Monthly Archives: January 2012

Now Celtic FC Ltd is involved in a case in the Court of Session!

Today has been awash with stories about Rangers and its finances etc.

However, that has not stopped me reading the court lists as usual, and today finding another interesting looking case.

The Calling List has as one of the cases the following:-

Celtic FC Ltd, Celtic Park, Glasgow AG Ross John Connolly…, Glasgow

Celtic FC Ltd is represented by Harper MacLeod, Solicitors. Interestingly that same firm acts for Craig Whyte in the court action being pursued against him by his estranged wife.

Some might be surprised by the same firm (I am sure not the same individual lawyer) acting for both Celtic and Mr Whyte. But, at the top levels of the legal profession, there are few firms with the reputation of Harper MacLeod.

Anyway, back to Mr Connolly.

I was looking to see if there was information to suggest Celtic was in dispute with a person of that name. What appeared was this linked Daily Record story. It suggests that this Mr Connolly who has been sued is the same man who, allegedly, assaulted a Celtic steward at the match in December against Udinese, when the steward tried to remove his offensive banner.

Why take him to court?

I suggest these possibilities.

1                    Having banned him for life, Celtic wants a formal court order to keep him away. That would be unnecessary, in my view. Celtic Park is private property and the Club can refuse entry to whomever it likes. Of course, there might be the added factor of actually having a court order against Mr Connolly, in the form of an interim and then a permanent interdict.

2                    Celtic may be pursuing him for payment of damages. This could be a pre-emptive strike on the basis that the Club will seek to recover disciplinary penalties levied on it because of Mr Connolly’s alleged actions. In addition, it may be that Celtic can attribute substantial costs already to Mr Connolly.

3                    The case will not be one for the steward who was allegedly assaulted. If he wishes to pursue a claim, then he could pursue Mr Connolly personally, or event, if it was felt that Celtic might, in some way, have failed in their legal duty of care to the steward, he could even pursue the Club.

4                    Most of all, I suspect that this is an example of being seen to be doing something. If Celtic, in legal terms, is seen to have done all it can to punish Mr Connolly and to prevent a repetition by him (by barring him from all Celtic games for life), then this might be seen to be to Celtic’s advantage when UEFA deals with the fallout from that game.

Celtic still has to attend the UEFA committee dealing with that match. They can however say that they are pursuing Mr Connolly for as much as the civil courts allow.

Messrs Levy & McRae, with a long track record of protecting Ibrox from closure due to the sectarian singing and chanting by some of the Rangers fans, took a twin track approach of full and frank apologies to UEFA, and statements of intent or actual action  taken as far as the miscreants went.

It might be that this is the best route down which to travel, and thus mitigate the penalties that might otherwise be applied.

I do not think it likely that the case of Celtic v Connolly will ever reach the stage of a contested court hearing. Celtic can leave that to its cross-city rivals.

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Credit Where Credit is Due – The Daily Record Reports on the Rangers Mess

I believe that, where one gives out criticism, one should also give out praise.

Therefore for all the brickbats thrown at the media, today the Daily Record has broken free of the hers.

You will find their story here, and I suspect that, by the time I come back to a keyboard, matters might have moved along today.

In which case, I will offer my further unnecessarily detailed and wordy analysis!

Later!

Here!

On this Blog!

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Filed under Craig Whyte's Companies, Daily Record, Football, HMRC v Rangers, Press, Rangers

Did Rangers Mortgage Their Season Ticket Income For Four Years – And Is It All Spent?

The Internet is buzzing tonight. Something big, we hear, is appearing in the Daily Record tomorrow. The wags on Radio Clyde were discussing the dread fate that may await Rangers. Clearly my blog post yesterday has been read in high places!

The suggestion is that the Record is breaking a story that, horror of horrors, Rangers Football Club PLC had mortgaged four years’ worth of season ticket income, in a large corporate version of an Ocean Finance consolidation loan. This was to bring in funds to, perhaps, allow Mr Whyte to pay off the Lloyds Bank debt and provide working capital for the Club. But what happens when the loan is spent and the debt is still there?

Did Leeds United Not Do This?

Keen observers might recall that one of the fateful actions by Leeds United, before it plunged into insolvency, was to mortgage future season ticket and other income. As “The Director” magazine reported in October 2006:-

To most lenders, the idea of becoming involved in football finance sparks the kind of panic attack suffered by England footballers in penalty shoot-outs. They remember when Leeds United posted a £49.5m loss in 2003 while carrying £78m of debt securitised against future season-ticket revenues. They recall how creditors waved goodbye to enough money to keep the entire gaggle of England WAGs (wives and girlfriends) in Gucci bags and Cristal champagne for life.

The then Leeds chairman, Peter Ridsdale, explained the profligacy that had led to the collapse of his club’s  fortunes as “living the dream”, but it was the beginning of a nightmare for other teams seeking to fund their success by mortgaging future revenues.

It is easy for clubs to be caught in a downward spiral. Relegation from the Premiership, for example, as happened to Leeds in 2004, represents a year-on-year drop in income of at least £15m, while the collapse in 2002 of the Football League’s broadcast deal with pay-TV start-up ITV Digital, left lower-division clubs £180m out of pocket. No wonder banks are jittery.

Yet such is the clamour from fans for on-pitch success and shareholders’ desire to tap into Premiership riches, that football boardrooms have tended to chase Ridsdale’s dream by spending money they have not yet received. The difficulty now is that the banks are no longer prepared to fund such speculation.(Emphases added)

As that reliable source Wikipedia records these events:-

O’Leary’s Leeds never finished outside of the top five, but following their defeat in the UEFA Champions League 2001 semi-final against Valencia their fortunes began to change. Under chairman Peter Ridsdale, Leeds had taken out large loans against the prospect of the share of the TV rights and sponsorship revenues that come with UEFA Champions League qualification and any subsequent progress in the competition. Leeds signed Robbie Fowler and Seth Johnson for large fees and big wages. However, Leeds narrowly failed to qualify for the Champions League losing out to 4th place to Newcastle United, and as a consequence did not receive enough income to repay the loans.

Remember this was before the global financial crash too!

However, it seems that Rangers were able to find someone to fund a similar deal for them.

The Secret Sources of Information

What digging has the Daily Record done to find this story (if that is their big splash)?

In the words of the great Alex “Candid” Cameron, I have the solution in an envelope here, which I will now open.

Here is what is hidden in the envelope.

Extracted from the Rangers Tax Case Blog post Reflections on Craig Whyte’s Obsessive Secrecy – 6th June 2011

“… it looks like Rangers are preparing the ground for a credit facility worth about £30-35m . Such a credit line would be secured by a large percentage of Rangers’ season ticket revenues over the next four seasons. … While such an approach would saddle Rangers with a very large debt burden, and would drain much of the blood supply that sustains any football club, such a strategy at least allows Rangers to live and to fight another day. At a club that would likely have gone bankrupt had it not managed to play in the Champions’ League group stages three years in a row, who is to say that they cannot continue this streak? … Unless one of Craig Whyte’s backers antes up cash to make borrowing unnecessary, the club’s viability depends upon many random variables. … if Rangers lose their appeal against the tax bills in their possession, and if Rangers fail to qualify for the Champions’ League in the next two seasons, it is hard to see how the club can operate at its current scale if it has surrendered close to 70% of the revenue from its season ticket sales for the next four years.

This was prompted by the lodging at Companies House, as identified by diligent and indefatigable posters on RTC of a form MG05s. This is a document which publicly intimates the withdrawal of property from the coverage of a floating charge. Put shortly, Mr Whyte’s company took over the security over Rangers’ assets provided by the floating charge granted to the Bank of Scotland in 1999. This charge allows Mr Whyte’s company to appoint a receiver, thus giving him first crack at the assets to repay the debts due to his company by Rangers. However, it is possible to take property out of the coverage of the charge.

The MG05s revealed that the “Released Assets” were the “Tickets, Season Tickets, Ticket Proceeds, Designated Accounts and Account Proceeds as defined below”.

The “Season Tickets” were 23,154 for 11/12, 27,017 for 12/13, 27,014 for 13/14 and 23,154 for 14/15. Effectively Rangers were giving up their rights to this income for the seasons mentioned. The form was signed by Phil Betts, director of Rangers and also heavily involved with Close Finance, and Mr Whyte himself.

There was however a problem. The MG05s had released all the assets, except for the “Released Assets”! In June therefore Rangers went to the Court of Session to “fix” the mistake, with an application for “rectification of the register”. You will find the court order here.

Now, had there been any reaction to RTC’s prescient article?

Yes there was!

Extract from Darrell King interview with Craig Whyte – June 2011

“Contrary to a report elsewhere this week, no form has been signed that would allow season-ticket money to be used as a guarantee against any FUTURE loans; indeed, the form lodged at Companies House by RFCG last month does the opposite: it prevents season-ticket money from being used for that purpose.“ (Lots of emphasis added!)

Nothing about past loans though!

There were  other hints about this issue too, although not easy to find.

Extract from the Rangers Independent Board Committee (IBC) statement contained in the Shareholders’ Circular – June 2011

“…the IBC is concerned about a lack of clarity on how future cash requirements would be met, particularly any liability arising from the outstanding HMRC case.

“The IBC is committed to ensure that the transaction and future investment and funding proposals should be transparent to all the shareholders and supporters of the Club.”

The issue was also raised in the court action pursued by the former Chief Executive, Martin Bain, against Rangers Football Club PLC:- June/July 2011

“As a result of concerns about tax liability and liability for wrongful trading (Rangers FC’s) Board of Directors prior to the takeover by Mr Whyte were making arrangements with the defender’s bankers to ring fence the subscriptions from season ticket holders to guard against those sums of money being lost in the event of there being a substantial tax liability. It is understood Mr Whyte has not ring-fenced those monies collected from season ticket holders. What is more it is understood Mr Whyte has arranged for the defender to assign its season ticket income for the next four years to a London based finance company in exchange for cash flow at the present time.

So, by June/July last year it seemed to be the case that (a) the season ticket income up to and including 2014/2015 had been released from Craig Whyte’s security over Rangers: (b) the IBC was concerned about how Mr Whyte was going to fund running costs; (c) Martin Bain was concerned about this issue too, as it related to the ongoing solvency of the Club; and (d) Rangers had made such a mess of the deed that they had had to spend good money engaging lawyers to fix the mistake.

Who might these London financiers be?

Close Brothers Group is a finance house, closely connected to Primary Asset Finance. One of the main men there is Mr Phil Betts, erstwhile director of Rangers. He resigned suddenly less than two weeks ago.

It is understood that, through Close, substantial sums were borrowed on the strength of the season tickets.

On 9th August 2011 Rangers granted a security in favour of Close Leasing in connection with income from their catering contract with Azure (a company from the Murray stable!). This was recorded in a form MG01s.

Then, on 26th October, a further form MG05s Security was registered in connection with alterations to the floating charge in connection with the Azure contract, ranking this ahead of the floating charge holder. The parties to this deed were Close Leasing, Rangers Football Club PLC, Rangers FC Group Ltd and L:iberty Capital Ltd (being Mr Whyte’s 100% personally owned company based in the British Virgin Islands).

There does not appear, yet, to have been a security registered for the season ticket “mortgage” but as all the parties are on the same side, it might have been decided to leave it unregistered till necessary, as there was no way that Messrs Whyte and Betts, who have a long, productive and successful history together rescuing companies, would fall out.

Now however, Mr Betts is gone from both Club and Group. Hot on the heels of that Sir David Murray re-appears at Murray Park. In the immediate follow up the mainstream press suddenly start to turn on Mr Whyte.

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EDIT FOR ACCURACY – 8am 31/1 – Whilst Close is involved with some funding, Ticketus appears to be the company responsible for the “big loan”. More detail when the Daily Record comes online!

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Rumours abound that they have run, or are running, out of cash, and that even the transfer of Mr Jelavic won’t bring in enough to fund the ongoing operations.

Have Rangers Run Out of Money?

The short answer is that we do not know. However, if Rangers had not failed at the first Champions League hurdle, or even at the first Europa League hurdle, or if the £9 million offer for Jelavic in the summer had been accepted, then this speculation would undoubtedly be even  more groundless than it is clearly is already.

Mr Whyte, as an astute businessman with a proud record, though he won’t name the companies he is proud of, will clearly have a plan to deal with these storms, and with the sudden departure of his “close” colleague.

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Hearts & the SPL, “Utmost Good Faith” + Flaws in SPL Discipline? By Me at Scotzine

I found it interesting that Hearts were taken through the disciplinary hoops by the SPL under a charge of failing to act with utmost good faith towards the SPL.

That got me thinking, and I produced an article on the points which you can find over at Scotzine.com.

Click on the link above, or the logo below, to read it.

 

 

 

 

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The Flawed Logic of the Scottish Media’s Stance on Rangers’ Troubles

As the prospect of Rangers FC ceasing to exist looms ever larger, and is now openly discussed in the mainstream media, it is interesting to see the line which is being taken.

 

Recently I have had the pleasure of attending a couple of meetings of the Scottish Press Club, where some of the machinations of the media are laid bare. Two recent speakers are, I think, relevant to this discussion.

First of all James Doleman wrote the terrific Sheridan Trial Blog. That had a large part to play in making me start my own, so he is the man to blame!

James sat in the Tommy Sheridan trial for its entire duration, reported thoroughly and correctly every day, and was able to observe the antics of the traditional media. He noticed that there was a “herd instinct” whereby there seemed a reluctance to be the person striking out in a different direction with the story. James had the feeling that there was a “safety in numbers” approach. If a reporter took a different tack from the rest, then he ran the risk of being wrong – if the general “spin” on the story was the same, them slight variation was in order, but no-one could be faulted for sticking to the “party line”.

It was also James’ view that this was not because of journalists trying to fit the story within their particular organisation’s viewpoint, but a recognition that there is “safety in numbers”.  (James – if you feel I have misinterpreted what you said, apologies, and I will correct it.)

 

Secondly, I was very impressed by Professor Greg Philo from the Glasgow University Media Group. His point (one amongst many) was that what the media failed to report was more important than what actually made it into the papers and on to the TV. He discussed various stories, dating back to the 1970’s, where the facts were simply not reported at all, leading to people forming views about, for example, Trades Union power or productivity of British workers, which (a) were factually incorrect and (b) have formed the general view of these matters in the UK now, almost 40 years on.

 

What does this have to do, you might ask, with the state of Scottish football and the media coverage thereof?

 

The story of the tax case facing Rangers was broken, I understand, on the Kerrydale Street website. It seems to have been picked up soon afterwards by Darrell King of the Evening Times. My knowledge of it came through the Rangers Tax Case Blog and via Phil Mac Giolla Bhain’s website.

The mainstream reaction to the story seems, from my observations at the time, to have been to ignore it. Bearing in mind that, in a time of financial austerity, it was being alleged that “one of the two most important institutions in Scotland” (as I believe some refer to Rangers) had taken part in a scheme (a) illegally to reduce its tax liabilities by over £20 million and (b) which had the effect of giving them a massive financial advantage over even its closest rivals, it seems astonishing that the media were not poring over the story, and having comment from tax lawyers and accountants about what it meant. The fact that the tax appeal took place in private did not mean that the issues raised could not be discussed.

There were no issues of contempt of court, as long as the privacy of the hearing was respected. If, for example, RTC had detailed the evidence of a witness to the appeal, then I am sure that some form of action would have been taken. Governments and law enforcement agencies can easily penetrate the anonymity of the Internet, if so required.

If an anonymous blogger can provide huge amounts of analysis, and have contributors who are versed in the various areas chip in with their thoughts and input, why not the mainstream press?

I do not think that a message went out from the various editors saying “We are all Rangers supporters, so do not write about them.” However, there was probably a “nod and a wink” to the idea of sitting tight on the story, and for letting someone else take the flak. The reaction by some groups of Rangers fans to what they perceive as negative stories r actions about them, such as the threatened boycott of Lloyd TSB for trying to control the Rangers debt situation, probably made editors think that the risk of a drop in sales, even for telling the truth, was not worth it.

In addition, sports writers traditionally have not come from a business or legal background. Would the City Editor of the Herald be expected to pop over to Firhill and write a match report on a Thistle v Hamilton game? But the media has access to all sorts of experts (so-called) and this seems a story ripe for detailed exposition and analysis.

 

Against that background, what do we see now that the story is being talked about?

It seems to be the “party line” that Rangers must survive in the SPL in some form, whether as a newco or the existing team. This is not, of course, for the good of Rangers, but for the “good of Scottish football”.

As has been predicted on RTC by various contributors for some time now, this is the “herd instinct” kicking in. The accepted wisdom is that, of course, there must be a “Rangers” in the SPL. There has been little or no mainstream analysis of the issues behind the question.

I try, when writing, to start with a question, look at the evidence, and then reach a conclusion. That might seem old fashioned, but the media view of Rangers and their present predicament seems to have jumped straight to the answer without any analysis to get there.

We are told that Scottish football will wither and die without Rangers on the SPL.

It is funny, but I cannot seem to recall the floods of stories from Messrs Traynor, Keevins, English et alia warning that the desire of Celtic and/or Rangers to leave the SPL and play in England, or the Atlantic League, or the Inter-Galactic Footie Bowl would kill Scottish football stone dead.

I may well be wrong, and there are archives full of articles warning of this very fate, but my recollection is that the media saw this generally as (a) a good thing for the Old Firm as they would have better competition and more money and (b) a good thing for Scottish football.

Now, with the prospect of Rangers disappearing entirely, or else dropping all the way to Division 3 of the SFL, the absence of the Ibrox team (for what might only be three years) will be fatal for Scottish football.

I will leave the analysis of this to wiser people, but it seems to me that the following “logic” lies behind the present media view.

 

A If Rangers AND Celtic leave the SPL, this would be a good thing.

B If only Rangers leaves the SPL, that will be a bad thing.

C Therefore Celtic remaining on its own in the SPL is a bad thing.

 

Frankly that “logic“ can only be the result of (a) flawed thinking or (b) anti-Celtic bias. If the contention is that it would leave an uneven playing field and that Celtic would win all of the trophies all of the time, then, frankly, why does Scottish football not turn into a competition where Rangers and Celtic play only each other?

There were no clamours for the playing field to be levelled when Rangers were winning nine consecutive Championships, nor indeed when Celtic won their nine in a row. (In the late 1960’s and early 1970’s the standard of Scottish football was very high, and there was a lot of European success).

At the end of the day, it appears that Rangers, through financial mismanagement, have brought about a situation, no matter what happens with the tax case, where it cannot live within its means. Motherwell, Dundee (twice), Gretna, Airdrieonians and, in the mists of time, Third Lanark all paid the price for similar failure.

Would the media be clamouring for the rules to be changed if, as a result of bad play and bad management, Celtic or Rangers faced relegation? Logic would suggest that the same arguments should be deployed. However, that shows the moral bankruptcy of the argument.

We still need, perhaps even more than ever, the likes if Phil and RTC to keep up their coverage of these issues, or else the facts will be drowned out by the pre-set media agenda.

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And talking of the pre-set media agenda, I note today that the Scotsman website has a story regarding some of Rangers “targets” including Jorge Claros, the midfielder from Honduras who had a trial with the team earlier this month.

Ally McCoist is quoted as saying “We are not just in a position to offer him a contract yet”. He then goes on to suggest that other areas of the team are a higher priority.

The article goes on to say:-

“Claros has returned to his Honduran club Motagua and their manager, Pepe Trevino, is unhappy at the player’s treatment. He said: “Jorge has a great future and will sign for a good club in Europe soon. Maybe it was not his time at Rangers – I don’t know why they didn’t sign him. Rangers took him for two weeks and now say they have money problems. They should have told him before that. He is a very good player and deserves to be treated better than this.” (Emphasis added)

Mr McCoist’s words ”We are not just in a position to offer him a contract yet” seems to corroborate what Senor Trevino has to say. It does not appear that he was asked why Rangers was not in position to offer a contract, rather than saying that they did not want, just now, to do so.

It might be seen as worthy of comment that Rangers cannot afford to sign Senor Claros. But no.

It is all business as usual – nothing to see here – move along please.

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I am sure that the tide will turn and that the media will give this story the attention is deserves. Probably though, it will not happen till the liquidator or receiver is installed in the fine offices at Ibrox.

 

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