How Much Money = Chance of Success in Rangers’ CVA? How Does Mr Green Make A Profit?

In which I look at what Sir David Murray thought was needed to give a CVA a reasonable chance of success and what this might mean for Mr Green’s efforts to make a profit out of his proposed investment.


As we await the formal revelation of the details of the CVA, which has already resulted in Duff & Phelps being on the receiving end of some less than complimentary comments, I wondered if any financial experts had offered their opinions on what would be needed to give a CVA a reasonable chance of being accepted.

I then saw that Sir David Murray had been asked this very question by Jeff Randall of Sky News on March 16. The full transcript of the interview is here. I recommend it as a good read.

However, and with thanks to Sky News, I reproduce the following part of the discussion.

“Jeff Randall – How much, in your view, would he (Paul Murray and the Blue Knights) need to raise?

Sir David Murray – It’s guess work because it’s interesting, we’re meeting today, the day that bids are going in for the club but I would have thought, probably, if it’s a debt free club, probably £20-25 million to then put into CVA to have a reasonable chance of paying a reasonable payment in the pound, I would have thought.”

Now, in view of the financial woes of the Murray Group and the mess Rangers is now in, and for which Sir David accepts some of the blame, do not think that I am holding him up as some Scottish Warren Buffet. However, he knows better than anyone the value, and costs of Rangers. If he thought, for example, that the assets were worth nowhere near £20-£25 million, would he be suggesting that that was the sum the Blue Knights needed. Is it rather a reflection of his view that the assets were worth more than this, but that sum was needed to put enough in the pot to entice the creditors into acceptance?

In addition, as Sir David had been dealing with the Big Tax Case for three years prior to Mr Whyte’s arrival, he might well have an insight into what HMRC want from the case.

He was later asked about his business model for the club failing.

“Sir David Murray – But you cannot run a football club on a normal, typical business model because a ricochet in the last minute of a game could win a league, lose a league, a Champions League game. So how you can ever put that in any business plan I do not know.

Jeff Randall – It’s not really a business then, is it?

Sir David Murray – No, it’s a very expensive … not hobby but very expensive pastime which cost me a lot of money.”

This should be words of caution for Charles Green and his consortium, whilst at the same time being the motivation for their plans. Mr Green plans, he says, to make money from Rangers. There is nothing wrong with that. That is what business is about in a capitalist society. However, no one, other than Fergus McCann has made money from owning a Scottish Premier League club in the last thirty years.

Put very simply therefore do we see in what Sir David has to say how Mr Green tries to make his money?

Make a lowball offer to creditors on the basis that, even without knowing what it is, it is assured of being the best available? If accepted, then he has acquired assets worth three or four times the value of his investment. He will not make money by continuing to run the club, as per Sir David’s line about it being an expensive past-time. Therefore Mr Green needs an exit strategy.

That can only sensibly work if carried out in the form of a very quick share issue, in the hope that Rangers supporters would chip in many millions of pounds to buy the club from Mr Green. This also presumes that he has, in some way, found a mechanism for relieving Mr Whyte of his shares too.

It would then leave the club in the hands of shareholders who do not want to make money from their ownership of their team, whilst Mr Green heads off with a large profit. In any rational market thereafter the share price would fall as, on a normal trading basis, the shares are worth far less than on a sentimental basis, and without the backing of a rich sugar daddy, how will a fan owned Rangers obtain the bank finding needed to keep them in the standards to which they have become accustomed.

Mr Green may very well have a smart plan, but there is such a thing as trying to be too greedy, and the low-ball offer might fall into that category.

When Fergus McCann arrived at Parkhead, he pledged to turn the business around, and, after five years, leave and take his profits. He was true to his word, leaving a new stadium and a solvent club. How long a haul is Mr Green in for? If he succeeds, will he talk of launching a share issue almost immediately? If he wants to make money, then he should, whilst the euphoria of rescue remains.

Would the fans be happy to pay for shares where the cash was going to the Green consortium rather than into their team? That is thought to be a reason for the failure of Sir David Murray’s share issue a few years back. The fans did not want to invest to reduce Rangers bank debts.

We shall see.


Posted by Paul McConville





Filed under Administration, Charles Green, Rangers

14 responses to “How Much Money = Chance of Success in Rangers’ CVA? How Does Mr Green Make A Profit?

  1. Araminta Moonbeam QC

    Paul, this seems more like an attempt to pull in investors rather than a serious offer to creditors. The amount talked about as being available for a CVA pot (after D & P fees) appear to be reliant on the Jelavic transfer money and winning the Collyer-Bristow case in October, which is unlikely to say the least. There is no way this is a legitimate offer, it looks more like an attempt to buy time (again).

    • As I understand it, Rangers have not fully paid for Jelavic. Can Rapid Vienna make a case for getting their money before anything is handed over to Rangers, either through somebody like CAS, or through the courts. If they [Rangers] do not pay, UEFA do have a track record for taking a dim view. How would UEFA see Rangers getting millions in cash for a player they never fully paid for.

      “UEFA last month [January] threatened PAOK Thessaloniki with a ban unless the Greek club got its finances in order by June 30 after investigating late payments to rival teams, staff and tax authorities. Bulgaria’s CSKA Sofia, Timisoara of Romania and Real Mallorca of Spain also have been barred from European competitions because of overdue payments. ”

  2. Littlerabbits

    Oh yeah – fantastic idea Mr Green – except we all know how well Rangers last floatation scheme went don’t we? He might be stuck with a pig in a poke here I suspect.

  3. Euan

    Paul it is obvious to me that Rangers Fc is worth a lot more than the bricks and mortar price tag that is being banded about. Sky TV has very little in the way of bricks and mortar, but it has a massive subscriber base, which is the value of the company. Surely Rangers FC value is not in the players and land but in the guaranteed (if you believe the “follow follow, rangers till we die, through thick and thin brigade) 45,000 annual season ticket holders at £300+ each, plus shirt sales sponsorship and all the other revenue streams. The season tickets alone must take in excess of £14m annually. If say £4m was siphoned off to pay debts for the next 25 years, creditors wouldn’t get all their money, but they would get a damn site more. £10m a year budget plus whatever they get in prize money shirt sales programs, the list is endless, is more than enough to stay competitive in the top 6 of the spl. They might not be challenging Celtic every season but surely that should be the price you pay for decades of tax avoidance.

  4. JimBhoy

    Hey Paul, Comment from Green wrt to any investors… “They’ll read about a club cleansed of all its toxic debt and sitting with a property portfolio of just more than £113m.…” If there is a property portfolio of £113m I assume inc some estimation of the playing staff’s marketable value why are the Administrators accepting probably (optimistically) £3-5m for the creditors, figure based on the £8m minus D&P’s £3-4m and June’s wage bill.
    They should not rely on the jelavic money when they never really owned that asset having an outstanding debt to Rapid Vienna, there should be some football legislation to stop that. The administrators based on these numbers and based on Mr Murray’s estimations should be stopped in their tracks right now as the creditor’s are being stiffed big time and not aided in retrieving what is owed as should be the administrators main remit. Surely this is definitive proof.
    If (when) the CVA does not go through I believe Whyte will still own Rangers and the assets will be bought from him at a fair markettable value for the creditors when D&P will be replaced. All this CVA stuff is just bluster and the sooner the authorities get with this the better the chance we will have football in Scotland next season.

  5. Would this news satisfy David Murray?
    This from the BBC:
    Rangers’ administrators upbeat over CVA proposal
    29 May 2012 Last updated at 10:19
    “Rangers’ administrators have told BBC Scotland they are still unable to reveal details of their company voluntary arrangement proposal.
    Duff & Phelps have been preparing a pence in the pound offer since Charles Green agreed a deal to buy Rangers.
    However, joint administrator Paul Clark says he is optimistic the two biggest creditors will agree to the CVA being sent out on Tuesday. ”

  6. Johnjo

    Mr Greene may well have covered his bet with potential season ticket sales.

    Once/if he gains control the PR will be in full swing…the bears will rejoice at the victory… their team will be” saved” and season tickets will be bought.

    I would suspect the first tranche of these sales will go towards paying back the initial investment plus some.

    He will then attempt to run Rangers within their means whilst, as Paul says, prepare for an early flotation. Remember he claims to be an expert in this field, stating that the Sheffield flotation was the most successful flotation of its type in the history of the game.

    The living within their means will be aided by; the European ban, ban on new signings and exodus of star players…none of which will be his fault (manna from heaven from Mr Greene’s point of view).

    But as Paul says he has a small window to see his plans through and with Rangers, planning on a successful flotation is high risk…

    But then again if you can cover your initial bet is the risk really that high. Especially if you see a quick profit making opportunity and do not care about the long term future of the club

  7. Joseph

    I’ve come to the conclusion the main players involved in all this are simply corrupt. That’s their make up! They can’t help themselves because they have no moral character. It goes back to where they came from and their upbringing. We are at the stage of what they do best – take the gamble, no matter how many get hurt in the process. If they win, they walk away with the money. If they lose no sweat – there’s always the next scam just around the corner!

    • I would rather say that in some cases, their first concern does not necessarily guarantee harmony with the very first point of the General Disciplinary Rules of the SFA which says:

      1 (Based on Article of Association 5.1) All members shall:
      (a) observe the principles of loyalty, integrity and sportsmanship in accordance with the rules of fair play.
      (b) be subject to and comply with the Articles [of Association] and any statutes, regulations, directives, codes, decisions … promulgated by teh Board, the Professional Game Board, the Non-Professional Game Board, the Judicial Panel, a Committee, or sub-committee, FIFA, UEFA or the Court of Arbitration for Sport.
      (c) recognise and submit to the jurisdiction of the Court of Arbitration for Sports as specified in the relevant provisions of the FIFA Statutes and the UEFA Statutes;
      (d) respect the Laws of the Game; and
      (e) refrain from engaging in any activity, practice or conduct which would constitute an offence under Sections 1, 2 or 6 of the Bribery Act 2010.

  8. p groom

    if the above is correct why did lord glennie rule that the sfa rules did not allow recourse to cas? who is this man, I demand to know if he is compos mentis.

  9. Here is the explanation as reported on the STV site, (and I copy for ease of reading):

    They report that:

    ‘Article 65 of the SFA’s Articles of Association states that a panel will “carry out and enforce disciplinary procedures” as well as appeals against these decisions. Article 65.3(b) specifically states that “the decision of the judicial panel in any appeal shall be final and binding on all parties concerned”.’

    Then they report that:

    ‘The lawyers acting on behalf of Rangers FC argued that CAS had no jurisdiction over their case. They used the legal case of Ashley Cole versus the FA Premier League in 2005 as precedent for this.

    In 2005, Cole was fined £100,000 by the Premier League for meeting with Chelsea to discuss a transfer while he was still under contract to Arsenal. An appeal by Cole reduced the fine to £75,000 but he then took the case to CAS.

    The CAS ruling of August 31, 2005, stated that it had no jurisdiction over the dispute because the rules of the Premier League do not contain any reference to a right to appeal to CAS. Premier League rule R63 state that their decision is final and binding – exactly the same wording used in the SFA’s rule 65.3(b).

    Lord Glennie at the Court of Session agreed with this argument and ruled that the civil court in Scotland was therefore competent to deal with the dispute between Rangers and the SFA.’

    and finally:

    ‘Fifa leaves it up to individual national associations to decide who the ultimate appeal board should be. Article 64.3 of the Fifa statutes reads “disputes shall be taken to an independent and duly constituted arbitration tribunal recognised under the rules of the association or confederation or to CAS”.

    The SFA chose to make their Judicial Panel the body which hears such disputes and not CAS, which is entirely legitimate under Fifa rules.’

    This is the argument that he seems to have accepted.

  10. p groom

    tks got it.

  11. Further evidence that there is something funny (not necessarily illegal). D & P say there is enough money for the playing staff to return to full wages. IF that is the case, then surely there is enough money in place for (1) the sale of players + (2) monies from this pot that would otherwise be used for wages to the benefit of the creditors. Oh, and isn’t there PAYE and NI and bus fares to Southampton for the Markus Liebherr Memorial Cup tournament at Southampton’s St Mary’s ground on July 14, just two days after they hope to emerge from administration.

    But, then the Telegraph note:

    “The would-be buyers of Rangers – a shadowy consortium fronted by the former Sheffield United chief executive, Charles Green – have more than enough cash to keep the club trading after Friday, when it would otherwise run out of money. ”

    Is that saying that the money to keep them going in Administration is from Green? How does that work? Is it saying that he has enough money to rescue Rangers, as created by Murray and Whyte who did all the work to build it up by dubious means (including but not restricted to “Money for HMRC? What money’s that?” and lets borrow lots and lots of money (not illegal, but unwise), and make it look as though we are wonderful people).

    Don’t anybody say that it is just the way it works. I don’t want to hear that. I am at a stage beyond that. It may (or may not) be the way things work, but, as everybody keeps saying – then conveniently ignoring in some significant cases – this is bout the integrity of sport. A team of players who are there, to large degree, not simply because of the agreement with Charles Green, but who are there primarily because of the various dubious practices of David Murray, and Craig Whyte. No, it brings the game into disrepute as far as I am concerned, irretrievably so if it is allowed to pass.

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