Rangers’ Big Day at a glance
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.
EDIT 5.05pm
As we were writing the post above, the whole thing got roughly 128.6 times more complicated as Rangers won their Court Of Session appeal against the SFA’s imposition of a 12-month player-registration ban for bringing the game into disrepute. The surprise verdict will see the case returned to the SFA’s judicial panel for reconsideration, having found that the specific sanction it had applied was unlawful.
We’re not even going to start on the potentially massive ramifications of the judgement between the SFA and FIFA – which imposes strict rules on all national associations explicitly forbidding them from allowing clubs to involve courts of law in disputes – because our head’s spinning already. What matters in the narrower sense (ie purely in the parochial matter of Rangers) is what the SFA do next.
The punishments available to the judicial panel are now limited to those expressly laid down in the SFA’s articles of association, and break down as follows:
1. Fine (maximum £100,000)
2. Expulsion from Scottish Cup
3. Suspension from all competitions for a specified period.
4. Suspension or permanent expulsion from the Association itself, effectively the same thing as (3).
Alert readers will of course have realised that there’s very little point in imposing a financial penalty on a club with no money, which is in administration and currently offering to pay creditors a maximum of 5p in the £ (see above), meaning the fine would effectively amount to £5,000 at the most. (Also, as the SFA originally imposed a discretionary higher fine of £160,000, the stipulated maximum would in fact be a significant decrease of their punishment.)
In any event, after the coruscating “Note Of Reasons” the SFA published in advance of the panel’s appeal judgement, laying out in forensic and devastating detail the gravity of the offences (which were deemed only just short of match-fixing in seriousness), a piddling fine would make the SFA a laughing stock (and probably enrage FIFA further, with potentially terrible consequences for the entirety of Scottish football).
Article 65.5 of the SFA’s rulebook states the following:
“The fact of membership of the SFA shall constitute an agreement by a member of it that it, or any body or person interested through such member, shall submit all disputes to the jurisdiction of the judicial panel and shall not be permitted to take such differences or questions to a court of law.”
Rangers’ actions are clearly a flagrant breach of this rule over and above the severity of its original offences, so it looks inevitable that in addition to being banned from European competition for three years, Rangers will be out of at least one other competition too for an indeterminate amount of time. This, of course, will damage the financial prospects of any newco club and affect the willingness of Charles Green’s consortium to invest in the club. “The plot thickens” doesn’t even begin to cover it.
EDIT 6.06pm
On closer examination, Rangers’ victory in the Court of Session looks more and more like a suicidally Pyrrhic one. It places the SFA in a near-impossible position: if it accepts the court’s judgement by returning the appeal to the judicial panel, then regardless of the panel’s revised punishment the SFA will be pulverised by FIFA for breaking a rule the international association takes more seriously than almost any other – that of allowing law courts to interfere in football matters. All Scottish teams, including not just Rangers but ALL clubs AND the national team, might well find itself banned from all FIFA (and UEFA) competitions.
Essentially, the ruling has painted the SFA into a corner from which there is only one way out – take the judicial panel out of the equation entirely, by leaping over its head and separately expelling Rangers from the Association for their clear breach of Article 65.5 (merely suspending them would only delay the problem at best, not solve it), thereby freeing the panel from the responsibility of making any judgement and so incurring FIFA’s wrath. Rangers just took an enormous gamble.
Would the creditors get anything from a sale of assets after liquidation?
Why can the ground and facilities and players not be sold off for a lot more than 5p in the pound. If I was ripped off I would want them to suffer.
So Green is not putting any money up from his 20 investors, that was all b.s.?
“Would the creditors get anything from a sale of assets after liquidation?”
No. That’s what I’m saying in point 5. Green would buy all of those, for an amount which only covers Duff & Phelps’ fees. They’re a secured creditor, so they get all of it, leaving zero for unsecured creditors.
“So Green is not putting any money up from his 20 investors, that was all b.s.?”
That seems to be the case. More info here:
http://www.dailyrecord.co.uk/football/spl/2012/05/29/rangers-in-crisis-charles-green-s-brochure-presents-glorious-future-for-stricken-club-86908-23877576/
Does HMRC not have a position as creditor, superior and ahead of all other non secured creditors?
Does the receiver not have a duty to accept the highest bidder for all assets, no matter whether they intend to use it or not for the original purpose, assuming it is not secured by someone else who sells it independent of the liquidator.
In other words, who owns the land and physical structures which constitute RFC?
If Rangers were an animal, a bear perhaps (sorry couldn’t resist), it would be considered cruelty to watch it slowly die the way that it is, caught in a trap of its own making, and no one prepared to put it out of it’s misery…
Scottish football, on the other hand, has the chance of saving itself, however, it seems prepared to continue to feed the stricken animal until it itself is brought crashing down as well…
Why does no one within the hierarchies of our game have the spine or the vision, or the compassion to do the RIGHT thing?
That’s a good summary thanks.
Do you know if an independent assessment has been made of the asset value ?
£5.5m seems very low.
So, the unsecured creditors get nothing, everything worth having goes to Sevco (Ibrox alone is worth more than they are paying/borrowing), Duff and Phelps get their full fee. If there is no way for the unsecured creditors to secure a significant share of the assets, it would appear the deck was stacked from the start.
“Does HMRC not have a position as creditor, superior and ahead of all other non secured creditors?”
As far as I understand it, no. Its only special power is that as by far the largest creditor, it has to agree to any CVA before it can go ahead (because a CVA has to have the approval of 75% of creditors by value). But it doesn’t have any more dibs on the money than Wee Jimmy the milkman who hasn’t been paid since February. If he gets only 2% of what he’s owed, so does the Revenue.
Rev Stu
That must have changed in the years I have not lived in Scotland.
H M Customs, the then Inland Revenue the Vat Man had priority over everybody for any unsecured assets and then there was a hierarchy downwards including the Leccy and the Rates.
The Milkman came at the very bottom as do the ordinary shareholders
“Does the receiver not have a duty to accept the highest bidder for all assets”
This is the interesting bit. As far as I can gather (a phrase which should be affixed to almost everything anyone ever says about Rangers at the moment), if the CVA fails Green is obliged to OFFER £5.5m for the assets, but if someone else comes in and offers more the administrators have to sell it to them.
The problem there is that the value of the assets is limited to whatever the new owner can realise from them. Unless they’re prepared to run a football club themselves, all they’ve got is a patch of grass surrounded by useless seating.
The main stand is a listed building and can’t be knocked down, but in theory the site could be redeveloped in much the same way Arsenal’s old stadium at Highbury has been.
http://www.highburysquare.com/
The issue with that, however, is that Ibrox is in an extremely scabby and deprived area of Glasgow (take a wander round in Google Street View and see for yourself), not a highly desirable location in the middle of London, so the returns on such an investment might be somewhat uncertain.
If the club is liquidated the players become free agents (though this, like a great many other things, is a matter of some dispute), so there are no quick bucks to be made there either. Basically, Rangers’ assets are worth a lot less for anything other than running a football club with, so it’d be a buyer’s market.
(They’re insured for about £100m, so frankly it’s amazing that Whyte didn’t torch the place before now.)
The valuations of the property are strange. They seem to have valued them on the basis that they would take two years to sell, deducting from the value the costs of them being unused for that period… but only account for it taking a month to carry out the transaction in the event of liquidation/newco.
“The estimated realisable value of the freehold properties is based on the Joint Administrators’ agents valuation lessholding and disposal costs based on a period of two years.”
The land Murray Park is on is probably more viable for development than Ibrox, I suppose. Unless Partick Thistle decided to relocate to Ibrox? Even so, it’s odd that Murray Park and Ibrox combined are worth about as much as Scott Brown.
As I understand it, Murray Park has planning permission for football-related use only, so you couldn’t bulldoze it and build houses or a Tesco, which clearly reduces its potential value drastically.
Err…
I have no expertise in this. But why, exactly, is Green being given any sort of rights in the event of a liquidation? Presumeably the job of the liquidator is to realise the maximum value for the creditors (or is it debtors? I never really figured that out). If, say, the liquidator can sell the players in a ‘fire’ sale, surely that goes into the pot for the creditors? I’d have thought the players alone were worth a tad more that £5.5 million. Why is Green given a position that might diminish the value of that?
I have read Rangerstaxcase off and on for a while, and frankly it all goes over my head. Whenever I think I have got my head around it, something else happens, like the CoS decision today. I have frankly no idea whether that is good or bad for Rangers, the SFA, EUFA or FIFA. I am just left completely confused.
It seems to me that EUFA want to have a sort of extra territorial sporting judiciary, that is not subject to the legal precepts of the nation states that play footie. Is that right?
I can see both sides of that, it would be a nonsense if a moral nation had to compete with a corrupt one, but it is equally wrong for a sporting body to set itself above our law.
I have no solutions whatsoever, and my head hurts!
“but it is equally wrong for a sporting body to set itself above our law.”
Clearly, FIFA and UEFA are not above national law, which is exactly why they get so pissy if clubs go over their heads and appeal to law courts. FIFA and UEFA want total control over football, but they can’t overrule such judgements so it really, really pisses them off, more than just about anything.
What they DO have the power to do, though, is expel members for breaking their rules, such as “You can’t go to a law court”. Nobody has a “right” to be a member of FIFA or UEFA, so at the end of the day you can win all the court cases you like, but nobody can stop them from then kicking you out of their gang.
Rev Stu,
Thanks for the reply.
I kind of understand that. But I am astonished that any club – or more strictly, group of clubs – can exempt itself from the rule of law in this manner.
It seems to me that any free citizen should have the right to challenge any bureaucracy if it’s rules are anti-democratic.
And that organisation ought to be forced to thole the consequences. As, I believe, Scottish golfers were, some time ago?
It suggests that issues such as this should be decided – for EUFA – at Council of Europe level and for FIFA at UN level. IMHO they should not be entitled to set themselves up as a separate judge, jury and executioner.
No doubt there are arguements to the contrary.
Hi Douglas
The facts are that FiFA, UEFA & SFA (to a lesser extent) are responsible for all aspects, laws and rules (articles) associated with the game of Association Football.
All clubs and National bodies are bound to work within the said articles and failure to do so brings with it consequences
As the good Rev points out, Rangers would appear to have backed the SFA into a no win situation here.
They have basically rejected a ‘reasonable/lenient’ punishment for flagrant breaches of moral, ethical and legal rules and have brought themselves, the Scottish game and football itself into serious disrepute.
For that, they may be forced to pay the ultimate price
“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.”
Why not? This is how it all too often works for governments and in the financial sector. If they can do it then it doesn’t seem so crazy any more for football to get up to the same naughtiness.
Gaavster,
Hi. thanks for your reply.
Rangers would appear to have shot themselves in the foot by going to the CoS. If I – forgive me, my head is spinning – understand this correctly, all that the CoS has done is to relinquish the case back to the SFA,
And the SFA are obliged by EUFA or someone to ignore whatever the CoS says.
But the SFA or the SPL are obliged to take action about clear breaches of governance, some of which have not reached fruition, dual contracts, BTC, etc…..
But the SFA, or is it the SPL, still have to impose a penalty? According to the CoS.
It seems to me that Rangers are theatening to take all of Scottish football down with them.
How else can one view this?
“It seems to me that Rangers are theatening to take all of Scottish football down with them.”
That’s about the size of it, yes. It seems like a giant game of brinkmanship that stands to go horribly wrong. (For them.)
Rev Stu,
You say:
“It seems like a giant game of brinkmanship that stands to go horribly wrong. (For them.)”
I hope you are right. However, it seems to come down to who blinks first.
Scottish football will remain a joke until it is properly reformed, IMHO, until the whole SPL edefice comes a-tumbing down.
Just my opinion.
(out of curiosity, why is it that when I enter paragraph returns in the original document, they fail to translate into the draft document? After I edit it there isn’t a problem. Just asking?)
God only knows. Sorry.
The point, though, is that the SFA have no room to blink. They’ll get it in the neck from FIFA if they don’t punish Rangers hard.
The stupid thing is, the transfer embargo wasn’t that big a deal. It was one year, and Rangers would have had no money to buy (or pay) any big-name players anyway. (Plus they wouldn’t have been in Europe, so nobody good would have signed for them.) It would effectively have made no difference to anything. Whatever penalty the SFA impose now, even if they try to wuss out as much as possible, will be significantly worse. It was an idiotic move.
“It was an idiotic move.”
We are agreed on that.
You’ve just knocked the proverbial nail on the head Douglas…
To extrapolate the argument about bringing Scottish football down and expand it a little, it might be worth looking back over the last 30yrs and consider what has actually happened in wider Scottish football over this period
In the not too distant past we have had Rangers, Dundee Utd, Aberdeen and Celtic all competing and winning at the highest levels, both domestically and at a European level, with a mainstay of homegrown Scottish talent and all achieved with well balanced books economically to boot.
To me the catalyst that brought about the demise of our game happened in 1986 with the arrival of Graeme Souness, accompanied by a plethora of overpaid, and in many instances, under-talented players from overseas…
Rangers effectively bought their way to success over the intervening period with money they ultimately didn’t have
Other clubs were then forced by market pressures to spend money they couldn’t afford to try and at least keep within some sort of touching distance of Rangers and many today now teeter on the brink as a result
I appreciate that this is a fairly simplistic view and that there are lots of other factors to consider, but why, in such a short period of time, relatively speaking, is Scottish football suffering so badly today?
As I said, this is just another wee angle to consider in the debate…
Aharrg! There is absolutely no spaces hetween:
“It was an idiotic move.”
and
“We are agreed on that.”
I shall be fascinated to see whether this has a desireable degree of separation, or not. (I double spaced).
Well, that worked!
Gaavster,
I think your point is less than trivial. It is essentially about being cheated. Our football will not be about a game any more until this is all sorted.
I must admit that I was totally bemused by the result of today’s CoS judgment.
Here we have Rangers, having been handed down a one year ban being kind of upset about the punishment. Rangers now decide to appeal the punishment at the CoS and win their case.
The reason for the judge returning the case to the SFA, as I understand it, was because the punishment was not permitted under the SFA rules. Hooray you might think, but wait, what is this I see on the horizon?
As I watched the report on Reporting Scotland tonight I immediately thought, “What group of numpties” decided to go to the CoS? All they have succeeded in doing is removing a one year transfer ban from Ranger’s which I’m sure they could have coped with and, in effect, imposed a much harsher punishment on Rangers. Bear in mind the “numpties” in question were “allegedly” working FOR Rangers! Boy I bet Rangers and their fans are REALLY pleased with this!
From what I understand this whole CoS case has put not just Rangers but also the SFA itself in an almost impossible position.
http://www.bbc.co.uk/news/uk-scotland-glasgow-west-18248766
Interestingly from the article we have this:
“One club chairman said there was an “increased animosity” towards Rangers after they took the case to court.
One of Europe’s leading experts in sports law has also told BBC Scotland there could be wider implications for Scottish football.”
The whole article ends thus:
“In an interview with Newsnight Scotland, Dr Gregory Ioannidis, who has represented a number of clubs at the Court of Arbitration for Sport, warned the consequences of the judge’s ruling could be damaging for Scottish football.
He said: “If the Scottish Football Association decides to not take action against Rangers, in relation to Rangers submitting the application to the Court of Session, then Fifa can actually penalise the SFA, and the individual club, and the national team of Scotland, and impose an international ban on all of them.”
I think with all this on the horizon, not just for Rangers but also the SFA etc, then I would expect all hell to explode. If it doesn’t then SERIOUS questions have to be asked about the WHOLE Scottish Professional football set up from the SFA down!
There’s no apostrophe in “Rangers”, fella. Tidied that up for you.
One thing that’s been in the back of my mind during all this is the long-term goal of Rangers wanting to play in England. Has anyone considered the (slightly mad, I’ll grant you) possibility that being expelled from Scottish game *may* then open doors to them eventually regrouping and slotting in to the lower leagues south of the border?
Just a thought.
They decided not to apply for the Conference South…because they don’t do Woking away [ahem]
Thanks Douglas
Ross – neither do the English want them (with all their baggage) or indeed need them
It’s a complete non-starter
As for re-entry into the SFL (Div 3), if Rangers are forced down the Newco route, one of the stipulations required to apply for entry is the presentation of at least 3 years worth of accounts….
I believe the same is true in England
That will present its own conundrum to the authorities as well…
Thanks for that Rev.
Never was very good with these upside down coma thingys anyway! 😀
The only way this would get any more entertaining or another twist is if there was a bailout from the government to save it. Perhaps as a move to win over unionist votes.
I share the head spinning reaction to this situation with most of the other commentators.
Among the nagging questions, two keep coming back again and again.
1. How can fixed assets be valued at over £100M in the balance sheet yet only fetch £5M odd in a liquidation?
2. Why was Craig Whyte so keen to have Duff and Phelps appointed as Administrators? I see why they were keen to have the job – £5M for a few months graft – good work if you can get it.
There is a strong odour of rodents about the whole thing.
Would I be being sceptial if I was to suggest that Sevco don’t really want the CVA?
Appleby,
You said:
“The only way this would get any more entertaining or another twist is if there was a bailout from the government to save it. Perhaps as a move to win over unionist votes.”
The one thing I think I do know is that the Scottish Government should steer well and truly clear of this! A completely detached, “this is a matter for football: the courts: the man at the bus stop: Westminster” approach is probably the only, relatively, safe approach for them to all of this. For what profiteth a government to alienate most of the people who elected it by pandering to a group of people who probably, on balance, didn’t?
Nicola Sturgeon came under fire for standing up for the creditors, like the face painter and the shredding company. There is no benefit whatsoever in getting involved in this. Speaking as an independence minded chap.
“They decided not to apply for the Conference South…because they don’t do Woking away [ahem]”
I hereby proclaim you Champion Of The Thread. Your reward is that I’m going to steal that joke and repeat it everywhere for the rest of the day.
Before you all get too frothed up again…..everyone seems to be quoting the most extreme possibilities in the situation regarding the COS ruling. Its just as likely that FIFA ignore it having had a few bloody noses recently in the courts(Sion).
The idea that Rangers are in some way too guilty to appeal a case and should just suck it up is interesting. Seems like a lot of folks are allowing their own football prejudice to overwhelm their sense. At the same time as the hoi polloi of football fans are saying that Rangers are not above the law and should be punished for not paying tax etc the very same folks argue in this side case that the SFA are not answerable to the law. If Rangers were a person you didnt know you’d never think that way. The law is the ultimate settler of disputes.
All the reporting on this is purely sensationlist and much of it reads like sour grapes. if Rangers are to be held to account regarding their tax evasion and their potential double contracts then they also have a right to challenge punishments in an appeal process. Being guilty of one thing does not exclude you from due process in other areas.
As another point of law, just because an association says you should not use the courts it is in fact not enforceable.
As I was once told , Mr Campbell “This is a pen, if you and I decide to call it a fork then that is between us, the law still says its a pen and if we challenge the law on the basis of our personal agreement then we’ll lose ”
So the SFA and FIFA can say its illegal to go to court but they cannot stop it and if they do they potentially open themselves up to other court cases……
The Rangers situation is in my view an embarassment and potentially a disgrace on the Club depending on the real debt but they are not excluded from the law as a result of that.
Strikes me that the postulation by Rangers, that Scottish clubs will suffer financially in the event of Rangers having to leave the SPL, sits uncomfortably with the fact that Rangers have, for years, been threatening to leave Scotland and to seek more testing opposition in another place.
Humbug.
Is the postulation wholly by Rangers or has it just become a mantra or urban myth for everyone….there is only one way to test it and that is to dump Rangers and let the other SPL clubs live the dream.
Anyone who says there will be no impact to the loss of Rangers is hoping the sky deal stays intact as it stands and essentially the status quo is somehow maintained. The attendance figures as projected on this site show it may be a wash but IMHO its a simplified version of the commercial complexity between clubs e.g its easy to compare Hibs-Hearts or Dundee-United with Example-Rangers but what about Dundee-St Mirren rather than Rangers-St Mirren.
I still think 3rd Division is the best option for the club, football in general and the fans and yes I’m a Rangers fan.
“Anyone who says there will be no impact to the loss of Rangers is hoping the sky deal stays intact as it stands”
No – as my previous piece explicitly detailed, it assumes that there WILL be a big drop-off in TV revenues, but that it will be recouped by the means explained in the feature.
(And it’s clearly not an urban myth that Rangers want to leave the SPL. They’ve said so countless times.)
“everyone seems to be quoting the most extreme possibilities in the situation regarding the COS ruling. Its just as likely that FIFA ignore it having had a few bloody noses recently in the courts(Sion).”
In fact they’re the ONLY possibilities, as detailed in today’s feature. The chances of FIFA just “ignoring” it are on a par with me taking a stroll on the Moon this afternoon.
In fact they’re the ONLY possibilities, as detailed in today’s feature. The chances of FIFA just “ignoring” it are on a par with me taking a stroll on the Moon this afternoon.
When are you going for your moon stroll Rev, I make sure to wave to you through my telescope. 😀
I have saw two mentions on Twitter this morning that stated that Dumb and Dumber had agreed a limit on their fee for the handling of the administration to £500K…..
If this was aimed at me then its not what I said at all.
“(And it’s clearly not an urban myth that Rangers want to leave the SPL. They’ve said so countless times.)”
The urban myth I was alluding to was that other clubs could not survive without Rangers, its not just Rangers fans who are saying this to my knowledge and even then i doubt even they all believe it.
As regards “In fact they’re the ONLY possibilities, as detailed in today’s feature. The chances of FIFA just “ignoring” it are on a par with me taking a stroll on the Moon this afternoon.”
Doing nothing is absolutely an option for them. The SFA alone won’t act on the use of the courts unless pushed. Time will tell.
FIFA and Swiss FA didn’t punish Sion for dragging them through the courts numerous times, they ‘only’ punished them for fielding ineligible players.
So what’s the current word fom Duff and Duffer?