For an hour yesterday lunch-time Graham Wallace spoke about the state of Rangers, how the club got to this point and how he intends to move it forward.
What struck home was how different he sounds compared to his predecessors; no trumpeting about brands and unexploited foreign markets, no playing to the gallery and telling people what they want to hear; no flannel and arrogance of the kind we have heard repeatedly over the years from Rangers executives as they sold a vision of the future while the present was crumbling around their ears.
Wallace is enough of a realist to know the scale of what he faces at Ibrox. Everywhere you look, there are issues.
TE: Since you lifted the bonnet and examined the finances has anything shocked you?
GW: I’m not sure if shock is the right word. I followed what has happened to the club, albeit from a distance. It’s a situation where a lot of decisions were made with a very short-term focus.
TE: When you say short-term focus is that a euphemism for panic?
GW: Panic? I’m not sure I would call it panic. If you look at a football club you have to have a sense of what the next five years look like and then you plan accordingly. You don’t plan for 12 months in isolation. One of the things I have found is that the focus has (previously) been in the near-term. There’s been areas of expenditure where money has been spent and shouldn’t have been and other areas where we should have been spending and didn’t.
The classic one was scouting and recruitment. At a time when this club needs to be identifying and scouting talent and acquiring talent at attractive levels our scouting and recruitment was largely dismantled. A small example of short-termism.
TE: Did they blow it by not setting in place the scouting infrastructure when in the Third Division?
GW: You could say that some of the decisions that should have been made then weren’t made and that’s a very good example. What the club should have been doing 18 months ago was investing more money in some of the things that could have borne fruit in the future. But that’s hindsight.
TE: You need to save money, but you bring in another financial guru in Philip Nash. That’s not going to save money…
GW: Phil can help us quickly get to the nub of some of the issues. He knows football structure. He’s leading the business review project for me so we can get up the hill really quickly. It’s about objectivity. I came here with a fresh pair of eyes and I brought Phil in on the short-term with a fresh pair of eyes and no baggage and preconceived ideas. It just helps us look at things in a more objective way.
TE: Big decisions need to be made, big savings need to be found and it takes a big character to make those calls in a place that is not used to fiscal commonsense. Are you tough enough for this job?
GW: I’m tough when I need to be tough. I know what needs to be done, I know how to do it and I’m focused on getting it done.
TE: Are you prepared for a backlash?
GW: You have to be prepared to back your own judgment and back your own ability. Yes, there was a bit of a backlash last week to the concept of a reduction in player wage costs. That’s an example of the area of the business we’re looking at right now. We said we were going to do a comprehensive review of the business from top to bottom and we’re in the midst of doing that. We’re looking at every angle and every opportunity to reduce our costs over the next couple of years so that we can position the business in a financially sustainable way.
I keep talking about sustainability and it’s absolutely fundamental. The business has to be able to stand on its own two feet. It has to. It has to be able to stand on its own two feet without huge amounts of investment coming in just to fund the on-going operation. When we go looking for investment we will go looking for the right reasons on the back of a robust business plan. I’m confident in my own ability to be able to deal with situations that will arise. There will be things that will be easier than others. I’m well aware of that.
TE: Do you know where you can save money?
GW: In certain areas, we’ve a very good idea already. I’m not going to come out and tell you where they are but we’ve been working on the project for a little over four weeks and we are looking at every area. There are areas where we can definitely reduce the historic spend that we’ve had. By similar token, there are other areas where we know we need to invest and grow our top line revenue.
TE: Okay, there was a proposal to cut players’ wages, but what about a proposal to cut the wages of the executives? At what point do you target them? We all know who we’re talking about here. Rarely have I seen a more unpopular executive at a football club than Brian Stockbridge…
GW: We’re looking at the executive team as well as the wider staff organisation. We’re doing it. And I will make my determination and judgment on each and every individual we have in the organisation. I’m well aware of the public criticism that comes with certain members of the staff. What I seek is the supporters giving me the time to complete the review. I will stand behind the decisions I make, good or bad.
TE: So there will be changes at the top?
GW: We’re looking right across the whole business and need a little bit more time to complete that project.
TE: How much is this club losing?
GW: It’s a question I can’t answer and I can’t answer it for the simple reason that it needs to be announced through the stock exchange. I can’t give you the answer.
TE: You have studied what has gone on here and seen financial waste. What have you found that has troubled you the most?
GW: What I’ve found won’t be a surprise to you given the pieces you’ve written and the analysis you have done and is demonstrated by the financial statements published last year. This is a business that was living beyond its means with a cost-base out of proportion with its ability to generate income. And even when you factor out some of the one-off costs that were in the last financial year we still have a business where the costs have not been managed in the way they should have been.
I announced at the agm that we have a programme of work over the first 120 days and it’s really only been 30 days since then.
TE: Has Brian Stockbridge returned his bonus?
GW: Yes, he has.
TE: Has Ally McCoist taken his pay cut?
GW: Yes, he has. Ally and I reached agreement on that not long after I got here and it was put in place.
TE: I’m confused as to whether he has just agreed to it or whether it has actually happened…
GW: He has agreed to it and it has happened. I can confirm on both counts.
TE: Brian Stockbridge said in the past that the club will have £1m left come April. Is that true?
GW: Without putting a number on it there is sufficient cash in the bank. Come April we’d be confident that the club will have sufficient cash in the bank in order to maintain our operations.
TE: Is everyone at Rangers going in the same direction as you? Everyone buying into the cost-cutting?
GW: If I take a step back and look at the board, I’ve been very encouraged by the discussions we’ve had and the response to my initial assessment as to what needs to be done. I’d say I’ve had unanimous support. I don’t feel there is any challenge to my authority or my ability to move things forward. When you’re looking at addressing a situation where there are a number of fundamental things that need to be worked on it’s natural that there’s going to be points of discussion. But in terms of looking at how the new board functions, I’m very happy at how that is working.
There is nothing that I have been exposed to that leads me to believe that I have a particular issue to confront. But let’s be honest here. Whenever you make any decision, particularly decisions that are leading to change, you get situations where people are less comfortable, but it’s part of my job to manage that.
TE: There is a fear that in trying to do the right thing, to make people face up to reality, that you will be met with historic thinking – ‘We are Rangers, we spend money’ – and that that attitude might grind you down. Any hint of that yet?
GW: No, I don’t think so. The shareholders and fans expect to have somebody at the helm who knows what he’s doing and who has a clear vision of how it needs to be done. This club has been through a torrid time over the last two and a half years and from a supporters perspective it’s entirely natural that a lot of them may look and say ‘Here’s the third chief exec in 12 months, what makes this guy any different from who has been here before?’
My plea to them at the agm was to give us time to demonstrate what we can do in terms of stewarding your club.
TE: Are you angry at what you have inherited?
GW: Angry? No, I’m realistic. I’ve looked at what has happened but I’m determined to drive it forward in the right way so that we have a club very much for the long term. The supporters demand it and it’s incumbent on all of us who are custodians of their club to run it in the right way. If you look at what’s happened in the last couple of years – or even in the last 6-9 months – everything you read about Rangers is shareholder unrest and boardroom battles. We need people to look at Rangers from the outside and see a club on the rise, that is being run and managed in the right way. Proper governance.
TE: But it’s difficult for you to sell this message of fiscal responsibility while there are people still in the club who are partly responsible for creating the mess in the first place. We’re back to Brian Stockbridge again…
GW: I would say give me the time to do what I said I’m going to do – and that is to look right across the business to make the decisions I believe are right for the club.
TE: Predecessors of yours sought populism rather than responsibility. They wanted to make crowd-pleasing decisions, as in ‘Yes Ally, you can have nine new players, no problem’. It takes a strong bloke to say ‘No Ally, you can’t…’
GW: We are where we are in terms of playing squad. Let’s start from that premise. You could ask the question did we need to expand the squad in the way it was done for what was effectively playing in the third tier and you could probably say no. The other side of the coin is that we now have experienced players alongside younger players and that is benefitting them.
Ally and I have the semblance of a very good working relationship given that it’s been less than two months. We talk multiple times a day. My focus on the footballing side is to be able to support what we need from a squad perspective but with a firm business hand.
TE: Do you think Ally gets it?
GW: I believe he does. He knows the magnitude of the financial challenge. He and I have had that conversation. We’re in sync. It’s not like there is a level of information that I have that he’s not privy to from a football squad perspective. We have what is widely known as the second most expensive squad in Scotland and we’re two divisions behind. That does present a challenge.
From a football perspective, we have some good talent in the team but the financial challenge is that at a particular point in time (you have to ask) is that level of investment more than the club should have. As I look at balancing the total cost base with our ability to generate income, our player wage cost is a significant portion.
TE: You need to save money on the player wage bill. They don’t buy the wage cut proposal so are you looking at player sales? Lee Wallace, for instance...
GW: I wouldn’t even go so far as to say it was a proposal. It was a discussion item as we look at a range of things that we have the ability to influence. In the same way as terminating other contracts that we may have, it was something we put on the table for discussion. Lee Wallace is the one who constantly gets mentioned when people talk about marketable players. He’s an international player, consistently performing for us, the fans love him and he’s very, very important.
TE: If you got an offer for Lee Wallace, a handy half million or million, would you take it?
GW: I woudn’t rule anything in or out. We will consider all of our options at the time when there is a decision to be made.
TE: But If you don’t have the 15 per cent cut where do you find the savings? Do you try and sell him?
GW: What I’m looking to do is right-siding the business. This is not about a need to impose drastic measures today that immediately pay tomorrow.
I’m looking at six months, nine months, 12 months, 18 months in trying to get our cost base under control.
TE: Is the club up to date with payments on tax and VAT?
GW: Yeah, completely.
TE: All bills being paid on time?
GW: Yeah. Trading as per normal. There is no issue there.
TE: Have you checked all player contracts to see what can be terminated and what can’t?
GW: Football players have a standard playing contract and we’re well aware of the provisions in those contracts and most of those contracts still have several years to run.
TE: Can you afford to pay people off?
GW: Depends if there was the right opportunity to do so. I haven’t ruled anything in or out.
TE: The playing budget is one third of the overall spend, so where is the other two-thirds going?
GW: I have to be careful. I can’t comment on the proportionality in the current year’s financials.
TE: Have you heard from Dave King?
GW: I personally have not, no. Dave’s name has been mentioned many times. I also said that we will be looking for investment when it’s appropriate and we will talk to a wide range of investors and that may or may include Dave King if he’s interested in having a conversation at that point in time.
TE: Why not have that conversation now?
GW: Issue one is getting the business right-sized, in terms of cost-base and ability to generate income. It’s not a case of looking for investment to cover on-going operation losses. That, to my mind, makes no sense at all. When we’re ready to go out and talk to a range of investors we will do that. There’s an investment sub-committee of the board that is specifically tasked with doing that. I would envisage that the committee will engage with a wide range of investors and that may or may not include Dave King depending on whether he is interested.
Where we are now is getting the business financially sustainable, get the cost base aligned with revenue. Very quickly on the back of that we are working on what the next five years would look like in terms of ability to generate income, investment into the playing squad and other areas. That then gives us a very solid platform to go and talk to anybody about what the vision is. And to my mind we have things in order to have a conversation with any potential investor. We have to have a level of credibility, so that we’re able to say here’s where we are, here’s what we have done, here’s where the business is today and here is what the next three, four, five years looks like.
TE: How much money do you need to save before you get to that point?
GW: Several million pounds.
TE: At that point you think the club will be a streamlined, functioning, non basket case economy?
GW: I see no reason why we can’t build a foundation where the club can’t stand on its own two feet in a sustainable way. I see no reason why we can’t achieve that.
TE: Whatever happened to the spirit of openness with the fans that the board was talking about at the agm? The fans have requested meetings and there’s been no response…
GW: I’m personally going to be meeting with representatives of the three main fans groups over the course of the next ten days. Those meetings are in the diary. They’re already set up. And then running alongside that we have also got work going on in terms of engaging with the wider fan base.
We’re identifying the best way to start that engagement with fans who are not in supporters clubs so we can understand what matters to them and hopefully design a programme of engagement that is, shall we say, more satisfying for them. I gave my personal assurance that we would step forward with engagement and that is what we will do.
TE: It doesn’t help that the some fans see your communications guy as part of the problem…
GW: I appreciate that there are segments of the supporter base who are not fans of Jack (Irvine). I come back to what I said earlier in terms of looking at the needs of the business and how I want to move things forward in the right way.
TE: Has this been tougher than you thought?
GW: No, it’s very close to what I expected. Even looking in from the outside you could see that the business was losing £14m, so you knew that there were significant challenges waiting on day one. These are challenges we’re facing up to.