My inbox at The Sun has been filling up with concerned Rangers fans asking what letting Lloyds into the boardroom means for the club.

 

Fans are concerned, but Rangers letting the banks in doesn’t mean they’re dangling above the fire. Whenever a company does business with another, they often insure the credit they offer to the other business as part of their risk management strategy.

 

This credit limit is the amount of money a major credit insurer thinks the business is good for in its day to day business. I have just credit-checked Rangers PLC and trust me, it’s ok!

 

In the long run up to Woolworths going belly-up their rating was nil. Rangers’ credit rating out of 100 is 98, to quickly put Celtic fans at ease; your credit rating is 98 out of 100.

 

It’s Lloyds that should be worried here with a paltry credit rating of 95 out of 100!

 

But why has the bank become such an important player in the future of Rangers?

 

In business when a company borrows money from the bank they need to be able to repay the debt which for a football club is secured against assets and cashflow. 

 

Rangers assets can be broadly broken down into two types: property assets namely Ibrox stadium and Murray Park – and of course – the squad and top players like Pedro Mendes, Maurice Edu and Kris Boyd.

 

When assets decrease in value or cashflow declines, then the bank’s exposure increases.

 

In the current economic climate banks are scrutinising their loan books, looking to reduce exposure like never before. As Rangers’ debt has risen to £30million, the bank is perhaps their most important stakeholder.

 

 

Today’s debt is a side effect of their spending spree during the 90s and 00s when money was cheap.

 

Scottish banks were trying to outdo the size of one another’s loan book and high profile entrepreneurs and businesses were able to borrow millions just by picking up the phone to the bank.

 

At the peak of the spree, ‘Gers manager Dick Advocaat shelled out £36million including £12million on Tore Andre Flo.

 

But as I see it, the bank would never pull the plug on Rangers for a number of reasons.

 

The taxpayer saved Lloyds from going bust because they were too important as an institution and for the British economy, Lloyds must then realise that many Scots feel the same about the Old Firm.

 

Let’s be honest, the end of Rangers is the end of the Old Firm and perhaps even Scottish football.

 

The bad publicity Lloyds risk from scrapping Rangers would be unprecedented and would spell the end for the bank’s presence in Scotland.

 

The appointment of turnaround specialist Donald Muir makes sense.

 

One of the most respected turnaround gurus in the world, Muir previously worked to save the Department for Work and Pensions, ailing NHS trusts and Northern Rock; he is in the premier league of big hitters.

 Specialists such as Muir are charged with ironing out immediate problems and sorting finances no matter what the industry.

 

Much was made of Donald Muir saying there are no sacred cows in a business but Muir knows "sacred cows" can only be removed if they’re superfluous.

 

The crucial word here is superfluous. In a case such as Rangers, prized assets are top players. If you sell the best – generally the most expensive – players it is difficult to enact a recovery plan making the problem worse.

 

Rangers’ prized assets are not superfluous by any stretch of the imagination so Donald Muir’s remit will be to closely monitor Rangers’ business plan, and protect the bank’s interests.

 

This may mean reducing costs elsewhere and establishing a sustainable business model whilst seeking new investment, or even an outright sale of the club.

 

If the business is sold, Muir’s job will be to ensure that the bank’s position is protected as part of the deal. He is not there, as fans have been asking me over the last week, as a hatchet man.

 

Do we honestly think Lloyds the bank want to be the business that single handedly obliterated Scottish football that or Donald Muir wants that as his legacy? Aye right!

 

I am a businessman first and football fan second so to answer the deluge of emails and letters from Sun readers about recent events at the club, I will offer a one paragraph summary; a purely business perspective on the situation.

Even in this financial turmoil Rangers still maintain an excellent credit rating. Their debt to the bank is less than 50 percent of annual revenue and this coupled with their esteemed history in Scotland, Ranger FC looks to be safe.

Their position is not enviable at the moment but as one of the biggest and most supported clubs in the world they, and their fans, have enough clout to get through this sticky time.

 

Read the rest of my column Here