Monday 22 December 2014 16:39, UK
Rangers chairman David Somers claims a number of 'legacy issues' from previous boards have contributed to the current financial state of the club.
In a statement to Monday's AGM at Ibrox, Somers said the club has been 'living beyond its means for years' and will now concentrate on building a team through its youth ranks - rather than buying established players - while proposing another share issue 'to improve the long-term financial stability of the club'.
And he revealed the 'lack of appetite from shareholders to invest significant extra funds' meant the club had to borrow from other sources, including MASH Holdings, a company owned by Mike Ashley who has an almost 9 per cent stake in the club.
Somers said: "It feels like years since I last stood in front of you and it is amazing that it is only just over 12 months. 12 months ago, as I had just joined the Rangers board, I was given the impression that the club had enough money to see it through the first few months to the season ticket window.
"Sadly, I quickly discovered that this was not the case. The board then began metaphorically to take up all of the carpets; after which we were left with a very long list of legacy issues that needed to be sorted out, often as our finances would allow.
"So in the first few months, we reviewed all of the contracts, the finances and the legal issues, ending up with a long list of legacy issues that would need to be dealt with over time. Since then we have spent many months focusing on these legacy issues dealing with them one by one.
"To be honest, it is frustrating dealing with legacy issues, because you are effectively looking backwards during this time and dealing with issues you didn't create yourself. I know that most fans will not really be interested in such efforts, because it is not about football, but these legacy issues and contracts have had to be dealt with so that we can begin to move forward.
"I was always taught to be cautious, so I hesitate to say that we have dealt with all of these legacy issues, as whenever I think that, another legacy issue quietly appears, but we do seem to have addressed many or most of them. One of our biggest remaining legacy issues is the weak state of the Rangers finances.
"In the financial area, we have been fortunate that a number of people have supported us with loans during the last 12 months, namely Sandy Easdale, George Letham and Mash Holdings. I sincerely thank them for their support, which in some cases, has included their loans being interest free.
"In the early days, while developing our list of legacy issues to be addressed, Graham Wallace wrote a review, which became known as the 120-day review. In this he indicated a desire to spend £20-30 millions in reaching the top levels of Scottish and European football.
"After visits to various City institutions the board believed that such a level of expenditure would be supported by the City institutions, and the then monthly rate of loss, would also be supported by the shareholders.
"In the event, this was discovered not to be the case, because when we came to raise funds through a share issue, we soon found that there was a lack of appetite from shareholders to invest significant extra funds just to pay wages and utility bills.
"Accordingly, we have moved to cut costs significantly. Like any household, Rangers can ultimately only spend what it earns and, as has been reported in the media, we have moved quickly to bring our costs down and much more in line with our income.
"Rangers Football Club has been living beyond its means for many years and much of the cost cutting and efficiency improvements should have been addressed years ago by previous boards when we were in the lower divisions.
"But they weren't, so we are doing it. A material part of our costs relate to player costs, however, and these can only be addressed over a long period of time because of the length of the contracts. These contracts are often measured in years, not months."
On the proposal to now concentrate on bringing on their own players through their youth ranks based at the club's Murray Park complex, Mr Somers said: "While the success of any major football club will always be benchmarked by its first team, a strong youth academy is also an informative barometer of long-term health and well being.
"It is very pleasing to see the quality and quantity of young talent being nurtured at Murray Park. Last season our Under20s won the SFA Youth Cup and narrowly lost out in the title race in the final week of the campaign.
"Fiftyseven players from our Under-14 to Under-21 age groups were called into international squads and three more Murray Park Academy graduates made their first team debuts.
"We are charting our future strategy in the five key areas of: Developing Football Performance, Focus on Player Asset Management and Youth Development, Re-connecting effectively to our Local and Global Fan Base, Developing Best in Class Commercial and Operational Capability and Strengthening Commitment to our Communities."
And Somers will also focus on the season-ticket boycott - called for by Dave King, a director of oldco Rangers which was consigned to liquidation in June 2012 - as another major factor on the club's dwindling finances.
Our path to restoring Rangers to where we all want the club to be can only be achieved with the continued support of all supporters, shareholders and business partners
Last season, 36,000 fans renewed season tickets while that number dropped to just over 19,000 this year after King's intervention.
Somers, who along with new CEO Derek Llambias and director James Easdale, will seek re-election at the AGM, added: "Rangers' return to the top flight of our game, I am sure you will agree, will be more easily achieved if everyone who cares about the club works together for the betterment of Rangers.
"This turbulent year has seen people calling for a season ticket boycott, seen the disruptive creation of a season ticket trust for a while and other negative ideas.
"Such negativity is expensive for Rangers as it reduces season ticket and overall ticket sales, increasing the likelihood that I will have to borrow money to cover the shortfalls created. Our path to restoring Rangers to where we all want the club to be can only be achieved with the continued support of all supporters, shareholders and business partners."
