A business and assets sale
Paul Murray's Blue Knights are looking to purchase the shares of Rangers Football Club plc and agree a CVA with creditors which would see around £10 million shared out. Paul Murray was a member of the Rangers board who ran up the initial debts which created the scenario whereby Lloyds could dictate to David Murray he had to sell to Craig Whyte, despite all concerned having commissioned and reviewed due diligence which fully laid out his past business dealings. He was a member of the board while EBTs were being used. As a director in the 5 years prior to Rangers undergoing an insolvency event the SFA's fit and proper rules should prevent him having any further involvement. The SFA's silence on this point is deafening. To date these issues have been largely dismissed on the basis that David Murray ran Rangers alone. Sorry but that doesn't wash with me. As a director you have legal responsibilities to ensure the company is being run in the interests of the shareholders, that is all the shareholders not just David Murray. Am I now to believe that someone who sat by while all this was going on is to be trusted to run the football club?
The other key point regarding Murray's bid is that he wants to buy the shares. As a basic principle this is not something the administrators have any power to do. In the absence of any explanation of how Craig Whyte would be compelled to sell his shares such an arrangement would need his agreement. Presumably Paul Murray is either happy to reward Whyte for his year in charge with a return on the £1 he spent or he is expecting Whyte to give them away. Even supposing the bold Craig did succumb to a fit of conscious Andrew Ellis this week again asserted his belief that he is in fact the owner of 24.9% of the shares. Would he be seeking to establish ownership if he was then just going to give them away to Murray? The point I am making is this is a far more complicated scenario than selling the business and assets. Even setting aside the big tax case it looks certain to see at least Ellis dragging the process through the courts. I cannot conceive of how a share sale can be achieved with the necessary speed.
Despite all this the Blue Knights' bid has the support of the various Rangers supporters group which puzzles me. If I was being cynical I would suggest there are people out there who are enjoying being in the lime light a little too much and are potentially eyeing a seat on the board as the fans' representative. The logic for the support is that this is the only bid which avoids liquidation and therefore saves the club's history. This is for me a complete falsehood. The administrators have failed to be explicit enough in their attempts to convey to the fans, media and Scottish football public at large that it is not the club which will be liquidated, it is the company. It was notable that they recently stated "We would stress, however, that if a CVA could not be achieved, bidders have discussed with us the next best alternative being the sale of the business to a new legal entity which would continue to trade as Rangers Football Club".
There are variations in how it can be achieved and I am deliberately keeping it simple because continually going over technicalities like securities and order of creditor payment bores most folk. In basic terms a business and assets sale would go as follows:
1. The administrators sell the business and assets to a "newco". This sale would see transfer of the stadium (and contents), training ground, employees and intellectual property i.e. the name Rangers Football Club, the badge and crucially the current SPL share and SFA membership.
2. This raises the money used to give the creditors their pennies in the pound return - at present this would be a better result for them than the Blue Knights' proposed CVA
3. Rangers Football Club plc is liquidated. Rangers Football Club continue in the SPL.
If this was any other business this solution would be a no brainer. As the business of this company is running a football club it clearly is more complicated. Normally the transfer of employees would be straight forward but again football regulations need to be considered to ensure this is allowed. Additionally the solution hinges on the transfer of the SPL share and SFA membership. The revelation this week the SPL was preparing to change the existing rules to ensure that a "newco" would start each season minus a minimum of 15 points and 75% of their share of revenues was greeted by the various supporters groups as proof that the football authorities were out to obstruct a resolution for Rangers. It was in truth the complete opposite. If the club is not Rangers but in fact a completely new club what possible basis is there for punishing them? None. The punishment is based precisely on the fact it would still be Rangers. You cannot therefore suggest the club retains responsibility for the historical misdeeds of David Murray and Craig Whyte's board and then deny them the rest of their history. The Rangers Football Club which would play in the SPL next season is the same Rangers Football Club playing in the SPL this season. It is the club who reached the 2008 UEFA Cup Final, it is the club of Bill Struth, Jock "Tiger" Shaw, the Barcelona Bears, RS McColl, the Loving Cup, "Davie Cooper on the wing", 9 in a row and eleven young boys who kicked it all off at Flesher's Haugh.
When previously advocating the notion that the club can survive when the existing company dies I have been asked for precedents. I cited Fiorentina and Napoli as examples of clubs who went through an insolvency that lead to the end of the company but who survived as a club. Anyone who had the pleasure of attending the 2008 UEFA Cup Semi final in Florence will tell you Fiorentina are a grand old club in a grand old city. The passion of the fans remains despite the ignominy of having to start over in Serie C2. I for one wouldn't have dared tell their support they were not the same club once graced by Batistuta and Laudrup.
This example though isn't enough to satisfy some so how about the following from the Premiership:
- Fulham Football Club (1987) Limited
- Wolverhampton Wanderers Football Club (1986) Limited
A trip to Craven Cottage is one of the most enjoyable experiences in the EPL. It is the polar opposite of a trip to a modern identikit fake plastic stadium branded and sullied by a corporate sponsored name. The ground is small and sits tightly in the surrounding neighbourhood. They still have a glorious Archibald Leitch main stand and pride of place is given to a statue of their greatest player form the 60s Johnny Haynes. As a club they are a wee bit posh, a wee bit twee and a wee bit diddy but you have to love them for it. They notably also have an undeniable sense of self and of their heritage as London's oldest professional football team. There is no question that Fulham date back to 1879 when the club was formed and not 1987 when the current limited company began. Likewise Wolves' website lists them as having won 3 of league titles and 4 FA cups, and as UEFA Cup runners up all of which pre-date the formation of the current limited company in 1986.
Rangers do not deserve special treatment. They deserve to be treated in the same way any other UEFA member club would be. If clubs in Europe's largest leagues have retained their history and identity then I see no reason why Rangers would not.
I covered the self interest that was coming to the fore previously and will refrain from going over old ground. The important point here is that two weeks ago the father of "sporting integrity" Peter Lawell blinked when he responded to the Diddy 10's desire to change the voting structure of the SPL. It was an acknowledgement that Celtic do need Rangers from a commercial perspective. Whilst the Celtic board have employed lawyers to ensure the maximum possible punishment is exerted on Rangers they are not going to do anything to the detriment of their own club. Or to be more accurate as directors of a plc they are duty bound to maximise the profitability for their shareholders. Were they to do anything other than ensure Rangers remain in the SPL they would be having a direct negative impact on TV revenues. Equally though in allowing Rangers to continue in the SPL with a severe points penalty they would be guaranteeing themselves access to the Champions League millions. Well I say guaranteed but that would of course require Neil Lennon to actually win a European qualifying tie. None of this is meant as a criticism of Celtic or their board. They are entitled to do as they wish. It is just an assessment of the harsh commercial realities of modern football.
However, the SPL's decision to create new rules will be viewed as unsatisfactory by virtually every football supporter in Scotland and rightly so. As I outlined above for me it was a major positive. The ratification of these rules will permit Rangers to remain in the SPL and will ensure the two business and assets deals on the table from the American and Singapore groups are a viable solution. I am though in a very small minority with most Rangers fans instinctively viewing this is an opportunity to exert unprecedented and unjust punishment on Rangers. Supporters of other clubs meanwhile will view the changes as being designed to purely to ensure Rangers survive. For those frothing at the mouth at the prospect of Rangers in Division 3 without even the consolation of a glorious history only disappointment awaits. Anyone for jelly and ice cream?
The problem with all this though is that we will have an end result which satisfies nobody. In creating new rules and punishments justice will not be seen to be done. I suspect that faced with the prospect of struggling to mount a title challenge and no European football for three years the number of Rangers fans looking to say "f##k the lot of them" and start over in division three or even more fancifully go to England will grow.
Scottish football is facing the prospect of a lot of unsatisfied supporters and an uncontested top flight. Celtic might well have managed to celebrate last week's SPL win like it was the Champions League but I would imagine they would struggle to dispel the underlying sense of unease at lifting the championship due to points deductions handed down to Rangers on an ongoing basis. None of this makes for a healthy SPL.
The end game
At the moment I have no clear preference on who ends up owning Rangers. Understandably scepticism regarding relatively unknown foreign bidders is high but as far as Paul Murray goes I am far from adopting the view it is better the devil you know. If any of the bidders were to come forward and promise the following they would have my full support:
1. They will ensure the club is run on a responsible financial basis and continue with the current emphasis on youth and signing players who can be sold on for a profit; and
2. They will exit in 5 years once the club has been placed on a sound financial footing, is challenging for the league again and is back in Europe by way of a share sale to the club's support (i.e. essentially following the Fergus McCann blue print).
Right now the Blue Knights have the backing of the majority of the Rangers support. I believe this is partially driven by the coverage (spun or otherwise) this bid has received in the Scottish press and the false presumption any solution other than a share sale creates some form of "new" Rangers. I can understand the more rabid elements of the Celtic support wishing to promulgate such a notion but I would hope that most rationale people would be able to distinguish between an ownership structure and a football club. In the absence of a material change in the Blue Knights' offer the Rangers support will ultimately need to accept that the solution may not be exactly what they expected or wanted but hold your nose and ignore the stink. Suck up the points and financial penalties the SPL will impose, be thankful Rangers have survived and let’s resolve to ensure that our expectations of success never allow the board to be blinded regarding their financial responsibilities. The end result will not satisfy anyone in Scottish football but at least there will still be Scottish football.
I never thought I'd see the day when Ibrox resounded to our support singing Bob Marley but the Bears at the St Mirren game were absolutely correct. "Don't worry, about a thing, every little thing is gonna be alright".