Wings Over Scotland

First, a disclaimer-stroke-apology: Wings Over Scotland isn’t a football blog. But as we’ve said before, in our opinion the fate of (The) Rangers FC will have a far greater influence on the outcome of the Scottish independence referendum than anything Johann Lamont will ever say or do in her life (something which certainly applies to her current pitiable carping about BSkyB), so we have to look at the bigger picture, and today that means talking about Rangers again.

It’s fair to say that Walter Smith’s intervention in the affair yesterday morning really put a tiger among the turtledoves. Rangers fans unsure about giving Charles Green their full backing – but ultimately likely to bite the bullet and go along with him for want of any alternative – had a new straw of hope, and wasted no time in clutching at it, as the influential Rangers Supporters Trust immediately asked fans not to buy season tickets unless Green stood aside to make way for Smith’s consortium.

The move places another obstacle in front of Green turning his newco Rangers into a viable business, to add to the many challenging ones he already faced – particularly hanging onto the playing and coaching staff (including manager Ally McCoist, whose departure would surely scupper any chance of supporters getting behind Green) and successfully negotiating entry into the SPL. But unlike most of the media, which is this morning reporting the Smith group’s succession as all but inevitable, we’re not sure Green will be all that concerned.

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We’ve been having a little poke around in the insolvency laws today, and we have to inform Wings Over Scotland readers with shame and regret that we made a mistake in our Rangers Liquidation FAQ a couple of days ago. It turns out that it is in fact permissible for a new company to take over the name of an old one, so long as the old company was purchased in the process of liquidation, an exemption which would seem to clearly apply in the case of Rangers.

In the light of bizarre and intriguing recent developments, then, we’re faced with an interesting prospect: a new Rangers FC, playing next season under the old name, in the old colours, with the old history, in the SPL, at Ibrox Stadium, led by Walter Smith, with the current playing squad, completely free of debt and with a £20m bank balance from season ticket sales. (After paying back the bargain-basement purchase price.)

One can only imagine the tone of triumph from the Govan club’s friendly supporters.

The Big Tax Case would be irrelevant, buried with the oldco, as would the SFA investigation into dual contracts and the punishment for bringing the game into disrepute. Tens of millions of pounds owed to the taxpayer would simply disappear in a puff of smoke, as would the millions owed to other football clubs, to Ticketus, and to hundreds of smaller creditors for whom the money could (and now will) be the difference between their business surviving and dying.

The new Rangers wouldn’t be eligible to play in European competitions for three years, but business would otherwise carry on exactly as it did last season without interruption. It doesn’t seem much of a punishment for 10 to 20 years of deliberate, blatant, industrial-scale cheating, robbing other clubs of tens of millions of pounds and driving the Scottish game to the brink of destruction in the process, does it?

The above is, of course, a best/worst-case scenario according to which side of the debate you’re on. Even if the new Rangers could secure an 8-4 Yes vote to their entry into the SPL, the SFA could apply conditions and sanctions, as could the other clubs in return for their vote. But the new Rangers could always renege on any promises it made (eg in respect of agreeing to a change in SPL voting rules or sharing TV money), and it could challenge any SFA conditions in the civil-law courts, were the SFA to be so toothless as to let them get away with doing it previously.

The press is reporting that the attitudes of several of the the other clubs in the top division is hardening against the notion of admitting the phoenix Rangers directly to the SPL. In the circumstances we can’t say we’re surprised.

The fallout from HMRC’s rejection of the Rangers CVA has, of course, only just begun. Journalists and bloggers, us included, will be spending a considerable amount of time speculating wildly about the likely outcome of the club’s now-inevitable liquidation. So let’s quickly take stock of what’s fact and what’s guesswork.

(Please bear in mind that Wings Over Scotland is not a lawyer, and that your house may be at risk if you don’t pay tax on it for 20 years.)

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Rangers Football Club, formed in 1872, will formally cease to exist later this week. In a surprise development (in terms of its timing, not its content), HMRC have officially stated that they will reject the club’s proposed Company Voluntary Arrangement at the creditors’ meeting scheduled to take place this coming Thursday, June 14. The news was confirmed when the club’s administrators Duff & Phelps issued a press release stating their intention to go ahead with a plan to sell Rangers FC’s assets to a consortium led by businessman Charles Green for £5.5m.

There is, however, a great deal of debate about whether such  plan can go ahead. A fascinating blog by Scottish lawyer Paul McConville last week observed that HMRC had already put in place its own preferred liquidators should the CVA proposal be rejected, and it’s hard to see how Duff & Phelps can go ahead with the asset sale in the event of a legal challenge from creditors. Since HMRC has rejected the CVA and has its chosen liquidators standing ready, it seems highly likely that it, or some other creditor/s, would mount such a challenge.

There can be little doubt that the assets of Rangers FC – the playing staff and property portfolio, including Ibrox Stadium and Murray Park – ought to be able to realise significantly more than the £5.5m Green is offering. (Since the money Green proposed to use to buy the club with was in the form of a loan to be recouped from the survival and continued trading of the club, it’s also uncertain whether it’s actually on the table in any real sense.)

Even if the players’s contracts are held to be voided by the liquidation of the club (also the subject of debate) and they can move on without any transfer fees, it’s difficult to see how the property alone, even allowing for its partially- listed status, could fail to be worth at least double the supposed sale price, and the liquidators will be duty-bound to maximise the returns for creditors by at least opening the sale process up to competing bids, including those not seeking to use the property for football purposes.

Duff & Phelps and Charles Green have both insisted that despite liquidation Rangers Football Club will survive, under the same name, and continue to play at Ibrox. Such claims, stated by both parties as certainties, seem to lack any credibility. Further intriguing developments, we’re sure, are not far away.

Much as Scots have grown accustomed to trying to pretend otherwise, you'll probably have noticed that there's currently another international football tournament going on without us. This evening sees the first appearance in the European Championship of the England team, the only side competing in the entire competition who don't have a national anthem to call their own.

Over two decades of living in England hasn't changed this writer's feelings towards the country's international team much. I still want them to lose – not because I hate the English people, but precisely because I like them.

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Much as Scots have grown accustomed to trying to pretend otherwise, you’ll probably have noticed that there’s currently another international football tournament going on without us. This evening sees the first appearance in the European Championship of the England team, the only side competing in the entire competition who don’t have a national anthem to call their own.

Two decades of living in England hasn’t changed this blog’s feelings towards the country’s international team much. Generally speaking we still want them to lose – not because we hate the English people, but precisely because we like them (see below). In the case of Euro 2012, though, we’re going to make an exception.

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The independence referendum is roughly two and a quarter years away. (Remember how recently it was two and a half? Time flies when you’re having fun.) But two things that could happen within the next three weeks could do more to decide it than a thousand embarrassing TV “debates” or multi-million pound campaigns. For those of you in the heretic camp, we apologise in advance, because to find out why we’re going to have to talk about football some more.

This week sees the announcement of the final 18-strong Team GB football squad for the Olympics. We’ve already looked at the potential implications of any Scot featuring in the selection, although to be frank with just 18 players to be chosen we’ll be surprised if any make it on merit anyway, never mind the politics of the situation.

The other thing happening this month, of course, will be the SFA Appellate Tribunal’s reassessment of the club’s punishment on charges of bringing the game into disrepute. Or at least, it might – according to the Herald, Rangers haven’t yet ruled out a further appeal to the Court of Session:

“Rangers welcomed the verdict that the SFA were not in a position to hand down a signing embargo but may yet appeal the decision to return the case to the Appellate Tribunal, believing the case should instead be judged by a panel at the first stage of the process.”

It is extremely difficult to overstate how much such a course of action would enrage FIFA, who are already furious that civil law courts have been involved in the case at all rather than purely sporting ones. Were the Ibrox club to be insane enough to engage the CoS a second time, the international body would be likely to impose savage sanctions on the SFA, which could very well include the banishment of the Scottish national side from competitions.

The phrase “90-minute patriots” was coined as a slight on Scottish people whose sense of national identity was restricted to the duration of football matches. Nonetheless, there are a great many such people. This month, Team GB and Rangers FC between them could set in motion a chain of events which will bring about the end of Scotland as a footballing nation. In our view, such a scenario would turn the polling figures for the referendum round overnight. We’ll be watching with interest.

Speaking as a professional journalist, the most flattering thing that can happen in your career is when major publishers pay you to write features. The second-best form of flattery is imitation, and at Wings Over Scotland we’re getting increasingly used to it.

Our more seasoned readers will recall examples such as the New Statesman’s enthusiastic “borrowing” of our popular Alex Salmond Dictator-Comparison Bingo piece, which they at least had the courtesy to acknowledge in print, albeit belatedly and after quite a lot of people shouting at them on Twitter. (It was such a good idea the Caledonian Mercury did its own tribute too.)

We’ve also been gratified to see other people finally picking up on the core and crucial observation about the nature of the independence referendum that we’ve been pushing since November 2011. (We won’t claim the credit for it being at the heart of the Yes Scotland campaign itself – we’re sure they knew it all along.)

Today, though, the thing we’re finding oddly familiar is a piece in Scotland on Sunday called “Will the SPL survive without Rangers?” The title and theme will ring an obvious bell with the over 20,000 viewers who’ve read our all-time most popular post, but the specifics are the really intriguing part, focusing as they do on the fact that several teams in particular wouldn’t be as badly damaged by the possible demise of Rangers as most of the media commentariat insists.

If we mention that the teams in question are Dundee United, Dundee, Hearts and Hibs, you’ll perhaps catch our drift. It’s nice to get paid for your analytical insight and research (and tracking down Dundee’s attendances from over half a decade ago was a tougher task than you might think) rather than just having other people take advantage of it, but setting the mainstream media’s agenda is at least some modest consolation.

There’s a famous scene in the first Indiana Jones film where our hero, faced with a swordsman performing an elaborate duelling ritual prior to an anticipated bout of formal combat, simply pulls out a gun and wearily shoots him. (Inspired, no doubt, by the legend of the Gordian Knot.) We’re feeling a bit like that this morning as we peer into the bewildering, constantly-shifting looking-glass that is the affairs of Rangers FC.

Either of yesterday’s events would have been enough to try to untangle by itself, but the two smashed head-on into each other and created a grisly heap of tortured, twisted, smoking metal that’d take half a Scottish fire brigade all day to separate into identifiable components, and with about the same chance of anyone walking away intact. But we’re so stupid we’re going to have a go by ourselves. Read on, if you dare.

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Well, it’s safe to say it’s all kicked off big-time today, with not one but two massive developments in the Neverending (Rangers) Story. Firstly, you can read the entire CVA document for yourself here. But these are the bullet points:

1. The £8.5m Charles Green and his consortium (“Sevco”) intend to fund their purchase of Rangers with is in fact a loan, to be paid back (with interest) by 2020 [Section 4.20], despite Green’s previous pledge to run the club “debt-free”.

2. According to the BBC, Duff & Phelps’ fees during the period of administration to date are £5.5m, leaving just £3m in the pot for the creditors.

3. Highly unusually, the proposal doesn’t actually specify a percentage creditors will be paid. But Rangers’ current debts are in the region of £55m, meaning the maximum payout to unsecured creditors will be slightly over 5p in the £. The actual figure is impossible to gauge, as the CVA proposal document is full of unknown sums marked “TBC”, such as the amount owed to Craig Whyte. [Schedule 8]

4. Should Rangers lose the Big Tax Case the debt will at least double, but is widely thought likely to increase by even more, taking the total to around £150m. This would reduce the maximum payout to unsecured creditors to 2p in the £.

5. Should the CVA be rejected by creditors, Green has a contractual obligation to purchase the club’s assets for £5.5m (presumably again in the form of a loan, though this isn’t explicitly specified) and liquidate it, saving himself £3m. [Section 4.23] By coincidence the purchase price is exactly the sum quoted by the BBC for Duff & Phelps’ fees, leaving precisely £0 in the pot for creditors.

6. The creditors therefore have a choice between accepting a maximum of 5p in the £ (but likely much less than that), or getting nothing at all.

More coming as we unravel it. All we can say is that in a world where Robert Mugabe is about to be made a UN tourism ambassador and the head of the IMF doesn’t pay any tax, the notion of a bankrupt football club with £50m of unpayable debt and up to £100m more hanging over it BORROWING the money to pay off its creditors – by offering them an unspecified amount somewhere between almost zero and actually zero and expecting them to willingly agree to the deal even when one of them is the nation’s taxman – suddenly doesn’t seem all that insane by comparison.

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The media has been strangely silent today about the apparent missing of yet another deadline in the Rangers saga – yesterday was supposed to be the day Duff & Phelps actually sent out the mythical CVA proposal, but as yet there’s no public sign of it. Bizarrely, STV News reports that the document sent out to creditors doesn’t actually specify the percentage being offered, so we can’t see how it even counts as one.

It’s relevant because the CVA represents the only chance of Rangers automatically playing in the SPL next season, without having to beg the other 11 clubs to admit them directly as a newco – something that most commentators agree will happen anyway, on the grounds of self-interest. But just how well-founded is that belief?

As the fiasco drags on (and on and on and on), we’re constantly warned that the loss of the travelling Rangers support, among other things, will cripple the SPL’s smaller clubs. Many of the less-considered assertions of this claim centre on an inexplicable belief that should Rangers go out of business or be demoted to the SFL Division Three nobody would replace them, and that what would have been home fixtures for other SPL clubs against Rangers will be replaced by vacant Saturdays in a succession of empty, tumbleweed-strewn stadia.

But a reader comment on one story sent us scurrying off to our Big Book Of Scottish Football Stats again, and produced a surprising result.

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As lovers of a good stat-wade ourselves, we’re liking this terrific piece by Celtic Quick News detailing the amount of money that Rangers FC’s “financial doping” has cost the other Scottish Premier League clubs over the last decade-and-a-bit. We highly advise reading it all, but the headline is that the Ibrox side has effectively stolen a minimum of £49m, a statistically most-probable £69m and a maximum of £224m from the other 11 teams currently in the SPL, as well as further sums from teams since relegated.

For us, though, the most striking figures can be found in the detailed breakdowns, where you’ll notice certain figures crop up over and over again. The direct immediate cost (in lost SPL sponsorship and TV money) of relegation to the SFL Division 1, for example, can be seen to be £765,000.

But the real eye-opener comes if you look at the sums involved in dropping down one league place. We’ve mentioned it in previous pieces, but laid out in stark black-and-white numbers it shows just what a crooked deal the non-Old-Firm SPL chairmen lumbered their clubs with when, blinded by short-sighted greed, they collaborated with Rangers and Celtic in setting the league up as a cosy permanent duopoly:

Loss from finishing 2nd rather than 1st: £340,000
Loss from finishing 3rd rather than 2nd: £935,000
Loss from finishing 4th rather than 3rd: £170,000
Loss from finishing one place lower, 5th-11th: £85,000

Ouch. Were the premium for a 2nd-place finish to follow the pattern of the rest of the distribution, it would be just £255,000. Or put another way, the SPL is basically an agreement to give Rangers and Celtic £680,000 a year each, on top of the regular prize money, simply for being the Old Firm.

Since all but one SPL season has seen the two Glasgow clubs take the top two places, the league prize-money distribution alone has ensured that the other 10 clubs fall further and further behind every year, by roughly the amount needed to pay the salary of one international-class player.

(It comes out fractionally over £13,000 a week, a sum exceeded by only a couple of Rangers’ biggest stars before their in-administration pay cuts, which are about to end. It’s the same as the average wage for an English Premiership player at the mid-point of the period analysed by CQN.)

Over the 11 seasons of Rangers’ alleged EBT improprieties, that of course adds up to a complete international-class side, which the other SPL teams have in essence paid the wages for (with the additional millions brought in by annual Champions League participation providing the transfer fees), guaranteeing that Rangers continued to beat them, secure one of the two top spots and perpetuate the cycle.

(A grossly-unbalanced state of affairs which makes it all the more astonishing that Rangers STILL felt the need to cheat by robbing the taxpayer, and just about everyone else as well, in order to spend even more money.)

Remarkably, it seems from their comments to the media so far that most of the SPL chairmen will be minded to vote in favour of continuing this slow suicide, out of fear that the alternative could somehow be worse. We hope that New Rangers will at least have the courtesy to pay for the cranberry sauce.