Duff and Phelps have kindly refrained from issuing any statements today (Saturday) I think! I might then have the chance to catch up with them!
We will start with Thursday’s statement by the administrators. As usual, their statement is in bold with my comments beneath in plain text. As an added bonus their release was combined with the “au revoirs” of the first two employees to leave Ibrox under D&P.
Paul Clark, joint administrator, said: “Since our appointment as administrators on February 14, it has been essential to review the cost structure of the Club’s operations and make every effort to achieve efficiencies to help improve the trading position. As part of this programme, Ali Russell, the Club’s Chief Operating Officer and Gordon Smith, Director of Football, have agreed to leave the Club.
It has been commented upon that, unlike other football insolvencies, D&P had taken their time to wield the axe. It was rightly stated by one commenter that each administration is different, and that none of them will follow an identical pattern. However, it did seem strange that D&P had not made any apparent savings and indeed had attempted to add to the staff, if not the payroll, with Daniel Cousin.
Their emphasis, as in their statement of 22nd February, seemed to be on increasing income, rather than reducing expenditure.
It seems in some way rather ironic that, to “achieve efficiencies”, the Chief Operating Officer and the Director of Football are the first to leave. Whilst D&P can step into the role that was Mr Russell’s, the day to day running of the Club, one wonders who, if anyone, is to take over the Director of Football role.
It is also perhaps reading too much into the precise wording (although that accusation could apply to most things I write) but the statement that they have “agreed to leave the club” does not quite accord with what Mr Smith says below.
Whilst Messrs Whitehouse and Clark, the administrators, are clearly accountants of great skill and experience, they do not, as far as I know, have any background in running a football club. Perhaps the fact of his departure is the best epitaph for Mr Smith and his ill-fated tenure at Ibrox. More a case of “And Smith must go!” rather than “And Smith must score!”
“Administrators met Ali and Gordon and during the meetings they expressed their deep disappointment regarding the position in which the Club has been placed. There is nothing to suggest that either of them did anything but strive to act in the best interests of Rangers Football Club during their terms of office.
Was anyone suggesting that Messrs Russell and Smith had acted against Rangers best interests? Is this a veiled criticism of Mr Whyte or indeed of Mr Johnston and Sir David Murray?
I suspect not, as, only a week ago, D&P were thanking Mr Whyte for his co-operation with them (although that was before the tax black hole increased in size by over 50%).
I am sure that any employees of Rangers would be expressing deep disappointment about the position Rangers are in – after all their jobs are on the line.
“At our request, both agreed to stay on and assist the Club until the end of this month and we are very grateful for their co-operation and willingness to do what they can during this difficult period for Rangers.
Both Messrs Russell and Smith have agreed to stay on till the end of the month? This is a very odd state of affairs. Usually the employees are being told to leave, rather than being asked to stay on. Are both of them being paid till the end of the month? Are they due pay in respect of a notice period? Are they being paid up to the end of the month or are they working for free? What, frankly, is Mr Russell to be doing which would not be done by someone from D&P?
“Meetings have also been held with Ally McCoist and we had discussions regarding the potential impact of the administration process on the football department and we will continue to consult fully with him. It is clearly understood by all, including the players, that the football department costs will come under review as is the case with all departments within the business. No decisions regarding staffing in any department have been taken at this point and will not be taken until next week. “
By the time staffing decisions are reached, D&P will have been in place for over two weeks. That is unusual, as far as almost every administration is concerned regarding football clubs.
Football clubs are out of the ordinary because of the huge gulf between the wages of the top 30 or so staff and the rest. Whereas in a normal trading or leisure company, for example, once the CEO and a couple of his colleagues are out of the way then the high earners will be few and far between; in a top level football club, there are a number of highly paid staff who could be let go, saving enormous sums. It is harsh to say so, and I am not encouraging job losses, but injured players and players far from the first team, and indeed those who are out of contract at the end of the season would all be on the administrators’ “hit list”.
As I discussed before, what advantage is there to the creditors (to whom D&P owe their primary duty) to fight for second place in the SPL?
This can only be (a) for the extra prize money for second over 3rd or 4th, and possibly to encourage fans to arrive at their games (but they are honouring season tickets) and to encourage supporters to buy season tickets for 2012/2013.
I would be very surprised though if many season tickets were sold quickly, until the future of the club is secured. After all, a liquidator will not honour season tickets!
Statement from Ali Russell
“It has been a great honour to have worked for Rangers Football Club. I only wish the circumstances could have been better. I would like to offer special thanks to Ally McCoist and Gordon Smith who have been tremendous throughout all of this.
“This is a difficult time for Rangers and I hope my departure will help others keep their jobs. The most important thing in this whole saga is the Club’s future is secured and Rangers looks forward to better days. I am sure that will happen and my support will always be there for the Club.”
This seems to be one of the most genuine things said by anyone since the administrators came in. I am sure no one would disagree with his comment that he wished the circumstances had been better.
It is also of interest that whilst he thanks and praises Messrs McCoist and Smith, there is no mention for Mr Whyte, or the other directors involved over Mr Russell’s tenure.
Statement from Gordon Smith
“It was a great thrill to be offered the Director of Football role at Rangers. As a fan it was a wonderful experience to play such a big part in our treble winning season of 77/78. However like my transfer in 1980 my leaving at this time comes as a tremendous wrench.
“I admit that under the current circumstances it has not come as a major surprise to me. I was brought in by Craig Whyte but because his control and reputation has been damaged by recent disclosures, I feel my own position has been undermined by association.
Mr Smith is not a lawyer or an accountant, but as a former players’ agent and an ex Chief Executive of the SFA, one would hope that he would understand that Mr Whyte’s “control” has not been just damaged by events, but completely destroyed!
Mr Smith was employed by Mr Whyte – of course he would be linked with him. He never spoke out against Mr Whyte (and it would have been unprofessional for him to do so) but he did have options.
“However, I would make the point that I was very frustrated in my job as I was unable to fulfil the job specification which was originally outlined for me. This was to control the major aspects of the football department outwith the first team operations.
“These were to include recruitment, scouting, transfer negotiations and youth development. I wasn’t in control of any of these activities despite constantly making it clear to Craig Whyte that this was to be my remit. I outlined my medium to long term strategies for the Club on numerous occasions to no avail.
“There’s no point in being a Director of Football unless you can control these areas, so, in that respect I’m totally comfortable with being made redundant at this time.
If Mr Smith was frustrated in his job, the he could have resigned. Indeed, if he was concerned that his efforts to fulfil his job description were being totally thwarted by Mr Whyte (as one assumes he means) then he could have resigned and taken court action for breach of contract.
I recall, at the start of the season, a heated discussion on Radio Scotland between Mr Smith and James Traynor where, after the collapse of the move for David Goodwillie, the Rangers’ Director of Football was quizzed about what he was actually doing! It was an enthralling 15 minutes of radio, though clearly very awkward for Mr Smith.
However, it would be harsh to condemn him for not resigning from what I assume was a highly paid job. Many people put up with a lot to keep themselves employed. It would be nice to be in a financial position where an employee could make such a decision with no thought for the lost income, but few of us are lucky so to be.
As I mentioned above, D&P stated that Mr Smith had agreed to leave. Mr Smith says he was made redundant. Maybe a small and insignificant distinction.
“The main thing for me is that Rangers survives and continues to operate as a great football club and I offer my full support going forward to ensure this happens.”
A final sentiment which I am sure is heartfelt.
As long as D&P continue without making savings on the playing and backroom staff, there will continue to be questions about the handling of the administration process. Even if D&P have a “warchest” to fund their continued operation of the business, a slimming down of the football side would extend that much further, perhaps well into next season, which would, in turn, allow a greater chance of season ticket sales.
However, as was pointed out by Morag Hutchison of Burness, Solicitors, there is an imperative on D&P to act within the first 14 days of the administration process:-
“The first fourteen days of an administration will be critical for Rangers’ employees as, if administrators do not terminate their employment during that period, any wages and salary accrued after the fourteen days rank highly in the administration and are more likely to be paid. The practical implication of this rule is that it may be the players on the highest salaries that are most likely to have their contract terminated before expiry of the fourteen days.
Wages and salaries accrued before the end of the fourteen day period, along with any notice pay, statutory redundancy pay or any protective award for failure to collectively consult are ranked very near the bottom of the list and are often paid at a very minimal amount if at all.”
As Tuesday 28th February is the 15th day, then might we see redundancies on Monday?