When Will Rangers (In Administration) Run Out of Money?

The Administrators of Rangers, Duff & Phelps, released their “proposals” to creditors on 5th April. The full document can be read here Duff and Phelps Proposal 5 April 2012.

It was packed full of interesting details, and if D&P had been able to sell copies it might have helped keep Rangers going a bit longer!

I wanted to have a look at the finances and how D&P can keep Rangers in administration and out of liquidation, on the basis that there are no home games for them until 2nd May.

Pages 43 and 44 of the document contain the receipts and payments accounts for the period from 14th February to 30th March.

The cash balance of the company had fallen from £3.3 million when D&P too over to £931,800 by the end of March. How likely is it that Rangers can make it to the end of the season, or indeed to their next home game?

Whilst the administrators have the power under the Insolvency Act to borrow money, or raise it by issuing shares in the company, whilst the company remains in such an uncertain position, both as regards its future and in terms of the security position, no one sensible would lend to Rangers or invest in the existing company. Therefore it has to make do with what it has, and what it can put in the till.

Let’s look at some of the areas.

 

Ticket Sales

During that time Rangers had three home SPL matches together with the Rangers v Milan “charity” match. They also played two away games in the SPL.

Ticket sales are stated to be £708,958. However, that figure includes the sale of tickets for away games, which are remitted to the away team with Rangers deducting a 5% fee for “managing” the sales. The figure paid to clubs for away tickets in the period is £195,932.

Therefore the net income from sales of tickets is £513,026. This includes a sum of just over £10,000 representing Rangers admin fee for selling away tickets. Therefore the net ticket sales for home games are £503,000. Bearing in mind the average costs of a ticket for Ibrox seems to be around £25 or so, then this represents approximately 20,000 tickets over the three games, and as these include away fans, it does not seem to be very much of an income.

If we take it that Rangers therefore sold on average £170,000 of tickets for each home game, and makes £5,000 per away game, this means that the ticket income from 31st March to 1st May (the day before the next home game) will be (roughly) (1x£170k) +(3x£5k) = £185k.

However as this is a receipts and payments account we are working from, if the payment by Celtic for the 25th March game arrived post 30th March, then it would not be included. That adds another £300,000 to the coffers.

There does not also appear to be any account in the figures of the receipts from the charity match.

According to the Rangers website, the game raised £280,000 for the club, with £170,000 going to the two charitable organisations, namely the Rangers Charity Foundation and AC Milan’s Charity. As the changed arrangements for the match meant that the club was keeping the revenue, and making a donation to charity from it, there should actually be a figure of around £450,000 added to the pot, with £170,000 to be put through as a payment.

Let us work on the basis therefore that none of the takings for the game is included in the receipts figure (which seems odd, but let us be positive).

There is £450,000 to add in, with the £170,000 to be deducted.

Therefore, in terms of extra money to be added to the balance, we have a net total from ticket sales as follows.

Gate receipts for 1 home game and 3 away games     £185,000

Payment from Celtic                                                   £300,000

Net proceeds from Charity match                              £280,000

 

Total Net Ticket Sales                                                 £765,000

 

Other Income

 

The additional trading income of programme sales, hospitality and food and beverage sales in the figures is applicable to the three home SPL games played. They total £153,000. This works out at £51,000 per match.

 

During the period from 31st March to 1st May, there was a home SPL game and the charity match. I will assume that none of the takings for that is in the accounts so far. I will also assume that such income for the charity game is over and above the declared figure for sales.

 

On that basis, there is an extra £102,000 to add to the pot.

 

Finally there is “other income” and stadium tours totalling just over £58,000. Let us assume that is repeated over the period we are looking at.

 

Therefore the sum of £160,000 is added.

 

How Much is in the Pot?

 

On these rough figures therefore, as at 1st May, Rangers (IA) bank account would have around £1,860,000 but only if no bills at all of any sort were paid (which might have been the modus operandi of Mr Whyte, allegedly, but cannot be that of D&P, as regards current debt.

 

What Will D&P Spend between 31st March and 1st May?

 

The receipts and payments account lists a lot of payments out under different headings. Some of these are trivial, such as £164 for stationery and £97 for fuel, whilst others are far more substantial.

 

It looks as if two pay runs are included in the 14th February to 30th March account. There will be one more by 1st May.

 

Is it possible to assess how much they still have to pay?

 

Wages and Salaries

 

The account produced shows a pre-administration figure of £479,513 and post-administration total of £1,208,986.

 

I have broken them down as follows. Let us say the pre-admin wages cover two weeks. That amounts to roughly £240,000 per week.  That rate of pay continues until 9th March, when the players agreed the wage reduction strategy.

 

Therefore wages are running at £240,000 per week for the four weeks till 9th March.

 

This leaves a balance for the remaining three weeks of £210,000, or £70,000 per week.

 

That calculation, rough as it is, shows a weekly saving in wages, even before we calculate reductions in PAYE and NIC, of £170,000.

 

Therefore, in April, D&P would be spending £280,000 on wages.

 

PAYE/NIC

 

We see that there is a total of £595,953 in the accounts under this heading.

 

Because the PAYE on the March wages is due to be paid by 20th April or so, this figure will not fall as much in April as we might expect. The staff was on full wages for almost 1/3 of March.

 

Taking a broad approach therefore, the figure to be paid for PAYE and NIC in April might be around £300,000.

 

Catering

 

The accounts show payments out of £541,507 for catering and food and beverages. Bearing in mind that the income from these was £138,000 that seems remarkable. Did Rangers lose £400,000 on sales of food and beverages over the course of three games?

 

Luckily they only had two games for the April period we are looking at, and therefore pro rata this sum would fall to £360,000. That still seems very high, and perhaps is an indication that the pies for the charity match had to be paid for up front!

 

If the monthly payment out for food was higher than the wage bill, that would seem very odd, but these are the costs in the books.

 

Other Charges

 

I have left out of account the £195,000 paid to teams for away tickets, as I have added in the net proceeds for Rangers of the sales.

 

Policing costs are shown as £204,538 for the period accounted for. We will take this as £100,000 for the two matches at Ibrox in the period to the start of May.

 

Facility costs, stated at £86,934 are, pro rata, reduced to £60,000. Lease and hire charges reduce from £106,224 to £70,000 on the same basis.

 

There is a charge for pensions of £28,030, reduced pro rata to £18,000 and £27,369 for software licences, prorated to £18,000.

 

This gives us deductions as follows

 

Wages                                                                          £280,000

NI/PAYE                                                                    £300,000

Catering                                                                      £360,000

Police etc                                                                     £100,000

Facilities                                                                      £60,000

Lease etc                                                                     £70,000

Software Licences                                                      £18,000

Pensions                                                                      £14,000

Misc                                                                            £20,000

 

Total Expenditure                                                       £1,222,000

 

 

So, Where Does This Leave Rangers on 1st May?

 

Based on the above figures and assumptions, the bank balance calculation is as follows:-

 

Initial balance                                                              £931,800

Add: Receipts – Ticket Sales                                       £765,000

Add: Receipts – Other                                                 £160,000

 

Sub Total (approximate)                                              £1,860,000

 

Less: Expenditure                                                       £1,222,000

 

Balance as at 1st May (approximate)                           £640,000

 

Good news! There will be nearly 2/3 million pounds in the Administration bank account working on the Trading figures!

 

 

What About May?

Put shortly, the calculation is as follows. Income – home games on 2nd and 5th May = £340,000.

 

Misc other income = £160,000

 

May’s deductions are as follows

 

Wages                                                                          £280,000

NI/PAYE (reduced due to lower wages)                    £150,000

Police etc                                                                     £100,000

Facilities                                                                      £60,000

Lease etc                                                                     £70,000

Software Licences                                                      £18,000

Pensions                                                                      £14,000

Misc.                                                                           £20,000

 

Total Expenditure                                                       £712,000

 

This gives us the following up to the end of May, based again on the Trading figures.

 

Initial balance                                                              £640,000

Add: Receipts – Ticket Sales                                       £340,000

Add: Receipts – Other                                                 £160,000

 

Sub Total (approximate)                                              £1,140,000

 

Less: Expenditure                                                       £712,000

 

Balance as at end May (approximate)                         £430,000

 

 

Why Might This Not be Good News?

The calculation above is based on 3 major assumptions, any of which being wrong will reduce that figure further towards zero.

 

1                    If the payment from Celtic for the Old Firm game is included in the Receipts and Payments up to 30th March, then £300,000 comes off the balance.

2                    If any receipts from the “charity” match are included in the accounts, then the balance reduces by that amount.

3                    I have not included the catering figure at all in the April expenditure. Of course, if it is again at the level shown in the accounts, £541,507, then the account will be in the red by the end of July, even if the other assumptions go in Rangers favour.

 

What About June? Season Tickets and Wages?

This month becomes even more fraught. Season ticket income, which normally tides a club over the summer when there is no income from matches, is unlikely to help much.

 

Either the fans will buy few season tickets, as there is no guarantee of there being a team, or what division it will play in, or if they do, much of the proceeds will be diverted to pay Ticketus, unless the administrators rip up the contract.

There are no matches played in June, and the wage bill will shoot back up as the players’ temporary pay cuts come to an end.

I have not included VAT in my sums. This is because the report shows that Rangers was running VAT neutral over the first six weeks of administration.

 

What About Rates?

No rates were paid by the administrators in the period referred to. This might be (a) because the club was paying over 10 months, and thus no sums are due in February or March, or (b) because the club pays in two instalments per year, in December and June.

Rangers rateable value for Ibrox Stadium is £1,916,000. Interestingly, Glasgow City Council lists the proprietor as “Rangers Football Club Ltd”. No such company exists!

The rateable value for Murray Park is £598,500. East Dunbartonshire Council lists the proprietor as “Rangers Football Club PLC”.

I will ignore other smaller properties Rangers own at Edmiston Drive. As a matter of interest, both rates revaluations are under appeal, and have been since 2010.

The national business rate is £0.45. Therefore, subject to reliefs, the annual rates bill for Rangers = £0.45 x (£1,916,000 + £598,500) = £1,131,525.

Therefore, by the end of June, the administrators ought to have paid, in total, either a six-month instalment totalling £565,762 or three monthly instalments adding up to £282,881.

 

 

Is There Extra Money from Anywhere to Counteract the Above?

The above figures only include trading income and outgoings.

Page 44 indicates the non-trading receipts and payments. For the six weeks covered, the administrators brought in £218,000 from debtors. However, this only left £320,000 more, and in the present economy, it is unlikely it will all be paid in full in the short term. For the purposes of illustration, we will assume that, in the period to the end of June the administrators are very successful and pull in an extra £240,000.

That would not cover the rates bill, even at its lowest.

Duff & Phelps have been touting the need for bidders to pay a fee to look at the books. It was publicised first of all as a £1 million fee, and then as a £500,000 charge. So far no one has elected to pay that, although it would keep the wolf from the door for a few weeks more.

The saving grace for Rangers might be its SPL prize money. However it is not clear to me from the SPL’s website when those sums are paid. I am trying to find out, although I am sure Duff & Phelps know (or at least I hope so!)

The problem here is that SPL rules permit the withholding of some of that money to meet overdue football debts. The report discloses at para 14.36 that football creditors (Scottish ones) are owed £1,063,082. That would make a big dent in any prize money!

However Duff & Phelps have forese the possibility of this happening. At para 14.39 they declare that if there is any offset applied, it “will be subject to legal review”. Talking of which, we come to…

 

 

Have They Paid Any Legal Costs Yet?

The report, at page 44, discloses legal costs paid in the first six weeks of administration of £129,294. An average of £21,557 per week!

There is no indication that the rate of legal costs will have reduced, and in fact the Collyer Bristow cases, of which more soon, will burn up costs at an even greater rate. Should Duff & Phelps try again to have the Ticketus deal ripped up, or to challenge Craig Whyte’s ownership of Rangers shares, then the costs will escalate even further.

At that rate, and I see no reason for the spending on lawyers, advocates and barristers to slow down, there will be a further £250,000 spent to the end of June.

As well as these cases, there is the potential SPL offset case, and the bills accruing in relation to the various SFA and ASPL disciplinary hearings and investigations.

Remember the Rangers Fighting Fund!

This has raised around £400,000 in the last five weeks since it was created. Can it continue to generate funds at the rate of £80,000 per week? Perhaps so.

Will that be of any use in June when full wages need to be paid, along with the rates bill mentioned above?

The Rangers fans who have supported the Fund deserve praise for doing so. However, standing the amount needed to run Rangers each month (£3.5 – £4 million) even these admirable efforts are just a drop in the ocean.

 

So Will Rangers (In Administration) Run out of Money, and When?

Yes. From all the calculations above (which I accept may well be wrong, but they are based on the best data available) I see it as being very hard for Duff & Phelps to make it past the end of June.

In addition of course, none of the above includes a penny paid to the Big Tax Case, the Medium Tax Case or the Wee Tax Case.

For Rangers to survive, Duff & Phelps need to sell the company to a bidder who will (a) pay off Craig Whyte for his interest and (b) put enough in the pot for a CVA to be acceptable to the taxman and other creditors. In addition, they need to complete the sale by the end of June. As that process would involve an investment over £100 million, without a penny going on players or staff, I think we can agree that that is not happening, and even if it was remotely possible, it is not happening within the next ten weeks!

For there to be an attempt for a “Rangers” to survive, Duff & Phelps would need to sell off the assets of Rangers Football Club PLC to a buyer in sufficient time for that purchaser to organise a license to play in the SFL/SPL, and for all arrangements to be put in place for a team to start next season.

The longer Duff & Phelps succeed in keeping the doors open, the less chance there is for a new owner of a “Rangers” to get everything in order in time for preparation of fixture lists for next season, for example.

I am coming to the view that there is almost certainly not going to be a Rangers, nor indeed a “Rangers” playing in Scottish football next season (apart from the team from Berwick of course).

The best, and possibly now only way to get over the hurdles of time and potential legal challenge to any sale as mentioned above, would be for a person or consortium looking to save “Rangers” to buy an existing club, and rebrand it, moving it, ideally, but subject to agreeing rent with the owner, to Ibrox.

It appeared that Rangers may have tried this with St Mirren and there are rumours that Cowdenbeath could be ripe for takeover. We will need to wait and see.

 

Posted by Paul McConville

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65 Comments

Filed under Administration, Football, Rangers

65 responses to “When Will Rangers (In Administration) Run Out of Money?

  1. Andrew H

    What about league money for (presumably) finishing second? When would they get that and would they get the full amount or would some of it be diverted to other SPL clubs they owe money to?

    • geoff

      Did you not actually read the entire post?

      “The saving grace for Rangers might be its SPL prize money. However it is not clear to me from the SPL’s website when those sums are paid. I am trying to find out, although I am sure Duff & Phelps know (or at least I hope so!)

      The problem here is that SPL rules permit the withholding of some of that money to meet overdue football debts. The report discloses at para 14.36 that football creditors (Scottish ones) are owed £1,063,082. That would make a big dent in any prize money!

      However Duff & Phelps have forese the possibility of this happening. At para 14.39 they declare that if there is any offset applied, it “will be subject to legal review”. Talking of which, we come to…

  2. Littlerabbits

    Have you included Duff & Phelps fees in the above Paul? Do they get ‘first dibs ‘ on the pot?

  3. Slimshady

    What about D&D’s own fees? They are accounted for nowhere in your commentary so far as I can see

  4. Slimshady

    If you take them into account, at the rate accrued in the creditors’ report, next Thursday is when they will run out of money

    • I have left out the D&P fees because they have not taken any yet. The administrators’ fees do not come out of the ongoing running costs of the company, but are first in the queue, even ahead of the secured creditors, when it comes to dividing up the proceeds of sale.

      However, the legal costs running at £21k per week were far higher than I thought, and as for the bill for the pies!

      • Michael

        what if the sale doesn’t bring in enough readies to cover their skim? remember the players of value will be able to walk away……

      • administrators are b****ds

        Administrators will get paid from the pot. What happens if there no proceeds from a sale? It’s liquidation time as soon as final league match is played.

  5. fisiani

    You rightly point out the financial meltdown and apparent inevitability of liquidation.
    Already the pragmatic planning is for a post liquidation scenario.
    The goal of Rangers fans is a “Glasgow Rangers” in the SPL 2012-13.
    A brand new newco “Glasgow Rangers” would be ineligible for Europe for 3 years and may be ineligible for the SPL and may have to start at SFL 3.
    A purchase of an existing football club and a rebranding and renaming of it as “Glasgow Rangers” playing out of Ibrox Stadium is thus a possibility.
    The mainstream Scottish media would happily collude with assigning all debts and responsibilities and punishments to oldco and claiming that newco was entitled to all the history, titles and traditions and a fresh start untrammeled by the past.
    Purchasing a St Mirren or Ross County would parachute a “Glasgow Rangers” into the SPL for thye coming season
    Purchasing a Cowdenbeath would parachute a ” Glasgow Rangers” into SFL1 for the coming season.
    Are there any owners of Scottish football teams prepared to accept 30 shillings!

    • JenPen1975

      This scenario would be an absolute travesty. I remember being annoyed when Cldebank were morphed into Aidrie Utd, but this would be a hundred times worse given the non-payment of taxes and potential cheating element.

  6. Paul, agree the chances of a phoenix being ready for the new season is very low but other obstacles would present for a relocated Cowdenbeath.

    I predict a perfect pitch at Ibrox for season 2013-14 as the grass will lie fallow after a year without Rangers, Newco or otherwise. After that, who knows?

  7. TImothy Molloy

    Good article, and he has addressed the question of SPL prize money for finishing places in that competition, as well as the possibility that some may be witheld and diverted to clubs that Rangers owe monies to.
    In conclusion, it looks very much as if you really MUST believe us…………….

    ……………….THE HVNS ARE GOING BUST!

  8. SouthernExile

    Some other things we don’t yet know:

    As we move towards the denouement my mind is moving towards the unsolved riddles in all of this. This is a starter for ten, would be grateful for contributions from others. It is skewed towards issues of corporate malfeasance rather than football matters (last time I was at a match was Fir Park in c. 1970…we were playing Dundee United and got gubbed…. DU were a decent side at the time, it was only a few years since they had beaten Barcelona home and away…ah nostalgia, but I digress!).

    1. What induced Ticketus to part with 24m quid?
    2. Who if anyone holds a floating charge over what and how much is it worth as a secured creditor in liquidation?
    3. What are the double entries in the accounts of group and the company wrt season ticket holder rights, Ticketus money and the Lloyds debt?
    4. What are the debits and credits in the CB client account?
    5. To what extent to these accord with the deed that CB signed at the time of the share sale?
    6. How much is missing from Pritchards client account and where has it gone?
    7. Who transferred £3m from the Worthington Group pension fund and why might it be in the CB client account?
    8. Who has been acting in league with who throughout?
    9. How much has the GEF already siphoned off from the deal and hence how much does he care about getting more?
    10. How many are going to landward up in the clink?

    • Niall Walker

      Since the elephant in the room since Jan 2010 has been the BTC, it is unthinkable that Ticketus advanced 24-30 million without guarantees, it is also safe to assume Craig White secured this guarantee against the assets of RFC. The floating charge in effect takes liquidation out of the equation as it renders the club worthless, which I guess was its intention.

      CB have been a bit naughty in misrepresenting the proof of funds to SDM, the funds were provisional in nature and not actual, they became actual probably 30 seconds after he handed over the pound,, in this sense SDM was duped about the nature of the funds..

  9. Your figures won’t make pleasant reading for those waiting with baited breath for the doors of Ibrox to be chained shut. The sad fact is that, even when things appear cut and dried, they always drag out far longer than expected. In theory, this is in order to give every option to be explored, in the furtherance of saving a business from the wreckage (or at least the appearance of such). This verisimilitude favours the pall-bearers, who are carrying the casket. The lawyers, accountants, and administrators make a great show of trying to revive the patient, whilst rifling his pockets on the way to the cemetery. Make no mistake, there will be nothing left to cover a basic spread at the CO-OP halls, never mind a fitting send-off.

    Having listened to some of SSB tonight, I am now of the view that the worst likely punishment would be for a CVA and sale of RFC 1873 to a buyer, who would then have to pay off huge debts and penalties, or for the SFL to usher in a NEWCO on the nod. As we can see by the enthusiasm shown by rangers fans, demotion to the Third Division is the closest they’ll get to “getting away with it”. Penalties, debts, and ignominy in the SPL would be too painful, but rebuilding from Div 3 would be seen as heroic. I can almost see the headlines now, as the plucky New Gers tour the tiny stadiums of Scotland, spreading the word and sprinkling pixie dust on the wee teams as they go.

    If neither of these options is palatable, then expulsion and a ‘scorched-earth’ policy is the only satisfactory road to take.

    PS. All football clubs (and all businesses) have fixed and variable costs. It is entirely possible for all clubs to decide to pay only minimal salaries to players next year, and for as long as it takes to get back on an even keel.
    The biggest variable costs are players salaries, and these are usually saleable assets, which can be moved off the books. There’s nothing wrong with First Division salaries, if the clubs are under threat of closure.

  10. renfrewdave

    what about the JJB shirt money rangers get every year? when does this get paid and how much. i know that there is arguement over how much rangers get but a ball park figure. also could JJB with hold the money questioning rangers uncertain future.

  11. renfrewdave

    Paul67
    April 19, 2012 at 12:07 am
    ——————–
    paul in order to have a perfect pitch for season 2013-14 the groundsman will have to be paid to mantainthe pitch. unless they are going to tie sheep up to each corner flag and let them mow it?

  12. JenPen1975

    Hi Paul,

    Could we start to have a stab at what the true value of the club’s fixed assets might be? Is Ibrox worth more as a basic brownfield site, square foot of turf than it is as a football stadium?

    • redetin

      I am still very unsure about who holds title to Ibrox, etc. Has it been used as security against loans as mentioned in the Phil McGB post, or did the £18M paid to Lloyds get it into the hands of Rangers Group?

      “Lloyds TSB attitude to high risk debt – With over £730M of loans at stake secured against assets such as Ibrox Stadium and MIH property and steel holdings…”
      http://www.philmacgiollabhain.ie/murray-international-holdings/

  13. abrahamtoast

    Paul, you state that “SPL rules permit the withholding of some of that money to meet overdue football debts.”

    Fortunately for RFC(IA), their debt of £800 000 to Hearts for the purchase of Lee Wallace, while outstanding, is not overdue. Strictly legally, there is no way of knowing whether that payment will or will not be made when it does fall due. Unless there are specific rules regarding insolvencies, the SPL do not have the power to pay Hearts that amount from the SPL prize money. If they tried to do so, I’m pretty sure they would be challenged, almost certainly successfully, in the courts.

    That gives the administrators another £800 000 to play with, which won’t help much in the long run, but might see them through June. When the payment to Hearts does fall due, the SPL prize money will have been distributed, and Hearts will just need to join the queue like everyone else (unless the administration went on for another year,and RFC(IA) gained enough prize money NEXT year to pay off Hearts – and that ain’t gonna happen!)

    • abrahamtoast

      Should have added to first paragraph above that the SPL rules apply only to debts to other Scottish clubs. The English and European clubs who are out of pocket will not receive that extra protection.

  14. Pingback: A must read blog by Paul McConville » No To Newco

  15. Ekwellfan

    Paul

    I am fairly certain that once the split occurs the top 6 teams are paid the prize money for finishing sixth before the last 5 games are played with the additional balance paid at the end of the season .
    This is certainly the case stated last year by Motherwell

    The bottom 6 get their prize money at the end of the season and nothing pre-split

  16. TheBlackKnight TBK

    I thought you were a lawyer 😉

    Hugh McEwan will not be pleased!

  17. The catering bill seems very high, as you said Paul. Presumably this is for the players, staff, etc? Does it include sandwiches for late night meetings and D&P overtime??

    I won’t make a joke about Super Sally and pies. That’s just too easy.

  18. The Battered Bunnet

    Good stuff again Paul.

    On the matter of Season Tickets, there are two issues:

    1) Can RFC(IA) actually offer season tickets for sale given the material uncertainty over their ability to fulfil the contract – play the games.

    2) Even if they can, the cash received is deferred income, released to the P&L account as the games are played throughout the season. If season ticket cash was used to support the operational costs incurred during the close season, D&P would technically be increasing the Creditors of the company, to the detriment of existing creditors.

    If D&P plan to manage the club through the close season, they require to match income and costs accordingly. In my view, D&P have not planned beyond the 1st June player wage horizon, and are committed to a CVA or Bust approach by 1st June.

    Either they facilitate a satisfactory deal between new investors and creditors in jig time, overcoming the substantial obstacles, or the game’s up.

    I’d say the chances of any flavour of ‘Rangers’ playing senior football next season are diminishing by the day.

    TBB

  19. Niall Walker

    Paul,

    You assume based on your laymans doodlings the professional accountants in D&Ps can not work out a 3 month cash flow plan, and have misled everyone by stating there is sufficient funds to the end of the season.
    I disagree, and at the end of the season the administrator can sell players to provide further working capital if needs be.
    The whole point of a CVA is not to pay 100 million for the club, it is to pay more than its worth in the event of liquidation.
    .The ordinary creditors ( inc HMRC) would get nothing out of liquidation, CW is a secured credtor, he has a 30 million floating charge to cover Ticketus guarantee, players lose all asset value and employee redundancies are a preferred creditor. Assuming the average offer under a CVA is 12 million then any liquidation offer would have to be close to 50 million to achieve the same return to ordinary creditors. I do not believe Ibrox and Murray Park are worth 50 million to any investor. The evidence to support my belief is simple, the club is not already in liquidation, there is no substantial offer from a bidder intending to liquidate. The outcome of the BTC is irrelevant if you are intendng to liquidate the club.

    I disagree that liquidation is inevitable, and see no reason why any ordinary creditoe would not ccepta higher return through a CVA.

    • Carntyne

      The consensus of many professional people on rangerstaxcase.com is that after the FFT ruling HMRC will hold the majority of the debt and will block a CVA.

      I note you say you ‘see no reason why any ordinary creditor would not accept a higher return through a CVA.’

      Unfortunately for the Ibrox club HMRC are no ordinary creditor.

      As I understand it this will be the first time HMRC have held more than 25% of a football clubs debt and are thought to be using Rangers as a test case.

      With regard to your suggestion that Rangers administrators can sell players to provide further working capital if needs be.

      The players have agreed a 75% pay cut until the end of June and in return will be allowed to move on if they so wish for a fraction of their true worth.

      So not much relief there then.

      If by some miracle Rangers somehow engineer an escape from administration before the season’s end there will be downsizing on a scale never imagined previously leading to years of suffering.

      It might be kinder to put them down.

      • Niall Walker

        Carntyne,

        Assuming a CVA is not agreed by the end of the season then the players will be sold,, no such agreement exists regarding selling them on the cheap, the administrators refused to accept this condition as it would have reduced the value of the club.. Even if it was the case, selling cheaply 5-6 of the top players would bring in a few million, more than enough to conclude any CVA…

        As for your HMRC scenario, there are countless examples every day of HMRC being the largest ordinary creditor to a company in administration, and they always do a deal unless there is criminal fraud, especialy where the owners have benefited from such fraud. Craig Whyte is not the first owner to use HMRC contributions as working capital, in fact most companies in difficulties do. HMRC may have a serious gripe with the business ethics of Craig Whyte at RFC but since he has not benefitted nor will he suffer, there is no point in liquidating RFC out of some obscure precedent.

        Whatever message HMRC wanted to send out to all companies regarding EBTs has been sent loud and clear, the publicity has been national. Driving a company into administration is no less a message than driving it into liquidation, they will take 10-12 million or have to explain to the tax payer why they took nothing.

        Craig Whyte knows this and this was always going to be his exit strategy, unlike most he saw the elephant in the room( BTC) and structured the debt accordingly.

      • Carntyne

        A well argued case Niall, but I have read many other equally strong opinions which differ.

        I tend to come down on the side of liquidation.

        Duff & Phelps actions as administrators have been a bit off the wall to say the least, and the way those making bids, or at least supposedly making bids for the the company, seems equally bizarre.

        For instance the Kennedy bid, now you see it, now you don’t, then you see it again, doubled apparently, but it’s rejected by the administrators because it’s only verbal.

        Then there’s the Blue Knights.

        They apparently had a deal with TicketUs to make a bid, but oh, wait a minute, they’re now taking a step back because TicketUs is now talking to Bill Ng, but wait a minute Bill Ng says he hasn’t talked to TicketUs, but wait a minute Bill Ng then says he may pull out because TicketUs are back talking to the Blue Knights.

        Then there’s Bill Miller the American.

        Last week it was reported that the administrators had ruled out his bid, but magically it was reported yesterday that it was back on again, presumeably because at that stage there was only bidder left, Mr Ng, and American Bill would give him some competition.

        Of course that was yesterday.

        Today it was all change again.

        Whatever happened to the German and British consortiums I’ve lost track.

        A strange game of musical chairs with the money running out and Messrs Duff & Phelps the only people guaranteed to get paid, and paid a small fortune.

        Throw into the mix Craig Whyte’s claims that he wants £30mill for his shares.

        Still think a CVA is a goer Niall?
        🙂

    • Deekbhoy

      In 13 May is the end of the season and the players including those who are out of contract will need to be paid until the next transfer window on 1 June.
      The players costs are the major outgoing which meant the club was losing £1m per month. I do not think Paul has taken that into consideration so they could run out of cash even earlier.
      The statement for D&P issued tonight has a shade of desperation about it (as does the ‘speculative’ claim against CB). Who in their right mind is going to make an unconditional bid for such a company in such a mess.
      The way it is going their the bidders will be soon reduced from 4 to 0!

      • RayCharles

        The insolvency expert on Newsnight Scotland last week read a policy statement from HMRC. It said “HMRC view EBTs as tax evasion not tax avoidance.” It then stated, and I am paraphrasing now, “Under no circumstances will HMRC consider doing a deal where EBTs are involved.”

        Then you have the fact they have spent millions over nearly five years investigating and pursuing this case.

        Then you have the wilfully uncooperative attitude of Rangers FC under Murray and Whyte.

        Then you have the fact the RTC stated that HMRC rejected a sum of around £11m, iirr, before the tribunal started.

        Then you have the fact that HMRC want a head on a stick to wave at recalcitrant clubs and companies down south.

        But the best bit is that even when the liquidate Rangers they know that a new club will be up and running and generating substantial revenue income for them within a short period of time.

        It’s a win-win scenario. They get their head on a stick while knowing future revenues will still be forthcoming from new Rangers.

        To do a deal at this stage is lose/lose.

        They might get £10m, if they are lucky, but there will be a political backlash down south, especially when the Tribunal ruling reveals the true story of the corporate behaviour of RFC over a 10-year period.

        Their bargaining position with other companies will also collapse. They will all ask for the 10p in the £ Rangers deal, thanks very much.

        The benefits of taking a tough line with Rangers outweigh the benefits of doing a deal.

        Only a CVA offer approaching the full amount would tempt HMRC to deal and that is not going to be forthcoming.

        I reckon liquidation is 99 per cent certain.

  20. charliew

    Liquidate.
    Start a newco & take with you your biggest asset – fans.
    Apply to join the english league
    Rent Ibrox – White Elephant to any club that cannot fill it
    Work your way up the english leagues until you are in the PL.
    With the fan base and sky money you can afford to be sucessfull again

    • Paul

      Makes the assumption that they’d be accepted into the english lower leagues and be able to make it to the promised land of the EPL inside 10years. If the tax man does manage to take them to the cleaners i expect to see him rock up to the doorstep of several of the EPL clubs shortly thereafter as i think that by using such a high profile test case as rangers they are going to set a president that puts the fear of god into chairman the length and breadth of the country.

    • Theres a lot of people out there who think your 100% wrong when you say whoever buys the club will need 100 m.10p in the pound is roughly what will have to be paid.sorry to burst your bubble I suggest you pray for something that is achievable.

      • Carntyne

        Rangers are on the brink of extinction.

        I would suggest if anyone needs to pray it is Rangers supporters.

        And quickly.

  21. SouthernExile

    On RTC
    Goosy says:
    19/04/2012 at 2:27 pm

    Some awesome stuff….on joining up the dots!

  22. Carntyne

    It breaks my heart to say it, but it looks like Rangers are Donald Ducked.
    R.I.P.

  23. Haribo_nc

    I have to say I have a feeling there is something way bigger going on here than any of us are aware of… Scottish football is dead, people are turning away from matches due to the mediocre offerings on the pitch and the money is disappearing quicker than the polar ice. Why would anyone want to invest in Scottish football??? To save Rangers? Ok I understand that rationale if you don’t care about the business aspect, but these guys bidding did not get to their financially strong positions by buying businesses based on their heart. They invest using their heads! And no one with their head screwed on would invest in the SPL. So is Charliew on to something there, as far fetched as it seems? Would it be legally possible to create a newco in the bottom tier of the english leagues with a fanbase of 50K? It would take time but with that backing they would eventually move up and could one day make the PL. Surely the legal precedent is set with the Welsh clubs and this is possible? Or as mentioned could they buy another club, but in England and move them to Ibrox?

  24. Carntyne

    “Would it be legally possible to create a newco in the bottom tier of the english leagues with a fanbase of 50K?”
    ======================================================

    The simple answer is no!

    Rangers fans, particularly on phone-in programmes having been touting this idea for months.

    Football chiefs in England have stated categorically that this cannot and will not happen.

  25. Haribo_nc

    I see what you are saying but do these football chiefs have a choice if it was to go through a legal process? Just curious…

    • Carntyne

      There is no legal process.

      You may want to join another league but you can’t force that league to accept you just because it suits you.

      Knock, knock.
      Yes?
      Can we join your league please?
      No!
      Thankyou.

  26. Munch was a Gers fan

    This real missing link is the accounts Jun 2011 – Admin date. I wonder if the high catering costs in D&P accounts is paying off the debts of the missing period. ie no money – no pies. Even allowing for that, money will run out pre-new season.

  27. Franco

    will rangers get the move to england? 1 word……manchester.

  28. bigbrotherswatching

    To be honest i lost the will to live about halfway thru it! What happened to for every pound Celtic spend we’ll spend two? Aha Aha Aha Ha Ha Ha!!! Ill watch division three for your results next year! Hail Hail!!

  29. ifa007

    LOOKS LIKE MERCHANT HOUSE GROUP HAVE RUN OUT OF MONEY!!
    http://www.iii.co.uk/investment/detail?code=cotn:MHG.L&display=news&it=le

    20 April 2012

    Merchant House Group plc

    (“MHG” or the “Company”)

    Statement re: Suspension

    The board of MHG announces that it has requested the temporary suspension of its shares from trading on AIM pending the outcome of a review of its financial condition with a view to determining whether or not it has sufficient working capital for its present requirements.

    Enquiries:

    Merchant House Group plc

    James Holmes, Chairman

    Christopher Day, CEO
    +44 (0) 20 7332 2200

    Cairn Financial Advisers LLP
    Tony Rawlinson / Avi Robinson
    +44 (0) 20 7148 7900

    Symvan Securities
    Kealan Doyle / Nicholas Nicolaides
    +44 (0) 20 7464 4260

    This information is provided by RNS
    The company news service from the London Stock Exchange

  30. Niall Walker

    Good morning Carntyne,

    I seem to be the lone voice of optimism on this site despite not being a lone Ranger. I do not view the standard negotiating tactics of administrators-bidders as anything but a complex Dutch auction. It seems obvious to me that no bid intent on liquidation brings a higher return to creditors than a CVA, or it would have been accepted months ago. It also appears that a going concern bid is unlikely to be successful without Ticketus on board..
    Ticketus are in a fairly strong position under the umbrella of CW’s floating charge, and any bid for the shares must include Ticketus or CW will value his shares at 30 million. Ticketus it seems would prefer to avoid liquidation and the lengthy process of recoverng its funds, and are negotiating the best deal for themelves by playing off one bidder against the other, again not that unusual..The delay in getting an unconditional bid from a preferred buyer is all down to Ticketus, its nothing to do with the BTC, the amount of debt being written off is irrelevant to any buyer. Future sanctions are part of the warts and all nature of this sale and this is reflected in both the asking and selling price. Ideally all bidders would like to wait until April 30th to know the extent of the penalties, but the administrators have left the boys to play long enough, and are putting their foot down, put in a formal unconditional bid or leave the stage. I believe a bid will be preferred within the next 7 days.

    Will HMRC agree to a CVA and can it be viewed as rewarding foul play, my view is yes and no. Any previous rejection by HMRC did not have liquidation and a zero return as an inevitable consequence, the game has moved on and now its time for financial pragmatism.

    My vote is still with a CVA being agreed by HMRC and Craig White selling his shares for any loss incurred by Ticketus, if there is no loss then it will be a nominal amount, they are in effect worthless.

    • cavansam

      Niall
      “Will HMRC agree to a CVA and can it be viewed as rewarding foul play, my view is yes and no. Any previous rejection by HMRC did not have liquidation and a zero return as an inevitable consequence, the game has moved on and now its time for financial pragmatism.”

      Not entirely true HMRC fought like hell to prevent Portsmouth going down the CVA route even when Liquidation was threatened, but their share of the debt was too small to stop the CVA happening.

      Their hand is much stronger in Rangers situation especially if the FTT find in favour of HMRC.

      • Niall Walker

        Cavansam,

        Thanks for your thoughts and I do agree its no foregone conclusion that HMRC will accept a CVA, however the difference between Portsmouth and Rangers is this, Rangers WILL be liquidated and HMRC do have the required percentage to facilitate this event. HMRC could afford to bluff and bluster at Portsmouth, they can not afford it at Rangers, it will cost them 10 million. There may well have been other factors at Portsmouth, especially concerning certain individuals profitIng from a CVA but being responsible for the Tax evasion.

    • Carntyne

      Hi Niall,

      There’s no doubt the best route for Rangers would definitely be via a CVA.
      To achieve this you need two things.
      Creditors agreement, but above all a genuine bid to satisfy the terms of a CVA.
      The bidding process from day one has been a farce.
      Brian Kennedy’s effort turned out to be typical.
      He didn’t want to buy the club unless no one else stepped forward.
      Paul Murray’s Blue Knights decided to ‘take a step back’ after being unable to furnish the administrators with a £500,000 exclusivity fee.
      This morning Bill Ng withdrew.
      And finally the last man standing, American Bill Miller, has made a conditional offer.
      We’ll call his bid Miller Lite.
      He says the administrators and Scottish footballing authorities must give a guarantee that Rangers will play in the SPL next season and not be deducted any points.
      That rules him out.

      Have any of these bids been genuine or just posturing by people looking for a little free publicity?

      In any event Rangers look done and dusted.

      Miracles do happen but I can’t see it in this case.

      • Niall Walker

        Evening Carntyne,

        Buying a company in administration regardless of size and stature is a glorified game of poker, it is quite an unsavoury process of bluffs and raises. The presence of Ticketus( =CW floating charge) has added a dutch auction element to the game. Ticketus seem to hold all the cards to any CVA and share sale, they know it and so does the administrator. The administrator has called time on the dutch auction and wants an unconditional bid with Ticketus on board, on Monday., Either Bill Ng or TBKs or both will return on Monday with their final final bid and the highest will be accepted.

        If I am wrong, I will never return to this site to show my face ever again.

      • Carntyne

        Hi Niall,

        Goodness me, I hope you would stick around right or wrong! 🙂

        My opinion could turn out to be nonsense and you won’t get rid of me so easily, ’cause I like a good argument!

        We’ve both had a look at the situation and assessed what the otcome might be.

        I am no expert, my opinion is just based on a gut feeling having looked at as much evidence as I could digest.

        After many twists and turns it looks as if we’ll learn the outcome on Monday.

        And then we’ll have nothing to argue about! 🙂

      • Carntyne

        P.S. With regard to TicketUs.

        If they are responsible for successfully engineering a CVA and the club comes out of administration, Rangers would still have large hurdle to circumvent when/if the FTT returns a decision in favour of HMRC.

        Another potential £75mill might send the club right back into administration.

  31. Pingback: Wings over Scotland | Back to basics

  32. Pingback: Glasgow Rangers on the brink of administration - Page 17

  33. Pingback: Bill Miller, “Truck Tycoon”, Rides to Rangers’ Rescue! But Will It Be “Miller Time”? | Random Thoughts Re Scots Law by Paul McConville

  34. Niall Walker

    Good evening Carntyne,

    The FTT outcome is included in the CVA, Rangers will not come out of administration until this debt is formalised.

    Imagine if the outcome is some good and some bad for both parties, appealling and demanding money from a soon to be liquidated company seems rather illogical, it may give HMRC sufficient cause to agree to a CVA and get 10 million instead of liquidation and nothing.

    I smell a compromise in the offing.

    • Niall, I cannot for the life of me understand why you cling to the delusion that HMRC would so much as consider accepting £10 million as a settlement for a tax liability of up to £100 million.

      Why should any of us bother paying our taxes if it was established that all we have to do is stonewall for years on end before finally offering a tiny fraction of what’s due? Is that what you do when your taxes are due?

      I’m trying to imagine the exchange. . .
      Hector – “Look, over the last few years ,we’ve spent millions chasing you up through courts and tribunals and processes and appeals and procedures and you still haven’t given us a penny of the thousands you owe us.”
      Niall – “Aye, I know. I’m a Rangers supporter, remember. Have you no’ got the message yet?”
      Hector – “Listen, you owe us ten years of income tax.”
      Niall – “So? I don’t like paying taxes. I’d far rather just spend the money on myself.”
      Hector – “But … but … if we let you away wi’ that, everyone else will expect the same deal. Then we’ll be totally Carter-Rucked.”
      Niall – “That’s hardly my problem, mate. ”
      Hector – “Well . . . Gonnae just gie us something? Anything at all, just so that we can say we didn’t walk away completely empty handed. Please?”
      Niall – “Here’s a signed photo of David Murray. That’s all you’re getting. Just be thankful you’re getting anything at all.”
      Hector – “Aw, thanks Niall. You’re a gentleman, mate. That gets us right off the hook.”
      Niall – “Aye, right ye are, bud. No hard feelings then?”
      Hector – “None at all. It’s been a pleasure doing business with you. See ye in another ten years time.”

      Is that how it works?

      • Niall Walker

        Hello Henry,

        If indeed I am being delusional then this delusion is being shared by the administrators and potential bidders, this suggests there is no incontrovertible evidence that HMRC do not do deals on EBTs under any circumanstances. However there is incontrovertible evidence that HMRC do agree to CVAs under specific circumstances, and this may be one of them.
        Policy statements are guidelines, they are not carved in stone, there is a big difference between unlimited pesonal liability and limited company liability. In the case of Rangers the company is insolvent and in administration,.and the main shareholder is not benefitting from any CVA.

        There is no ifs or buts for the revenue to consider, Rangers will be liquidated if they do not agree to a CVA and they will lose 10 million. Neither the current owner nor the original transgressors will suffer a penalty from this event.

        They wil do a deal in my opinion.

  35. Pingback: Duff & Phelps – Have Delays In Administration Made Winding Up of Rangers Certain? | Random Thoughts Re Scots Law by Paul McConville

  36. lol you nver gave celtic any charity all we celtic supporters suffer did rangers run away with football for 10 years wim janson stoped rangers from doing 10 in a row mind you when celtic made 9 in a row 1st we done it in one leuag no two division 1 and the premier also 6 years of celtics team was all scotish born bread players rangers went mad singing gazza loudrop bolie butcher was celtic offerd any kind of help NO NOW ITS GOT TO THE POINT THAT RANGERS AS WE KNOW IT ARE HITTING THE WALL A CAN WAIT AND SEE THAT CAN RANGERS FOOTBALL CLUB STOP THIS A SAY “NO” THE PLAYERS BROKE YOUR CLUB THINKING THAT YOUR TEAM WOULD WIN A EUROPEAN CUP “NO”

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