Ex-Rangers director King claims newco club 'will not make profit'

Ex-Rangers director Dave King has claimed the newco club would not be able to generate a profit.

The South Africa-based businessman held talks with Charles Green, chief executive of the new Ibrox club on Tuesday.

He claimed to have received assurances that the last owner of Rangers FC plc, Craig Whyte, was not involved in the Sevco consortium that bought over the club’s assets.

Mr Green’s group paid £5.5m last week to cover administrators Duff and Phelps’ £3m fees, as well as an estimated £1m to cover the liquidation of the company incorporated in 1899 by neutral insolvency firm BDO, a process that will begin in several weeks’ time.

Mr King, who is subject to a restraint order preventing him from dealing with realisable property because of a multi million tax case against him, said Mr Green’s “for profit” model of running Rangers will prevent them from competing at the top level.

He told STV News Mr Green had also given him “absolute, categorical insurances” that Mr Whyte is not involved in the newco.

Mr King added: "I think [Charles Green] is going to try to run the club to make a profit. I don’t believe that’s possible. I believe for Rangers to be the Rangers that we all want them to be, it requires investors who are willing to subsidise losses for a number of years. I don’t believe you can do that on a commercial basis."

Regarding the failure of the consortium led by former Rangers manager Walter Smith to take over the club, Mr King said he was "not surprised" the £6m offer had been rejected.

Challenge

He said he thinks running Rangers will be "immensely challenging" for the Sevco group, while he also stated that he did not know where the money would come from to keep the newco club afloat.

Mr King admitted that Sevco was now the "only game in town" for Rangers, while he also said he felt the new club would need around £30m of investment to cope with the next three years of "wilderness" because of the ban on European football for that period that the club received for carrying out a newco switch to shrug off its huge debts.

After meeting Mr Green at Ibrox on Tuesday, the chief executive of Johannesburg investment firm Micromega Holdings said he felt the newco regime would have to "aggressively cut costs" to make a profit. He also stated that he did not feel it would be "in anyway possible" for a strong Rangers to emerge from a business model dependant on making profit.

Mr King previously claimed he invested £20m in the club in 2000 when Sir David Murray was in charge. He then stated he was planning to sue the former owner for the cash because of Sir David's financial mismanagement of the Glasgow club, including the use of offshore tax avoiding employee benefit trusts (EBTs) to pay the wages of players and some directors.

Sir David claimed he would vigorously contest that action if it arose, while Mr King was unsuccessful in registering as a creditor of Rangers FC in a company voluntary arrangement (CVA). He had lodged a claim for £20m and stated that he would put any money he retrieved back into the club.

He also accused Sevco chief executive Mr Green of using season ticket sales to fund his takeover, similar to Craig Whyte, who bought Sir Davids 85% stake in Rangers for £1 last May and used a £25.3m deal with London firm Ticketus to wipe out the club's £18m debt to Lloyds Banking Group.

Mr King is currently being pursued by the South African Revenue Service (Sars) for 2.7bn rand (around £227m) dating back to 1991.

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