A sports team languishing in the fourth division of the national leagues may not sound like the best investment, but Gervais Williams, the fund manager at Miton Group told CNBC that one soccer club in Scotland is set for great things after a turbulent few years.
Glasgow Rangers FC fell from grace last summer as the club went into liquidation after being placed into administration and being docked ten points. The team lost to its arch rivals at the end of the season and was then placed into the bottom tier of the league following rejection from members of the Scottish Premier League.
Rangers may not be challenging for the same league title it has won 54 times previously. But a lack of debt, loyal fans, a new wave of young players and some astute clothing deals nevertheless mean this club is one of the best investments in soccer, according to Williams.
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"Because of the precipitous fall a lot of the debts have gone away. The business has got 20 million [pounds] ($33 million) cash on the balance sheet. It owns its own ground which is worth about 70 million [pounds], the training ground worth another 10 million [pounds]. They've really got great revenue coming in from the season ticket sales which will happen over summer. So, the actual business is capitalized at only 45 million [pounds]," he told CNBC Thursday.
"What's been remarkable is how loyal that fan base has remained and that's going to really drive its valuation going forward."
A successful IPO (initial purchase offering) on the AIM market of the London Stock Exchange raised 22.2 million pounds in December 2012, the club said in its latest results. This will help to fund its growth strategy and brings the total raised share capital since incorporation to 35.2 million pounds, it said.
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"There's lots to go for in this business, I agree generally not a good place to make money in football clubs but this business, given it doesn't have any debt, given it's such a low cost outfit at the moment, it's going to make plenty of profit," Williams said.
Results posted at the start of March showed a loss of 7 million pounds for the last seven months of 2012, with revenue of 9.5 million pounds and operating expenses at 16.6 million pounds. A new retail arrangement with retailer Sports Direct has been announced, alongside kit deals with manufacturer Puma and sponsor Blackthorn Cider.
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Henry Dixon, co-founder and fund manager at Matterley Asset Management feared that a player wage bill that is relatively low now may not be so if the club surges back into the top flight with the team currently sitting proudly top of the third division.
"Is that enough to sustain a club in the Scottish premier league, is it enough to win? That's going to be the tug of war between, if you like, economics and emotion and the heart," he told CNBC Thursday.
—By CNBC.com's Matt Clinch