Is it just me or has this week felt a little bit like going back in time?
The papers are comparing Brendan Rodgers to Ronny Deila, the Morelos story collapsed in Barrie Mackay style farce, Scotland’s CEO resigned in disgrace, the SFA talked about hiring Walter Smith as boss and Sevco fans greeted news of a potential cash injection like it was Christmas.
What capped it for me was the company involved; Close Brothers, one of the companies brought into the club by Whyte and his people, and an ally of the “rats and spivs” King was supposed to be chasing out the door. They go a long way back at Ibrox, and they’ve taken their share out of the place as well.
Their company profile suits the club perfectly.
The story was one in the eye for the doubters who thought Phil MacGiollabhain’s article about Sevco seeking “invoice financing” was erroneous. In fact, Close specialises in it and when you learn that the “overdraft facility” is a mere £3 million you begin to wonder what the difference is between that and the type of front-loaded transaction Phil was writing about.
Some Sevco fans – the most ignorant, the most pliable and easily led – believe that this is good news, or at least they are crossing their fingers and hoping that it is. The more cerebral fans smell the stink all over this and are being seriously critical.
They are asking the right questions.
Some are making the right connections.
For openers, Close is associated with Ticketus / Octopus, even sharing a director, Ray Greenshields.
They were the organisation Whyte handed over their catering revenues to back in 2011, when he was flogging off every asset that wasn’t nailed to the floor. They’ve dealt with Green too; they have been investors in a number of his companies.
The connections are all there in black and white. They are easy to find.
They are, in fact, so well known that our media gave the story only the most basic attention and then ignored it completely. A handful of hacks – like Chris Jack – those in the pockets of the Sevco PR arm tried to give it a more positive spin, but too many know this one isn’t good.
Sevco’s “overdraft facility” bears all the hallmarks of a short term loan, an invoice loan, with the season ticket money paying it back. Furthermore, it is securitised. One Sevco fan tweet that I read the other day, hopelessly ignorant, said that the club has a “good deal” here because the assets it binds in chains aren’t worth that amount of money … even on a conservative estimate this is ridiculous nonsense.
Furthermore, the sum they have advanced to the club is ridiculously small as far as overdrafts go, and especially ones which securitise vital property assets. Their website allows you to calculate how much money you can borrow from them, based on the turnover of your company. Someone over on the Scottish Football Monitor input Sevco’s top-line figures and the number he got back was just shy of £6 million, as opposed to the £3 million they got.
So they won’t even offer Sevco the maximum sum its turnover could enable. There is little doubt that they got the better end of this deal. It’s all on their terms.
Sevco fans believe this puts them on the road to prosperity.
In fact, it’s deeply dangerous.
The club’s financial position has not improved and now they’ve taken on a commercial debt to get through the season. That was the one thing their boards since 2012 have been very careful never to do, and here they are, doing it. Directors might never call in their loans; this lot will insist on payment even if that payment draws blood, and as the club is desperate and went to a dozen companies before this one agreed to “help” them you can bet that’s exactly what it will do.
This doesn’t change Sevco’s financial position one bit, except in that it creates a whole new problem and a whole new worry for the future. They will scrape through this season based on what they’ve done here; that’s my understanding of the numbers anyway. But they have already primed the bomb for the next campaign, for which, by the admission in their own accounts, they were already seeking bridging funds.
They have just added £3 million more worth of debt to next season’s requirements. How are they going to pay that off? They never consider these things; this is all about surviving from one day to another, and as anyone who’s tried living like that knows it can be done … for a while. But the room to maneuverer gets smaller every time and eventually the walls are too tight on either side of you to breathe and then it all comes crashing down.
Now, Close might well extend the loan for a second year. That would be the wise move. Because as long as they hold those properties as collateral they are the only people who hold a single card in the event that the club slides into the abyss.
Directors who have given soft loans aren’t secured creditors.
Close will be.
This is perilous for the club because whilst Edminston House and the Albion Car Park don’t seem like do-or-die assets, actually that’s not strictly true. The Club Deck stand at Ibrox has a safety certificate that is dependent on a proscribed number of parking places being available in that area.
Whoever owns the car-park becomes a guarantor of that certificate.
I’m not here to push a scare story. Close would not opt to shut the car-park and thus the Club Deck. That would be the stupid move. If I was in their shoes, and an administration happened, I would agree not to dispose of the asset but instead allow them to lease it back for a reasonable rate. For a fixed term. Of, say, three years. Just to get the deal over the line. Following that, I’d push the price of the renegotiation as high as I could and bleed them over the long haul.
This guarantees Close a stake in any future Ibrox NewCo as well. They literally could not be better placed to grab their pound of flesh, whatever the outcome.
Sevco fans can celebrate this deal as much as they like, but the spivs are back and the club’s directors are the ones who have opened the door wide for their vulture capitalist finance house to cut off their balls and keep them in a mason jar.
Who do they think these folks are? What do they think these people prioritise? They are not a charity; they are a finance house. Those guys get paid. They get paid “or else” and the last thing they will give a monkeys about is Sevco’s league position and how their payment schedule impacts on what money the manager has to spend.
There is no telling them this, not all of them anyway. For others, the truth of this is all too clear. This is a deeply troubling – dare I say “destabilising” – move. They haven’t been saved here. Not even Close. They are, instead, one step closer to the brink.
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