The Glasgow Rangers Administration â?? a status quo.

[der Berliner 3,247]

The Glasgow Rangers Administration – a status quo.

 

German newspaper reports claim that Glasgow Rangers FC has gone into administration, will be liquidated, has been founded anew, and because of debts of €160m faces demotion to the 4th tier of Scottish football.

 

Much of that is factually wrong:

 

There is a duality in British football between a football club in itself and corporate body / company attached to it. „Rangers FC“ as club was founded 1872 and because of business needs, a company was attached in 1899, „The Rangers Football Club plc.“. The latter it was who was driven into administration in 2012 by the then-owner Craig Whyte (he bought Rangers only in spring 2011).

 

The official Administrators' report can be downloaded from here - http://www.rangers.co.uk/staticFiles/fe/%E2%80%A65~174334,00.pdf

 

Duff & Phelps interim report to creditors can be downloaded from here - http://www.rangers.co.uk/staticFiles/a2/b6/0,,5~177826,00.pdf

 

What did Craig Whyte then?

 

Craig Whyte bought the club & company in May 2011 for a nominal fee of £1 from previous owner Sir David Murray, getting some 85% of the company's shares, which made him in effect, much like Murray was, the owner of the club.

 

At that time, Rangers had some (managable) £20m debts at their bank, the Lloyd's Banking Group. Lloyds put pressure on Sir David Murray, whose steel empire had crumbled in the aftermath of the credit crunch and was deep in the red figures. Rangers were one of the few parts of that empire that could quickly turned into money. Whyte told the Rangers support that he would pay that bank debt, thus the support looked optimistically to the future. While there were negative rumours at the time, this was deemed as something not uncommon for business-people like Whyte. Hindsight is, of course, a fine thing.

 

Whyte did indeed removed the clubs debt, but not with his own money. He sold the rights for the season ticket sales of the upcoming 4 years to Ticketus, who in turn gave him an advance payment of roughly £26m. Whyte paid the debt and other costs and used the money to keep the club running. That this was essentially illegal by both Whyte and Ticketus – even though the latter apparently did not know how Whyte was using their money – is left aside for the time being. Ticketus' demands from Rangers FC plc these days are said £26m, whom they currently chase from Whyte and for which they have since stepped up the relevant legal steps.

 

Whyte's ultimate fault was that he did not pay any TAX nor PAYE ever since he took over. This and other misdeeds became known in due course and in February 2012 it reached its climax. The British tax and customs authority HMRC called for the outstanding money to be paid and since Whyte / Rangers could not pay up, he handed in the administration papers.

 

With regard to administration it has to be noted that it only concerns the money owed to HMRC, £9-15m. Any other debts/liabilities at the time were not pressing in any way, something pretty common at any football club. As can be gathered from the official Administration Report (list of creditors), the full amount of debt was valued at roughly £55m.

 

Where do these €160m come from?

 

Pure phantasy. There are simply not there. Pessimists would probably claim: not yet there.

Edited July 11, 2012 by Zappa

[der Berliner 3,247]

From 2000 onwards, Rangers (then under the ownership of Sir David Murray) - much like many other British companies - utilized the so-called Employee Benefit Trust (EBT) schemes to – at that time - legally hand bonus payments for its players and staff members. All were listed in the annual financial reports. In 2010/11, HMRC declared this practise illegal and instantly checked various companies for the use of such schemes. That is, whether companies used these schemes to hand employees a second income without paying income tax. It appears that Rangers FC was targetted as a prominent „sample case“, as they had 'now challengable' EBTs inbetween 2001 and 2006. The mentioned horror figures in the press relate to the absolute worst case scenario, i.e. Rangers would be found guilty in each and every single case of EBT payments, roughly £75m. The rather important word „could“, which the British media usually puts ahead of this figure has been forgotten in recent month. Since this latter stance has also been adopted by such credible institutions like the BBC, it is rather understandable that the German news outlets have taken this figures up without checking them. Yet, no final verdict on these cases has been delivered, since it is apparently not that easy to declare something illegal on hindsight, something that was legitimate at the time it was done.

 

HMRC has since launched hundreds of related investigations in Britain, since the use of EBTs within e.g. banks and football clubs (including the EPL) was widespread. At the time without much concern.

 

All this though is only peripherally related to the current administration. For the latter only concerns the £55m of the creditor's report.

 

So much for the differnt figures in the media then.

 

How did it go on then?

 

Administrators Duff & Phelps took over at Ibrox and in early June, a CVA proposal failed at a creditors' meeting. HMRC categorically decline such offers (or so they say). Thus the liquidation of the plc was agreed upon, after all shares, assets, employees et al were transferred to the new corporate entity running Rangers FC, Sevco Scotland Limited. The club itself remained untouched by this. Hence, Rangers Football Club as we know it with its 140-year history remains very much the same.

 

Membership in the highest Scottish league (SPL) and the association (SFA) lies with the company (plc). Since the old corporate entity is bound to be liquidated, the new one has to apply for membership again. This application was declined by 10 out of 12 clubs on July 4th 2012, with Kilmarnock FC abstaining from the vote and Rangers voting for it.

 

The question that comes up is obvious: why can direct competitors decide on the fate of a club? That is Scotland for you. A wonderful country, but in terms of football tainted by hatred far beyond the rivalry between Rangers and Celtic. And when it comes to the governing bodies, even the Italian ones don't shine in a darker light.

 

In Germany, much would clarify and decide itself via the rules and statutes. As it should be. People will have to live with that, since at one time or another, everyone had agreed to them. Not in Scotland. For it lacks somesuch. The governing bodies were quite literally bricking it and declined to take responsibility, as would have been their duty. What began as some sort of joke soon turned into bitter reality.

 

First, the current board members of the SPL were to decide on the Rangers membership. They (6 members of of 12 SPL teams) quickly decided that all clubs had to make a decision.

What happened now would even put a witch-hunt to shame. Clubs suddenly saw a chance to get a bigger share of the cake. A place closer to possible European competition, more TV and sponsorship money, more money for finishing higher in the league table. Quite happily (and in correct assumption of the outcome) the clubs even let their support decide on their vote. That sort of fun was not to be missed. For the support this wasn't about money. Simple malice and decades of frustration of being pummelled by a greater team were their guiding principles. The result was clear: every support „demanded“ a 'No' vote from their clubs, often the threat of a season-ticket boycott attached to that, should the club not comply. Since you can't sell this as „money-grabbing“ and „utter hatred“, it was clad in the newly-defined term „for reasons of sporting integrity“.

Just imagine that Bayern Munich would find itself in a similar position and DFB/DFL (German Football Association / German Football League) - in an attempt on democracy – decide that all clubs should vote on this. And in turn, the clubs hand that decision to their supporters. The result would be pretty obvious. Such sort of decision-making is quite simply scandalous. It is something for statutes and rules to decide, not sympathies or personal interests.

 

What happens in Scotland right now with the SFA, SPL, and the clubs is essentially the same as if you would punish the Costa Concordia (the ship!), its cooks, stewards and passengers for its sinking. It matters not who was actually responsible, who should be made to suffer. The captains of the other ships (i.e. the directors of the remaining SPL clubs) of the Costa Line are only interested in keeping the Costa Concordia grounded and not sailing again. For that is how they get its passengers, income and more media attention. That is what they then call honest and objective decision making. Somesuch, quite simply, beggars belief.

 

You can gain a certain amount of understanding by looking at the punishments levelled out thus far:

 

Rangers FC

 

- 10 point deduction (normal administration procedure)

- £160,000 fine (normal administration procedure)

- Loss of the Champions League-place and no European competition for three years (A rule of UEFA, since every „club“ has to be a member of the association for three years ere participation in a UEFA competition. The duality between club and company thus works against Rangers. The prime objective of the UEFA rule probably is to stop some oil billionaires whipping up a team out of nothing and challenging the big guns in Europe in no-time, thus e.g. essentially undermine the attractivity of the Champions League.)

- Liquidation of the old company, founded in 1899

- Demotion to the 2nd, 3rd, or 4th tier of Scottish football (Since the members of the SPL voted 'No')

- (1 year transfer embargo (A plan instigated by the SFA, but as it is not in their rulebook thrown out in court. It is not off the table though.)

- Loss of nigh the entire professional playing squad (According to manager McCoist up to 20 players, Rangers currently have some 8 first teamers. Players who declined to transfer their contracts to the new corporate entity could leave as free agents (which is disputed), not least due to some instigation by their agents, as the latter surely could get a better bargain for their players later on.

- A consequent loss of £25-30m due to these players leaving without fees.

- Barely imaginable loss of image

[der Berliner 3,247]

The actual culprit: Craig Whyte

£200,000 fine and he is from now on forbidden to hold any position in the Scottish game. He's surely deeply worried about this in his Monaco home.

 

As described, the club itself has never had any tangible knowledge of Whyte's activities, nor any chance to do anything against it. Still, it is the club who is being punished for Whyte's crimes, for reasons of „sporting integrity“, as has been stated.

 

By now, the SPL clubs have lifted their glasses and returned to stark reality. What would factually happen if there were no Rangers in the SPL? And suddenly, it all shone in quite differently a light. In their rush the SPL clubs simply forgot that the cake on offer would suddenly become rather small. The running TV deal would be renegotiated, sponsors cutting their payments or go away entirely, the Rangers as a magnet for the home support as well as the Light Blues' travelling support (5 to 15,000 people) won't be there any longer. What good is a larger piece of the cake if it only has the size of a cookie? That enlightenment happened too late though. In Germany, decisions would have been made according to the statutes, as it has to be done. In Scotland it was made by competitors and their sympathies. This essentially meant „envy“ and „hatred“. Called „sporting integrity“. A day before the final decision was made, club officials met for a final time, desperation at a premium. By now, they knew what was going to happen to their clubs. Yet, 8 of them had already made public statements declaring their 'No'-vote intention. Their support coerced them to remain with that vote by threatening a boycott of their own clubs, should they decide to vote Rangers in again.

 

The next step:

 

Rangers have since applied for membership in the next tier of Scottish football. The SFL presides over tiers 2 to 4, i.e. Disivion One to Three.

 

It is by now the wish of the Rangers support (!) to voluntarily start anew in Division 3, not least to show their disapproval towards the SFA and the SPL, who at no stage whatsoever offered any help to the club - rather on the contrary called for sanctions and penalties throughout. Not to mention the voting procedure for the SPL. For at the end of the day, the club has been the victim of an elite con-man and the club itself had nothing to do with this. The fraud and crimes by Whyte are utterly ignored by the Scottish media though.

Both the SFA and the SPL will face a serious shortage of money soon enough. According to their own reports, some £16m in TV deal and sponsorship money will be lost (not to mention loss of income from Rangers games to the various clubs). They are thus already pressurizing the SFL not to send Rangers into the 4th tier and to reinstate them into the 2nd tier. Thus, the „game in Scotland will not go to the wall“. This is rather embarrassing, as they – at the same time – note that TV companies and sponsors would accept a 'one year SPL spell' without Rangers. Thus, the SPL and the SFA decided quite high-nosed and regally to send Rangers down into the lower levels of Scottish football, but left the SFL with the scapegoat role and told them of the „dire consequences“ should they dare not to follow the demands of the SFA/SPL. It has to be noted that the SPL was created out of commercial reasons by the greater clubs of Scotland, preserving the bulk of sponsorship and TV income to those 12 teams, while keeping the rest of the game (i.e. the 30 SFL clubs) on an annual £2m life-support. One can imagine the pure joy amongst the SFL teams being treated in this way by the other teams and the associations.

 

The Rangers support (surveys amongst season ticket holders showed 80% votes in favour) as well as manager Ally McCoist want Division Three, i.e. the 4th tier. What else can be done with a club without any players? Since all of this – ware, for there it is again – has to be done for the sake of „sporting integrity“.

 

That, though, is of no interest to the SFA or SPL. They want to see the Rangers in Division One and thus soon in the SPL again. Preferrably with point deductions and a transfer embargo et al, running for years. Thus they are being kept as a shade of their self, a cash-cow suitable for sponsorship and TV deals, but no threat on the field of play. All in the name of – sporting integrity. Who would deny that?

 

The SFL decides:

 

On Friday July 13th the SFL will decide where the Rangers will play next season. And as you can imagine, the SFL leaves that decision to their member clubs as well. Or their support? We shall see.

 

It borders to the perverse how the small clubs in Divisions One to Three (they decide in one go) are being pressurized by the authorities. Pressurized to place Rangers in Division One. Those authorities and clubs, who could not be quick enough to send Rangers into Division Three out of „sporting integrity“ are now trying their outmost to keep them closer to themselves – and their own purses. A world turned upside down? No. Just reality in modern day Scotland. To reach their aim, the small clubs like Cowdenbeath FC are openly being bullied, as they made public last week.

 

Who is the victim, who is the culprit?

 

The bad guy in this surely is Craig Whyte. Are the Rangers solely a victim though? They are not. They have been caught stone cold by a criminal, but have to take some blame not to recognize the threat earlier. Given the majority rights, this was not easy, but the club has to take some responsibility. Whether the punishment dealt so far is just is up for anyone to decide.

 

With regards to the authorities though, this is simply nothing short of scandalous. Epitomized by the transfer embargo from the SFA. Something not in the rules or guidelines. Rangers had been punished according to the rules on administration, but received something that was simply not within the relevant rules. Who would help? A protest of some 10,000 Rangers supporters was the beginning, while Rangers went to the Court of Session. The latter took minutes to decide that the punishment was illegal. A cold shower for the SFA. Naturally, UEFA showed up, since it does not like if clubs sue their association in law courts. The reason is pretty clear, as both the SFA and UEFA (and FIFA) like their ivory towers of power on anything football.

 

This article is not intended to paint a wrong picture. Rangers, who are surely victims themselves, need to be punished. No ifs and buts. Yet, the measure as well as the establishment and the voting for the punishment are as reprehensible as the deeds of Craig Whyte. At the end of the day, it all revolved and revolves around money.

 

The position and power of the Scottish press in this tragedy is best kept aside. What should be kept in mind when reading it though is the fact that Scotland is a small country with a limited amount of journalists, people who waited for decades for somesuch to happen. Frequently, peerless local „bigotry“ came to the fore. A journalistic legend like Jim Spence commented on the Rangers administration diametrically different to that of his own club-of-choice, Dundee FC, who suffered a similar fate a few years back. Even BBC Scotland, whose reports are taken on by the BBC – itself deemed to be a respectable source of information world-wide – was on a constant warpath with the club under Craig Whyte and has time and again left the high-ground of impartial reporting to meet the quality otherwise only to be found at tabloid level. The constant denomination of Rangers FC as „newco Rangers“ or „Rangers newco“ tells us how the Scottish media treats the situation of the club.

 

It is too early for that. Yet, it is pretty clear that there will only be loosers: Rangers and the whole of Scottish football. That is an assumption already shared by those who viewed themselves as winners. It may not have reached the Celtic support, but that is of no great surprise. Their malice will last longest and will be the one most enjoyed – after all, they envisage themselves as winners of the next 3 to 4 league titles. Whether it will be a title worth its name remains to be seen.

 

On July 13th the drama enters its next round. We will keep you up to date.

[der Berliner 3,247]

As you might have seen, the admin of the German board and yours truly have written a German article about the club's situation, send by now to various German media outlets. For those whose German is not up to scratch these days - which I cannot understand, of course - my English translation is posted above.

 

When reading this you have to remember that the German media usually takes the word of the BBC et all for granted (for it generally is a decent and impartial information source) and is that barely scratching the surface of the truth. Thus, this article is a first status quo, without including some of the finer details that we go on about here of late (just yet).

 

EDIT: just in case, beyond the British isles Rangers are known as Glasgow Rangers. Hence we included Glesca's name in the article on purpose.

Edited July 11, 2012 by Zappa

[Frankie 8,151]

An excellent effort to spread the correct information. Great stuff!

[Zappa 0]

dB, I've made this new thread for your English translation and I'll now put a link to the translation here at the bottom of the article on the main site. I should have thought to do it this way in the first place!

[Zappa 0]

Done! That's a link to here now beneath the article - http://t.co/qXQzdCRD

[der Berliner 3,247]

Any chance that we can included the Interim report somewhere on the German and English versions respectively? E.g. straight below the first pdf-Link near the top?

[Zappa 0]

Any chance that we can included the Interim report somewhere on the German and English versions respectively? E.g. straight below the first pdf-Link near the top?

 

Yes, but I need a translation of "interim report to creditors can be downloaded from here" in German.

[der Berliner 3,247]

Let's sub the current ...

 

"Der offizielle Insolvenzbericht liegt entweder dieser Mail bei oder Sie können ihn hier herunterladen:

http://www.rangers.co.uk/staticFiles/fe/…5~174334,00.pdf"

 

... for

Der offizielle Insolvenzbericht *insert first link* und aktuelle Status zur Insolvenz *insert new link* kann hier gelesen bzw. heruntergeladen werden.

 

Cheers!