image rights now that it's not in the SPL. It paves the way for extra revenue through the broadcast of live matches over the internet. Property development projects around Ibrox, the club's stadium, are also in the offing.

None of this convinces Mr Hembert. "Clubs can't afford to pay dividends because they need all their cash for players, which limits the return," he says. "Football IPOs are almost always aimed at fans."

Mr Green said last week that he was talking to institutional investors with a view to giving up 50-60 per cent equity in the club (but limiting individual holdings to 15 per cent). Retail investors were pencilled in for 15-20 per cent. Given the level of fan interest, however, maybe those percentages will have to be revised.

IC View

Football investments have a terrible track record for UK investors and, although we will reserve judgment until the details of the IPO are published, it is likely to be one for fans only.

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