Day 8 (Wednesday) of Rangers Administration – I’ll Have Some of What Duff & Phelps are Drinking!


The D&P statement is in bold with my comments beneath in plain text.

DUFF and Phelps, administrators of Rangers Football Club, today (Wednesday 22nd February) issued the following statement.

David Whitehouse, joint administrator said, “The Rangers fans have been absolutely tremendous over the last 10 days and it’s vital to the administration process that we continue to receive the support we have had thus far.

“Ibrox was sold out last Saturday and hopefully that can be the case for the rest of the season. The fans are clearly extremely loyal to Rangers and by coming to matches at Ibrox they are directly contributing to the Club’s future.

As I have pointed out before, in almost every administration of a football club I can recall, the administrators have not honoured the season tickets. Season ticket holders have paid for their seats “up front”. Legally therefore they are creditors of the insolvent company. The value of their remaining part of the season ticket falls to be a claim in the insolvency, should they choose to make it of course. It could be argued that an unfair preference is being given to the season ticket holders by the administrators. How many other suppliers are being paid for pre-administration debts?

If the interest is to have the fans “directly contributing” to the Club’s future, then surely the fans would understand why their season tickets were now void, and would not begrudge paying again at the door for tickets? Whilst the extra costs would undoubtedly be difficult for some fans to meet, it would be a test of loyalty to the team.

At Motherwell, Dundee and Livingston, for example, the buckets and collection tins were out, and the season ticket holders paid on the gate for entrance.

Rangers’ administrators therefore appear to have missed out on a great deal of money by (a) letting season ticket holders in “free” and (b) by promising the same rights to the end of the season.

It might be that the administrators want to keep the fans on-side so that next year’s season tickets will sell well, but I think there are many more matters at play than simply whether these tickets are honoured.

“We are hopeful that we can enhance revenue streams in the coming months through a variety of means and we have been very encouraged by the support of the business partners who have helped in that regard already.

“Enhance revenue streams in the coming months”? The job of an administrator is, as I have written before, (a) to rescue the business as a going concern; (b) failing which to secure as good a deal for all creditors as possible and (c) if neither a nor b can be done, to secure payment for any secured creditor.

In any distressed business it can (a) increase income and (b) reduce outgoings. The approach of D&P so far seems to have been, until the departure last night of Messrs Russell and Smith, to focus entirely on (a).

I should say though that the story broken by Gerry Braiden of the Herald last night – that despite D&P’s promises, Rangers have not paid for the policing of Saturday’s game, suggests that the cost reductions have started – but reneging, allegedly, on a deal with Strathclyde Police might have consequences for D&P, as they agreed to pay for it, and could, if not resolved, lead to Rangers closing the doors at Ibrox very soon indeed.

I’ll come back to that later.

In addition, what is this about “the coming months”? I had thought D&P were confident about a quick departure from administration. Could it be that their rosy view of the world has darkened the more they have looked into things?

How have “business partners” helped with the “income streams”? Who has given the administrators money to continue to run the club?

“The Club’s suppliers are also working with us to improve income flows where possible and the sponsors have also been tremendously supportive. We are in discussion with them to see if we can enhance the packages that we currently have in place.

Sponsors do not have a choice but to help, unless the contract specifically allows them to terminate on an Insolvency Event. Therefore, even though association with Rangers is just now less prestigious than at other times, the sponsors have to smile and go along with the ride.

However, if I was a sponsor of Rangers, indeed of any team in this situation, whilst D&P might ask me to “enhance” my package – ie pay more money – I would take a huge amount of convincing.

How can suppliers “help” with cash flow? Only by agreeing to supply Rangers (in administration) whilst waiting even longer for payment. In light of the alleged treatment of Strathclyde Police, would any supplier go along with that?

“This is obviously a very difficult period for the Club but those who come to the fore and support the Club will obtain tremendous publicity which is what sponsorship is all about.

So a sponsor who steps us to the plate will be doing it for the publicity – Rangers are at probably the lowest point in its long and illustrious history now. Whilst the followers of the Ibrox team would appreciate any efforts to keep it alive, the opinion outside the loyal fan base, and not just among fans of other teams, is that we have an organisation which has grossly mismanaged itself, and owes huge sums by way of tax. As Mr Salmond saw from the reaction to his ill-advised comments, the tide of public opinion is not in Rangers’ favour just now.

If I ran a big commercial organisation, would I want to be perceived as helping a “tax dodging” company? How does that benefit my brand?

“Right now, it is quite simple – income now will help secure the future of Rangers.

How much income? Taking account of tax and other liabilities, Rangers debt is enormous. The owner has stated that they have a £10 million per year income shortfall. An extra £10 million income does not remove a penny of debt.

A cynic would say, wrongly of course, that D&P fears that there is not enough in the pot to pay its fees!

“Our focus is on generating income for the Club but there is also a focus on costs and the steps we are taking in terms of the cost base of the Club will evolve during the next week.

Good to see that the cost reductions are coming – but why has it taken so long? Portsmouth made over 30 people redundant in a couple of days. All other Scottish football teams who have entered administration have made job cuts (regrettably) immediately. But talking about these savings “evolving”?

“On a daily basis we are talking to department heads and seeing where there is capacity for cost savings but being very mindful of the need to both to preserve the performance on the pitch and retain the efficiency of the club off the pitch as well.

The need to preserve performance on the field is not an administrator’s responsibility.

The only justification for this would be that doing so would make the club more money. But Rangers is not going to win anything this season and will not be eligible for European football next, if it even exists.

Would Rangers fans refuse to turn out to see a team mainly of youth players, if paying at the gate could still save the club? Of course they would.

Therefore the only reason for “preserving the performance” on the field is for the increased prize money for finishing second, rather than lower down. Does that justify the huge salary bill that D&P would need to meet?

No, it does not.

“Overall, I would describe the situation as positive. Everybody recognises the plight that the club is in and have come to the table to help and assist where possible.

The situation is “positive”!!??

Remarkable.

I can only equate this to the captain of the Titanic saying that the news was good as the ship would not run out of ice cubes for drinks n the bar!

“We have also had very good support from the football authorities and have met with both the SFA and the SPL.

What support? Financial? Have the SPL and SFA discussed with their members, some of whom are owed money by Rangers, if they are happy for “support” to be provided?

Remember the SPL “prosecuted” Hearts for failure to act with the utmost good faith for paying its players what the League saw as one day late!

If I ran any of the teams owed money by Rangers, I would be demanding answers from Messrs Regan and Doncaster before a penny of “assistance” went to Rangers.

“For 140 years Rangers has been a key part of Scottish football. We hope that the influence and the support which the Club has given to the game over the years will carry some weight at these difficult times.

Well it’s worth hoping!

“Generally other clubs are sympathetic. I think clubs realise this is a difficult time for the football industry in general and Rangers isn’t unique in its financial position. They are very supportive of the survival of the Club which is critical to Scottish football.”

Rangers is unique in its financial position. No one else owes such huge sums to HMRC due to a failed tax reduction scheme. No one else boasted about spending twice what its nearest competitor did. No one else has been running up new tax debt at in excess of £1 million per month.

Can D&P show how Rangers survival is critical to Scottish football – no – because it is not.

 

Conclusion

I will come back to Rangers latest comments and developments tonight. As a story it continually develops faster than it can be written about. I hope to keep up with it for the sake of my reader – maybe I should suggest that D&P keep quiet for a day or two!

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19 Comments

Filed under Administration, Craig Whyte's Companies, Rangers

19 responses to “Day 8 (Wednesday) of Rangers Administration – I’ll Have Some of What Duff & Phelps are Drinking!

  1. I suspect Paul that all will be quiet between now and Monday. Given players have been paid until 29 February no point in releasing them or telling them they are going before Sunday’s game.

    It is clear there must be some cash as how else would wages be paid?

    The season ticket issue is a curious one though.

  2. oisin71

    “I can only equate this to the captain of the Titanic saying that the news was good as the ship would not run out of ice cubes for drinks n the bar!” – Brilliant Paul. LOL!!

  3. Paul, I don’t think you really mean this as written:

    “Would Rangers fans refuse to turn out to see a team mainly of youth players, if paying at the gate could still save the club? Of course they would.”

    Or do you?

  4. Hi Paul – loving your updates. Why isn’t someone picking up on the fact that this club is in administration and that the administrators duties are to the creditors and not the club, the season ticket issue etc – can the judge who heard the case not step in and say tha D&P aren’t doing there job? Anyway keep up the good work, love it

  5. OfficerDiggle

    It’s Blythe Duff and Vanessa Phelps

    “There’s been a muurrrddduuur”

    “Oh luvvie that’s aaawwwfuuul!”

  6. Me_The_Island

    Paul

    Perhaps when they talk of “revenue streams in the months to come”, they hope to limp along until they can sell season tickets for next season.

    Could it be that by honouring this seasons books they are attempting to build confidence that ‘everything is normal’, so that next seasons books sell well?

    Its a way to fill the coffers!

    John

  7. doubled1975

    Hi Paul,

    Is it just me or do the administrators seem to be just doing Craig Whytes job rather than focus on cutting costs?? Who could be funding the administration?? As far as we know they have no income stream so how are they able to survive so long?? Something fishy going on!!!

  8. Lee Harvey Oswald

    you can’t beat a veiled comment;

    “Generally other clubs are sympathetic. I think clubs realise this is a difficult time for the football industry in general and Rangers isn’t unique in its financial position. They are very supportive of the survival of the Club which is critical to Scottish football.”

    For this read, keep supporting us wouldn’t want to be seen to be slaughtering the golden goose. The fans may be incensed at this clubs behaviour but the boards will keep on puckering up and staying on message.

  9. Stuff

    It’s not an unfair preference in the legal sense as that would be a pre administration transaction within 6 months surely.

    That said, I would have thought that the charging of one rangers fan ( in the financial sense, not the Manchester one!) Could be an issue as legally they are both ranked equally, but preference is being given to one and not the other. Mmmmmmmm!

  10. Hi Paul,

    Do you think the Ticketus deal could have anything to do with the administrators not cancelling the season tickets?

  11. DerryBadness

    Hi there,

    Another terrific blog, but as a Dundee fan eh has went through this process twice, our season tickets were valid on both occasions.

    Ticket holders were asked voluntarily to contribute what they could at the gate.

    I think D&P are indulging in some twisted Stockholm Syndrome with Rangers tbh. They seem to be getting drunk on the publicity and stature of the club rather than doing their job.

    Keep up the good work, Paul.

  12. TheBlackKnight

    cant wait for day 10

    😉

  13. Cautious Paul

    Some things are troubling me with this administration, and Ally McCoist has just brought up another issue at his pre-match press conference.

    He was asked about the players taking wage cuts – now the papers have been reporting that players have offered to do this. However McCoist just said “This has not been discussed” – Now for a company in administration NOT to even discuss wage cuts in 10 days is quite……strange?

    In fact, it’s even stranger now that the administration have guaranteed the police the money for home games for the rest of the season. How AGAIN can a club in administration and seemingly with little funds be able to do this?

    Why is it that Rangers, a club on the brink of financial ruin apparently are able to run home games as normal, make guarantees on policing costs for the next 3 months, make 2 redundancies (My reading is Ali Russell and Gordon Smith walked away – guilty by association), NO wage cuts, or even discussion of wage cuts.

    This in fact means Rangers are running just as they were 10 days ago pre-administration! Still not paying tax, still not paying creditors, and still paying players like McGregor, Whittaker and Davis a rumoured 20k a week each. – Those 3 alone are 250k a month. With not much income as the majority of tickets are sold, and no catering as that has been sold too, and only 2 redundancies (Estimate Smith and Russell on 10k a month each?) and 1 player leaving (McKay for 150k) – How on earth are the Administration not making any urgent moves at all.

    It’s like they are plodding along as normal, with a seemingly invisible pot of gold that only duff and phelps (and whyte) can see!

    Strangest Administration case I’ve seen.

  14. Nick Robinson

    I am not convinced that season ticket holders are creditors unless the company folds and is unable to deliver the prepaid seats at matches they have paid for. There can therefore be no question of them getting a preference. If the existing corporate body continues to the end of the season, there is a contract which cannot be abandoned. An administrator does not have an equivalent power to a liquidator to abandon a contract.

    Obviously if the present Rangers company folds and there is a Newco, that’s a different thing.

    By the same logic, if Ticketus have bought the actual season tickets for the next few seasons, the only way to get them back into the control of whoever takes over is through a Newco and that of itself brings another set of problems like having to apply for re-admission to the league. Given Rangers are unlikely to be the last club to go belly up in the current climate, the SPL will have to be mindful of any precedent it sets!

  15. There are so many aspects of the administration which make me reconsider things which I assumed I knew. For one thing, how much of the day-to-day, month-to-month fiscal business of Rangers is actually conducted by Rangers FC (in or out of administration) itself and how much is handled by Rangers Football Group (née Wavetower) on Rangers’ behalf?
    Does Rangers FC sell season tickets directly to its supporters or could there be a framework by which that business is conducted by another company altogether?
    There are very interesting rumours afoot that the contracts of some players are with Group rather than with RFC. Is this is true – and leaving aside for the moment the significance of this anomaly with reference to the rules of the SFA, SPL, UEFA and FIFA – it appears to be conceivable that the employment of players such as (say) McGregor and (say) Naismith is outwith the authority of the admistrators of Rangers FC (in adminstration). Nor could those players have been sold for the profit of Rangers FC (which might explain why some players had an unexpectedly quiet time during the transfer window).

    Is it likely that Duff & Phelps have a great deal less under their control than we have hitherto assumed?

  16. Erratum, 2nd paragraph: — “Is this is true…” should read “IF this is true…”

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