Let’s deal in facts, shall we?
At the time of writing this, there is no bank, anywhere, willing to loan Sevco “one thin dime” to use the vocabulary of Fergus McCann. At the time of writing this the club has no shirt sponsor for the coming campaign. At the time of writing this, Dave King is awaiting a court hearing for refusing to honour the terms of The Takeover Panel’s demand that he make an offer for all the existing shares in the club. At the time of writing this the club is yet to publish a series of fully audited half-yearly accounts. At the time of writing this they are selling season tickets, and this is the only verifiable income they have. At the time of writing this they are buying players.
Let’s look at what those facts mean.
At some time over the course of the next 12 months – certainly before the end of the next football season – based on everything we know about their financial state, all of it in the public domain, Sevco will run out of cash on hand to pay their bills as those bills fall due.
This is not speculation; this is iron clad fact. The numbers do not lie.
Even if they’d signed no-one and stood perfectly still, even with the SFA throwing them home ties in the cup, even with three rounds of European football, it is beyond doubt that their expenditure for season 2017-18 will exceed income.
On top of that they’ve added outgoings from transfer fees, signing on bonuses and other costs. The media can speculate about how high that is as much as they like; it is likely to be well in excess of £3 million. And that begs the question; where’s the cash coming from?
There are three places from which this cash might come.
First is a share issue. Let’s definitively rule that out, and it’s easy enough to do so.
Whilst King is in his battle with the regulator the club will never get a stock market listing, which it requires in order to successfully sell shares. There is no prospect of it whatsoever. And anyway, before a single penny came in from that source there would be significant costs associated with it. If you assume this would be implemented to get them out of hock then the act of doing it would imperil them further, and with no guarantee anyone would purchase them.
For that reason, we can rule out a share issue.
The second possibility is that the cash will come from the board.
That’s what’s kept on the lights up until now, and it’s not inconceivable that it could continue to if the current directors have the will and the wherewithal. But we believe that the club made a loss in excess of £4 million for the last campaign; that debt is already being carried by the directors. How much longer will they keep this up, knowing the likelihood of ever seeing the money back is near zero? If the club exits Europe early – as most of us except – this season’s debt will be higher.
The third possibility is that the cash will come in from outside, either investment of some sort, sponsorship, player trading or some other means which doesn’t involve season ticket sales. Let’s take these one at a time, because most are unlikely.
Investment is a non-starter. The only viable way for the club to get “investment” is if they are giving people something in return, usually a shareholding. Unless an existing shareholder is leaving, selling up and handing their tranche of shares to someone else this is off the tables. In addition, any investor would want a level of control, at the boardroom table, which would mean opening up the books and granting that person scrutiny. It won’t happen.
Sponsorship is possible. I don’t actually expect Sevco to reach the start of the season without a shirt sponsor; they’ll find someone and the media will hail it as a great deal, although no actual details of it will ever leak. The numbers will be low, as befits an organisation which is desperate and which has royally screwed up prior sponsorship arrangements. But there are companies which will be perfectly willing to throw them some scratch, seeing nothing but upside on the deal.
Sponsorship alone will never be close to being enough to plug the gaps.
Player trading is laughable. The entire Sevco first team squad is currently available for transfer; indeed, if they thought there was a chance of a quick turnaround on Alves or Jack they would be trying to hock these guys along with the rest.
Not a single viable offer has been received for any of them, in spite of the media’s constant attempts to drum up interest, and the vague hope that Warburton comes through on their behalf and hoovers up some of the dross he left them with.
In addition to that, it’s perfectly clear that some of the players they are bringing in are being viewed as saleable assets; I suspect that part of the strategy here is to hope one of them hits the ground running and can be turned for a profit in January.
The transfer strategy doesn’t seem destined to bear much fruit.
The likes of Herrera and co will have been extensively scouted by European clubs already and making an impact in the SPL, if they do, will not make them into £5 million players. The Mexican league exports its best players; these guys are still there. What do you reckon that means?
If we exclude those possibilities there are only a couple left, and it’s here that things get interesting, and opens doors their fans would probably rather have shut.
Imagine the signing spree gets them off to a good start in the league, and that they are still in the race by Christmas, around the point where the cash runs out. It could be that the board are counting on the fans being so swept up in “Goingfor55” that they would tolerate anything at that point, as long as the train stayed on the tracks.
Then it’s all up in the air; renaming the stadium, selling off the training ground, a sale and leaseback of the ground and other assets … you name it.
All of it is possible.
So too is mortgaging future income; it could well be that the emergence of the old Ticketus arrangements have given people inside Ibrox ideas about how they can score some money upfront for a major dice roll, at the expense of the club’s future. From what’s now in the public domain we know it’s not the first time.
The deal for Jelavic was signed via a Ticketus advance.
There are circumstances under which such a colossal risk could pay off, but they are so remote as to be laughable. If the club wins next season’s SPL title and then gets through the summer and then qualifies for the Group Stages of the Champions League then it’s possible that they could come out ahead, depending on various variables which are equally unlikely; the sale of at least one key player at a big profit, a fresh round of sponsorship deals and so on.
If Sevco really has decided that, in the moment the cash runs out, that they will place the club’s very future on the table then their fans need to keep their eyes open.
There is simply no way that their current situation is sustainable.
Barring a major influx in cash – from somewhere; and they had better be watching – they will run out of cash pretty swiftly. When that happens the board is going to have to sell them on some pretty bitter medicine … but they and their media buddies will do their level best to sugar it as best they can, so they’d better be keeping their eyes on that too, because they will be lucky to have a club to follow if this gamble fails, and it’s a long-shot if we’re being generous.
For the moment, Sevco fans think it’s Christmas, but they’ve forgotten that there’s no such thing as Santa Claus.
The days of the big spending on somebody else’s dime are over and done with.
The money for this little transfer splurge has to be found, and as they enjoy the moment they best have one eye on the likely consequences of it.