Well, what a day today! Whilst I had thought that Mr Miller’s hopes of doing a deal by 11th May were optimistic, to say the least, I did not expect to end today with him out of the bidding.
As is my wont, let’s have a look at the statements by Mr Miller, and from Duff and Phelps, and see where this takes Rangers now.
As always, my comments are in bold beneath the relevant part of the original.
“As soon as I was announced as preferred bidder for Rangers, my team began to press ahead with our due diligence.
“Until then, information had been limited to what was made available in the internet data room and questions addressed to the administrators and their staff.
Preferred bidder status was granted on Thursday, and by Tuesday he was gone. That suggests some bombshell hit him in the period after his people got access to the books, or else something happened over that period.
“In addition, I had preliminary discussions with the Scottish Footballing Authorities and limited discussions with Ally McCoist.
“Upon being named preferred bidder, discussions with Rangers staff started and discussions with all interested parties intensified.
“We continued to work through the holiday weekend in order to meet a very compressed schedule.
“By late Monday night, it became clear to me that preliminary information, discussions and analysis were, unfortunately, more optimistic than reality.
Mr Miller’s preliminary information, discussions and analysis will have come predominantly from D&P. They might consider that he is pessimistic and he might think he is optimistic. Bearing in mind that Craig Whyte’s due diligence took around six months, it seems remarkable that four days was enough to end Mr Miller’s interest. Either he was not serious in the first place (a theory prevalent amongst some Rangers fans) or what he found was immediately fatal to the plans.
“Having no intention of negatively affecting the potential outcome of the club’s future and after hearing the message from Rangers supporters and fans loud and clear (“Yank go home!”), I notified the administrators today that I have withdrawn my bid for Rangers and will not be moving forward.
How did Mr Miller think he would “negatively affect” the potential outcome of Rangers’ future? Was he told that, for example, his “demands” for written guarantees of no penalties for Rangers next season were unacceptable, but that someone else in charge might have a fairer hearing? His phrase is an interesting one, but I suspect it will not be clarified.
As far as the message he describes as being received from Rangers supporters, again some of the Ibrox faithful are disputing whether all of the anti-Miller communications came from Rangers fans at all. I think all would agree though that, whilst Mr Miller was the preferred bidder for D&P, he was most definitely not the preferred bidder for Rangers fans.
He has been criticised for not visiting Ibrox and for not engaging with Rangers fans. According to his statement, he listened to his prospective customers, and “walked away”.
If he had taken one piece of advice from Mr Whyte, it would have been to learn that there would be huge scrutiny of his public and private life, which seemed to surprise Mr Whyte when he was caught in the glare of publicity.
“I am deeply disappointed as I had considered the opportunity to bid for one of the most historic football clubs in the world, an honor and a privilege.
“I wish Rangers fans, supporters and employees my very best. I hope all your dreams and wishes come true. You certainly deserve it.
“I am most disappointed that I won’t have the opportunity to walk into Ibrox Stadium on the day of an Old Firm match as my friends tell me the hair on my arm will stand up and I will never witness such passion and spirit at any sporting event.
“God Speed, Rangers!”
His words are complimentary towards the club and the fans. His statement seems to be a very tactful one. He could have said, if it is the case, that he wanted to run screaming when he saw the books, for example. The books though might be a bit of a red herring. After all, he had already bid his £11.2 million to buy Rangers’ assets, lock, stock and barrel. He was not buying the ongoing business. Therefore existing contracts and liabilities were of little concern to him. The only existing contracts he was taking on would be the players’ wages, effectively.
Maybe he had been misinformed about the rights of the players to leave on the changeover? Maybe he had been led to believe that there would be no penalties from the football authorities, after his initial request?
In any event, his greatest criticism lies for D&P for being more optimistic than realistic.
Duff & Phelps then responded. D&P have been subject of criticism for the unusual way in which the administration has been carried out. Some of their statements have been apparently confusing. I have noticed that they spend a great deal of time talking about their duty to the fans and the team, and comparatively little about the duty to the creditors.
Against that background, how would they react to Mr Miller’s dignified statement?
David Whitehouse, joint administrator, said: “We can confirm that Mr Bill Miller has decided not to complete his purchase of Rangers Football Club.
“Since Mr Miller was announced as preferred bidder on Thursday of last week, it is regrettable that more progress could not be made to further the sale of the Club.
“We have been informed by his advisors that there were a number of issues with which he felt uncomfortable including legacy contracts, the limitation of potential revenue streams and the expectation of required investment.
I can well imagine that D&P genuinely regret that the deal could not go forward. I suspect that both in England and at its US Head Office Duff & Phelps would be delighted to be out of the Rangers mess. However, is it wise to detail what Mr Miller thought was wrong with the deal, especially as Mr Miller did not do so?
If Mr Miller, the preferred bidder, is not happy with “legacy contracts, the limitation of potential revenue streams and the expectation of required investment” then how do D&P expect other bidders, who were “un-preferred” to do so.
Legacy contacts? Presumably only the players’ deals. Maybe the increased contracts given by Mr Whyte last summer, at the same time as he was talking about cutting costs, were an unexpected surprise. Maybe Mr Miller did not realise that, as a new owner, he could not simply rip up existing contracts. I don’t know if there is the equivalent of TUPE in the USA, but even if there is, I suspect it does not work the same way.
Limitation of future revenue streams? This is either Ticketus or the European ban. The position about each is quite clears, at least as far as buying the assets for a newco is concerned. What did D&P tell Mr Miller about these issues? If not them, then what else lurks beneath the Ibrox surface?
Expectation of required investment? “I was told that my £11.2 million got me this money making machine. You mean, gentlemen, to tell me that you want me to fund the business as well? I’m out!”
Or else – “Mr Miller, the fans will expect you to buy Lionel Messi and Wayne Rooney. So if you can write a cheque for £65 million for working capital, we can crack on. Mr Miller…hello…the line’s gone dead…”
“As in any company takeover, the selection of a preferred bidder does not guarantee the completion of the sale. In this case, with time and money for Rangers running out quickly, it was essential to move the process forward with urgency. Mr Miller’s bid was deliverable to creditors and was the only deliverable bid on the table at that time. We had no other unconditional bid.
I mentioned before about the Ratner-esque reference to the toxic brand of Rangers made by D&P. Here we go again! Time and money running out quickly!
It is interesting that D&P say this was an unconditional bid (or at least they imply it was). But it cannot have been. It was conditional, at the very least, on due diligence being conducted. If someone were daft enough to make an unconditional offer without due diligence being carried out, then D&P would bite their hand off to conclude the deal. The danger in making an unconditional offer is that, if accepted, there is a binding contract.
This suggests that a certain number of conditions = unconditional which is an interesting use of language.
So the only deliverable bid is off the table. What now?
“Given the fact that Mr Miller did not enter into an exclusivity agreement, we informed all other known potential bidders at the time the door was not closed.
I’m getting confused now. Because there was a preferred bidder, D&P contacted the remaining interested parties and asked if they wanted to gazump him? On that basis, what was the advantage of being declared preferred bidder? In track cycling at the top level, the cyclists compete to go the slowest round the track till the last lap or so, on the basis that the one behind can start their sprint before the leader sees them doing it, and thus the better position to be in is at the rear.
Did Mr Miller know that as soon as the congratulatory press conference on Thursday had taken place, with Mr Miller being anointed as preferred bidder, D&P were on the phone to the other bidders asking them to come back in?
Mr Whitehouse said on Thursday “In terms of the structure it is the only one that can deliver certainty in a short period of time so overall we think it is a great step forward.
“We have met with leaders of fans groups in the last week and I think across the board everyone accepts that Bill’s bid is the right bid for the club in the right structure and in the right form.
“That way the history of the club can remain intact and the views of the fans have definitely been taken into account in this solution which provides Bill and his team with a stand-alone entity which isn’t tarnished by the toxicity of the existing business but at the same time allows both to be brought back together at a later date.
“The major creditors – including HMRC – are aware of the structure of the deal that is being proposed and one of the advantages of this structure is that it is deliverable so we as administrators can conclude that deal.”
No mention of looking for other bids, nor of the risk that preferred bidder status without exclusivity was such a poisoned chalice. Mr Miller knew, I assume, that he did not have exclusivity. He might not have expected D&P to be looking for new bidders!
And again on Thursday Mr Whitehouse referred to the toxicity of the existing business. He’s not doing a great job of selling it, is he?
“As a consequence of Mr Miller’s bid being accepted, three other bidders have come forward to express their interest in buying the Club and these offers are being evaluated with the utmost urgency. There is every opportunity for these bidders to now complete the purchase of the Club prior to the end of the season.”
But all is well! There are three new bidders (from the parties who expressed an interest before). It seems unusual that they came forward as a result of Mr Miller’s bid being accepted. That seems like a good way to waste money on legal and accountancy fees!
We are now at Tuesday evening. The SPL season finishes on Sunday. Therefore the last day to do a deal properly prior to the end of the season is Friday, this week.
I have been blogging about all the hurdles in the way for Mr Miller. If it was going to be impossible for his deal to be dome in over a week, how much more impossible in three days!
There comes a point where there is very little more that can be said, as the absurdity of the situation beats any commentary that can be offered. We are at that point now.
Maybe there is every opportunity for the chosen bidder to finish things by the end of the season. There is every opportunity for me to win gold in the Olympic 100m this year. However, whilst the opportunity is there, the reality is well nigh impossible.
In the same way, how is a bidder going to be accepted, do due diligence and get SPL and SFA approval, all in three days?
I am sure that D&P have a clever plan. They must have because otherwise it would just look as if they were floundering about in the dark, with no idea from one day to the next what was happening.
So Whither Rangers Now?
We are told there are three “offers” on the table. There was some Twitter discussion earlier about whether these were just expressions of interest. However, D&P clearly say “offers”. “Offers” are capable of acceptance. D&P won’t have invented them.
But bearing in mind that a stand alone CVA has been ruled out, and that all the mad rush was to avoid the new penalties by getting a deal don by Friday, where does this leave D&P and Rangers?
There can be very little cash left.
The players’ wages go back to full levels after the May salaries are paid. There can be no season ticket income till it is sorted out whether or not Rangers will exist next season.
There are no more games to play, and even the Express’ story about a money spinning tour of China in July won’t help.
D&P have effectively acknowledged that the first purpose of administration, keeping the business going as a going concern, cannot be fulfilled. Now the question is whether they can get a better return for creditors through administration than by liquidation. Standing that the Blue Knights’ bid was reputed to be around £5 million, then if D&P can keep going till June and sell every possible player than, that might justify keeping going.
However the reluctance of players to be sold, and the fact that the agreement allowing wage cuts permitted players to leave for little or no cost means that there may no longer be any value in keeping going.
The case for pulling the plug and stopping the outflow of money becomes ever more compelling. In addition, D&P’s charges have been running at around £200,000 per week. If they have spent a full holiday weekend engaged in discussions with Mr Miller, than the charges over recent times will have gone up, not down. The bill could be nearly £3 million by now.
On what planet is this in the interests of the creditors?
Posted by Paul McConville