Rangers takeover: Blueprint for Bill Miller to tow club to relative safety

‘The strategy Miller followed was to rebuild the tarnished brand name, cut costs and rationalise operations’

GIVEN the recent history of Rangers Football Club, it is natural that fans and commentators will be wary of anyone who professes to invest in an institution that holds value to such a large segment of Scottish society. Bidders have come and they have gone, but now we are left with one: William G. Miller, chairman of the Tennessee-based Miller Industries Inc, a world leader in towing and recovery equipment manufacturing.

Valid questions have been raised, not least regarding his motivation to invest in a financially distressed Scottish football club. There have also been queries as to his background, financial wealth, business style, plans for the club, ethics of his bid and how he could make a return where almost all investors in Scottish football have failed.

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Undertaking research into the background of a bidder is a formidable task. Miller has been involved in a number of companies over the course of his 65 years, and he, or the firms he has been associated with, have invested across varied industries and several countries, including the UK (Boniface Engineering, among others). Much of our view of Miller comes from his association with Miller Industries, the firm he has been associated with for more than 20 years. However, his prior business experience has included executive positions in large US firms, such as Bendix Corporation.

Miller’s early business strategy is likely to echo his plans for Rangers. He identified three debt-laden, struggling firms that had strong brand names and had fallen from a leading position in the industry. These companies were Holmes, Challenger and Century. Holmes is particularly relevant given their similarities to the football club Miller wishes to buy. When Miller purchased Holmes, it had become insolvent after having fallen from being market leader in the US tow truck sector. The reason for Holmes’ decline? It had over-leveraged itself in pursuit of maintaining its position as market leader. Notably, Miller funded the acquisition by borrowing £12 million and investing £3m of his own funds.

The turnaround strategy Miller followed was to first rebuild the tarnished brand name, ruthlessly cut costs and rationalise all operations. With the efficiencies he introduced and an instinctive eye for good acquisitions along the way, he tripled the value of his firm within four years. With experience of turnarounds of this type, Rangers appears an ideal investment.

A lot of time and effort has gone into estimating the net worth of Miller. This is an exceptionally difficult task since many of his investments are in private companies. Some statistics can be provided from his most public engagement, Miller Industries Inc. Within the last 12 months, Miller has sold more than 50 per cent of his holdings in the firm, raising around £4m before tax. However, over the last seven years, his share sales have totalled more than £12m (before tax). Currently, Bill Miller has nearly 350,000 shares still in Miller Industries, takes a salary of just over £193,000 and received a dividend of almost £93,0000 in 2011.

Miller is notable for refusing an increase in his base salary and bonuses in most years since 2000. This is despite other board members taking their allocated remuneration. Under his chairmanship, the company has also shied away from issuing executive share options to its employees. This is a perceptible signal of a firm that values loyalty and sustainability over short-term profits.

Beyond the initial investment of £11.2m, a question has to be asked what further investment would be required in Rangers? In almost all of Miller’s corporate investments, growth and capital expenditure has come from internally generated funds. This will almost definitely be the model for a newco Rangers if the bid is successful.

Finally, what would be Miller’s return on investment? At the age of 65, he will likely look for an exit within six years. The most efficient way forward will probably mimic his early purchase of Holmes. If the newco Rangers is formed, it will not benefit from European football for the next three years and will be unable to register players in the next 12 months. He is likely to use this as an opportunity to pare back and stabilise to be domestically competitive. A return to European football would be expected after the three-year exile and cash would be forecast to flow into the club. A financially healthy, well-run club would then be in a position to be sold to the fans at a healthy profit.

In the days to come, it may transpire that a major creditor objects to a newco Rangers, and the ramifications of the dual contracts issue must still be judged upon by the football authorities. Combined, either may lead Miller to decide another investment may be preferable to that of Rangers. The future is potentially bright for the club but clearly many challenges still remain to be overcome. Only time will tell if William G. Miller will be the saviour that fans are searching for.

n Professor David Hillier is vice dean of the Strathclyde Business School at the University of Strathclyde.

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