What Has Charles Green Bought for his £5.5 Million? An Instant Profit?

What Has Charles Green Bought for his £5.5 Million?

In which I suggest that Mr Green has made an excellent deal in buying the assets and business of Rangers for £5.5 million, and that he stands to make a lot of money very quickly, if he plays his cards right, and gets back out almost as quickly as he came in.

And I suggest a comparison with Mark Goldberg’s purchase of Crystal Palace Football Club in the late 1990’s as a benchmark to compare the quality of the deals.

 

Mr Green made the following statement yesterday, “Following the formal decision of the creditors’ meeting at Ibrox Stadium today, the consortium I represent has fulfilled its agreement with the administrators and has completed the acquisition of the business and assets of The Rangers Football Club plc. The transfer of the business and assets to a new company structure has taken effect immediately and the new company is The Rangers Football Club.”

Mr Clark of Duff and Phelps said, “As a result of that decision, which was known in advance of today’s meeting, the consortium led by Charles Green is obliged to buy the club’s business and assets and that transaction will be completed imminently.”

Both statements refer to “the business and assets” of Rangers Football Club PLC, or of the Club, depending on which statement you read.

What are those assets?

The best place to look is in the Rangers CVA Proposal which states at paragraph 4.11:-

The assets of the Company, listed at Schedule 6, currently consist of:

 

Ibrox – Ibrox Stadium, 150 Edmiston Drive, Glasgow G51 2XD;

 

Murray Park – the Company‘s training facilities at Murray Park, Auchenhowie Road, Milngavie, Glasgow G62 6EJ;

 

The other heritable properties and leasehold interests of the Company;

 

The Player Contracts – the contracts of employment of those employees of the Company who are professional football players registered with the SFA;

 

The SFA Membership;

 

The Company‘s share in the SPL;

 

The Goodwill and intellectual property rights – the goodwill relating to the business of a professional football club carried on by the Company and the exclusive right to use the name “The Rangers Football Club”;

 

Stock, plant and equipment and cash at bank;

 

Amounts owed to the Company (other than the Player Transfer Fees);

 

The High Court Proceedings – (1) Application Number 2003 of 2012 in the Companies Court, Chancery Division of the High Court of Justice, London; and (2) Claim Number HC12EO1526 in the Chancery Division of the High Court, London; (3) any claims, proceedings or demands arising out of (1) or (2); and

 

The Player Transfer Fees – those payments, in respect of players sold by the Company on or before 12 May 2012, due and payable to the Company on or before the earlier of: (1) the termination of the CVA in accordance with paragraph 7; or (2) 2 September 2013.

That is quite a lot!

Under the CVA, all of the above assets, except two, were to be transferred to Mr Green’s company, in return for his consortium lending Rangers £8.3 million. The exceptions were the Player Transfer Fess, as defined above and the High Court Proceedings. Therefore Mr Green, under the CVA, was getting Rangers almost in its entirety, with the exception of the cases involving Collyer Bristow and alleged misleading actions by Mr Whyte, and for the proceeds of the sale of Mr Jelavic primarily. The plan of D&P was to factor the outstanding fees for him and anyone else in the same boat, bringing in just over £2 million.

The terms of Mr Green’s purchase are confidential, we are told. However, it would suggest that, at the very least, he would have purchased all of the assets he would have got under the CVA. In addition, one wonders of he has acquired the right to the “Player Transfer Fees” as well. Could he even have acquired the rights to the High Court Proceedings? After all, these are all assets of the Company in administration, and as such transferable.

The only assets which would not be transferable, simply because they can only be pursued by administrators or liquidators, are the alleged unfair preference to Banstead Athletic, and the alleged gratuitous alienation to Mr Betts.

What Are Rangers’ Assets Worth?  

The trite answer is that the assets are worth what someone will pay for them!

I think all observers agree that the valuation of the Rangers fixed assets as stated in its accounts previously, being in excess of £100 million, is irrelevant for today’s purposes.

Duff & Phelps, in the CVA Proposal, did list certain values in the “Estimates Outcome Statement”.

This stated that, in the event of liquidation, the only assets would be the “Freehold Property”. This was on the basis that player registrations would be worthless on liquidation, and that no value would be attributable to goodwill or intellectual property in that event as well.

The value placed on Ibrox and Murray Park was £4,590,214. This however was not the value which has been assessed by the valuers, at a fee understood to be around £60,000. Instead it was stated, “The estimated realisable value of the freehold properties is based on the Joint Administrators’ agent’s valuation less holding and disposal costs based on a period of two years. It is possible these costs could exceed the gross realisable value rendering the properties onerous and without value.”

I may be wrong, and I often am, but that seems to suggest that the valuation of £4,590,214 is not the value today, but instead is the value after paying for two years to maintain them without any income and then to sell them. I assume that the fees of selling agents for marketing such properties would be fairly high.

Therefore Mr Green has bought an asset worth £4,590,214 plus the costs of maintaining for two years and selling. Let us be generous and say that the valuation today would be only £4,750,000.

I assume that there will require to be an apportionment of the price to attribute a value to the properties at Ibrox and Murray Park, for Stamp Duty Land Tax purposes. Whilst the value of fixtures and fittings can be discounted, one would expect this to be in excess of £4 million.

The CVA Proposal stated, “The sale consideration under the New Company scenario has not been apportioned”.

I can help. He has paid a total of £5.5 million. Therefore he has acquired everything else for £750,000:-

The Player Contracts – the contracts of employment of those employees of the Company who are professional football players registered with the SFA;

 

The SFA Membership;

 

The Company‘s share in the SPL;

 

The Goodwill and intellectual property rights – the goodwill relating to the business of a professional football club carried on by the Company and the exclusive right to use the name “The Rangers Football Club”;

 

Stock, plant and equipment and cash at bank;

 

Amounts owed to the Company (other than the Player Transfer Fees).

 

He may also have acquired the Player Transfer Fees and the right to pursue the High Court Proceedings.

No matter what deals were agreed with the players regarding reduced fees for them to be sold, and regardless of anyone’s opinion of the value of Rangers’ players, as long as the players agree to join newco, then Mr Green could, by the end of the transfer period, sell off all his high earners and make millions of pounds.

He has acquired the rights to use the name Rangers, and that is one with which, in the past anyway, companies have been glad to be associated, and on commercially advantageous terms to Rangers.

Mr Green has spoken about selling the naming rights to Ibrox for £10 million.

He anticipates selling lots of season tickets, and as Ticketus is nothing to do with the deal any more, he expects to receive many millions through the door for these too.

Finally, he is anxious to float the company by selling shares, especially to those whose shares in the Company in administration are now worthless (even though pre-administration they were worthless anyway). I did not see Mr Green suggesting that these shareholders might now be allotted shares in the newco for no cost.

Conclusion

In the late 1990’s, as I have written about before here, Mark Goldberg bought Crystal Palace. He did not manage to buy the ground, but otherwise he acquired, for cash in excess of £20 million, the equivalent of what Mr Green has purchased here.

I know that things have changed in the last 13 years or so, but to that extent?

As has been pointed out, the administrators had the business on the market for four months, and Mr Green’s was, apparently, the best offer left standing. It is ironic that, as pen was being put to paper in relation to the sale, Mr Walter Smith’s consortium appeared with a higher bid!

As has also been pointed out by Brogan, Rogan, Trevino and Hogan, it is understood that D&P made it clear that they were looking only for offers for the business as a going concern, and not on a “break up” basis. This would have been in accordance with the first aim of administration, namely to rescue the company as a going concern. Of course they have failed to do so, as they have now sold off the assets and business to Mr Green.

Was there any effort made to market the properties for sale for purposes other than football use? Would the Murray Park grounds have been of interest to a developer, if only to retain in a land bank until property values start to pick up and house building is profitable again?

It looks as if we will never know, although there is now nothing to stop Mr Green testing the market. After all, he could argue that the state of the art training facility has been a white elephant, and selling it would generate money.

Mr Green is unashamedly in this as a venture to make a profit, which is perfectly legitimate. I think the deal that has been done, especially if it includes the Jelavic fees and the High Court case, can work as a winning lottery ticket for Mr Green.

Indeed, the fact that Mr Smith’s consortium turned up just after the die has been cast, might make a cynic think that Mr Green has been, whether by accident or design, a useful middle man, who will now sell on Rangers to the “True Blues” for a profit of a few million, whilst at the same time insulating the new owners under Mr Smith from accusations that they allowed the Club to be liquidated.

But then I know no one reading this blog is a cynic.

 

Poste by Paul McConville

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41 Comments

Filed under Administration, Charles Green, Football, Rangers

41 responses to “What Has Charles Green Bought for his £5.5 Million? An Instant Profit?

  1. George Murray

    Paul, You will be aware of the TUPE factor in terms of the players and their acquisition, but how can he inherit the SPL place and the SFA license when the football club to whom these refer no longer exist?

    • Tyke Bhoy

      RFC(IA) do still exist and will be in admin for another 8-10 weeks according to D&P who will benefit most from that time span in more fees racked up. However……………………..

      The SPL share can be sold for the princely sum of £1 only with the agreement of all/a majority of the members of that private company. However SFA regulations clearly state that an FA licence can NOTbe transferred between entities. I take it that covers both gift and sale so D&P have no authority to transfer it to Mr Green as part of his landgrab.

      • weegie

        If SFA regs do not allow for transfer of licence to newco then presumably any penalties imposed on oldco (RFIA) cannot be transferrd to newco?

  2. Macduff

    good article, there is a whiff of sulphur regarding WS late offer. What I find amazing is that with all they owe to the taxman, ticketus etc they have a claim on money owed to them as part of the deal to sell to CG. surely any money owed should go to creditors?

  3. Garry Noakes

    Thanks for that Paul – a lot still to happen here methinks.
    Overall impression is that Mr Green seems unsure what he has bought and who is indeed financing it. But I suspect that he is relying on the principles of the ‘Greater Fool Theory’ to come into play i.e hold on to the assets until somebody with more money and less sense comes along and buys it from him. (Refer NFL in the period 1972 – 1976 and English PL at the moment)
    He must therefore be pinching himself as no longer has the ink dried on the deal then along comes the Cardigan Collective offering more money for a summary of fragmented assets without even a hint of due diligence. Are they seriously offering to buy the business on the assumption that D&P have carried out their brief properly and that all issues with regards to floating charge and the maze and myriads of Mr Whyte’s business dealings have been established and concluded? Are they rely willing to invest millions of pounds based on what was frankly an utter basket case of a CVA? Possibly, but like I said Greater Fool.
    I have refrained from refering to New Co as a club. Until they field 11 eleven men and kick a ball it will be no more that a vague aspiration!

  4. Al ross

    I have thought from day one here that we were seeing a highly complex choreographed dance with the dancers appearing briefly on stage to do their act then moving off to the wings as the performance all fell into place and was developed. Paul talks about being cynical but it strikes me that there just seems to be a lot of very convenient comings and goings at set times in the process with D&P charged with keeping the production moving along. DM said he had been ”duped” I wonder. I had an uncle who was a Polis and he once told me ”there is no such thing as coincidence son it happens to often for that”.

  5. Tecumseh

    So . . .what will the HMRC liquidators be doing . .???

    Are we tax payers paying them to sit on the subs bench . .???

  6. Nobody Knows

    Thanks Paul. Clarity as ever. What a deal, debt free! I hope The Rangers football club do however inherit some punishment for the actions of the previous corporate body, presumably from SFA or SPL. SPL Chairman need some courage and hopefully will put integrity over this all to easy corporate rebirth.

    As I am not a legal person but to a lay person, it appears that everything is the same apart from the debt being eliminated. Rangers fans and supporters won’t except that Rangers died or were liquidated if this is handed on a plate to them.

    Daily Record putting pressure on SPL chairman by saying Sky ready to pull deal. PR propaganda at its worse.

  7. The retiring CA

    On the surface, it would appear that Duff and Phelps have accepted an offer for a parcel of assets which is not the highest obtainable at the present time in the open market. Is this a problem for the Administrators? What defences can they muster?

    Secondly, can the Walter Smith-led consortium go to law in order to overturn the decision of the Administrators to sell to Mr Green’s grouping? If they did, what practical problems would this throw up for a new Rangers playing football in whatever league.

  8. Seminal

    Paul, it is only a week ago you submitted that D&P had lost the power to sell assets to Green contrary to all signals they were giving out, and this is actually what transpired. I’m afraid you make the mistake of many posters on RTC of believing what will happen is what you hope will happen. You make the evidence fit your belief system that Rangers will die, when in fact the opposite will be the case.

    • paul

      seminal, the sale could be challenged successfully in court, particularly by the ‘walter consortium’. The big problem is that this would take until the end of the year, meaning no football anywhere for a year for this newco.
      Rangers did die, their brand is now going to be torn apart by several factions arguing over who has the right to trade the brand. CG has the stadium, walter has the goodwill.
      I will refer you to a club called Airdrieonians FC ‘no longer in existence’ for the consequences of a divisive policy to reincarnating a football club.

    • Al ross

      Seminal on the basis that Rangers will never die are you happy for the new iteration to take any punishments for any of the various SFA/SPL rules they may have broken? Seems only fair if they hav’t died.

  9. Ocuilte

    If as the cva document says the spl license and SA license has now been transferred to newco, on what basis can d&p representing the oldco attend and vote at spl/sfa meetings to argue for transfer of license as it has already taken place.?

  10. Sandro

    Paul, many thanks once more for bringing some light into all this mess.
    (It’s not always easy to follow this complex topic without being a legal
    expert or business man).

    I’m sorry for all the creditors (specially the small business), since nobody
    acted in their interest during the whole admin process. Rangers FC PLC went into Admin at February 14th. The players squad had a value of about 36m at that time, there is a 50.000 seater “5 stars” stadium, Murray Park and and and…

    This is all sold now for 5.5m which is just enough to pay the adminstrators.
    Am I right in thinking that D&P didn’t have their finest hours during their
    amin task ? (creditors get nothing, ongoing business of “rangers” is in doubt)

    If Charles Green can do an instant profit, so while couldn’t D&P get more value out of the deal ?

    May I raise two more questions please ? (I would be grateful if you could provide help with these issues)

    1) What’s about the “floating charge” topic of CW ? Is this point clarified or could this still be a problem for the “purchase” of the assets.
    2) Is there still the possibilty that BDO/HMRC (or any other creditor) could contest the purchase of the assets ?

    Many thanks in advance

    • degough

      The other point not mentioned is that the IPA are investigating D&P for conflict of interest because the partner Grier was involved with Whyte purchasing Rangers as per the BBC documentary. Don’t know when or if the IPA will publish their findings.

      With all that has and will still take place I cannot understand why the authorities are not asking any questions. They should be involved due to the fact that so many creditors and shareholders have lost their money.

    • Pardon me plugging my own blog, but professional insolvency practitioners MSM Solutions (as seen on Newsnight Scotland) did an online webchat this afternoon in which many questions relating to the liquidation were answered. There’s an edited transcript of it here:

      http://wingsland.podgamer.com/rangers-insolvency-qa/

  11. paul

    MSN MYTHS BUSTED:

    1. TUPE law – it protects the employees and as such allows the staff to voluntarily move to the newco whilst protecting their existing contracts. They cannot be forced and are perfectly within their rights to refuse and move to alternative employment. Not only is this new ‘venture’ not yet a club, but it does not even have any players with which to field a team and cannot sign them until it joins a football association. My interpretation is that all the playing squad and other staff including manager, are now free agents should they choose, or they can transfer to newco and enforce theri existing contract. I spoke to a C.A. yesterday who confirmed this opinion.

    2. I think having read all the info available, that they have transferred the ‘business’. As such, titles et al may be included. In that case they can be penalised for past deeds (ebt etc). They can either claim the titles and pay the penalties or renounce the history and start with a clean slate.
    The big question is this: was it an asset sale or a business sale. The language of both CG and D&P is ambiguous at best and my gut says that the reference to the ‘business’ is a bit of spin to keep up the supporters hopes. In reality, most if not all liquidations result in an asset sale. Bricks and mortar etc. The trophies would be available(scrapmetal perhaps?), but not the titles.
    I could be wrong here, but I don’t think anybody really knows for sure. This will be argued for generations if they manage to get a football club up and running.

    3. The SPL share. The SPL website is not as forthcoming with its rules and regs as the SFL website, however it does not appear that the share is able to be ‘sold’, so I must assume that the original company still owns this and as such, the controllers of this soon to be liquidated company will have the voting rights and playing rights relevant to the share. As regards the ability to play in the SPL, well that is down to the other clubs.

    4. Administartion mk11: What am I on about?
    currently the newco has the ground, but ‘Walter’ and his team have the goodwill, regardless of who may claim to have bought it! There is no income to the newco at present, but they may have to pay a lot of staff wages at the end of the month as well as maintain the stadium, pay rates and many other bills. How deep are CG’s pockets? ‘Walter’ and his team of ‘in the best interest of rangers’ opportunists have basically told the fans not to pay their season tickets until they have control, therefore blocking any income streams. What odds that ‘THE rangers football ltd’ is in administration before the season starts? Could TWO rangers companies go bust this year before Motherwell are eliminated from europe? We’ll just have to wait and see.

  12. 100bjd

    Good stuff as usual Paul. Has Green actually paid the full amount yet? The duffers used the word imminent.

  13. Ray Charles

    “You make the evidence fit your belief system that Rangers will die, when in fact the opposite will be the case.”

    Hate to break this to you Seminal but Rangers FC have already died and been cosigned to history.

    What Paul failed to predict was exactly what assets would be transferred to the new club that has now applied for a licence to play football from the SFA and a place in the SPL.

    Those on RTC have been predicting the death of Rangers for several months. It has now happened.

    You seem to be denying the fact that RFC are now dead.

    Are you trying to twist the evidence to fit your belief system?

    • gc

      Rangers Football club plc have died , not rangers fc, they are separate, the plc owned the club ie rangers Fc, rangers fc are a member of the SPL not rangers plc. The club lives on.
      If Mr green does not except punishing for the wrong doing then the club will not exist.

  14. Some of the assets such as high earning players could prove to be liabilities. They can’t be forced to transfer.

  15. George L.

    Paul, I posted on another thread that I am unsure if the properties have been included in the transfer. I remain that way, in view of the EOS that you refer to, page 32. You are assuming that they have been; do you know that? Has anyone actually ASKED the question of D&P about this?

  16. Thx Paul, again very much apreciated.
    Maybe someone can clarify somebody that I have mssed in all this coverage.
    If Green has obtained the SPL share from NewCo how can OldCO still be part of the voting process for the transfer of the share when the SPL members decide on this matter?
    Surely only shreholders are allowed to participate in this voting process?

  17. Lennybhoy

    Paul,

    I would not rule out a legal challenge to Green’s purchase once BDO get to grips with everything.

  18. p groom

    taking a pragmatic view, green is now in the driving seat and I dont see any of the authorities involved rocking the boat. trfc will be waved through at every hurdle and it will be business as usual by the start of next season in the spl. sectarian warfare with celtic and football hooliganism will resume. ( a chance has been missed here to have good cause to put a stop to both). isnt there a disconnect between the insolvency laws (and lawyers) that allows the outrageous outcomes we are seeing in this case and the game’s regulators, struggling to plug loopholes and keep one step ahead of the mavericks? natural justice is not getting a look-in. I am puzzled by hmrcs attitude. you would have thought by now they would be so familiar with defaulting football clubs that at the first non-payment they would have taken strong action against rangers but no they wait until the debt is so big it is unpayable and in the knowledge also that the law will ensure it remains unpaid to boot. ditto other creditors. ” you dont have to be celtic fan to know this is not right”.

    • I have a feeling that HMRC are letting this go (for now) because they’re just about to pronounce on the EBT situation. No proof of course, just my suspicious mind…

  19. Have I missed something? Membership of the SFA is prohibited under article 14 of the Articles of association. The SPL share can only be transferred with the express permission of the Board see sections 11-20 of the Articles of Association.

  20. Excellent read as usual Paul, thank you. Keep up the good work.

  21. John Burns

    All there is, is Sevco, trading as The Rangers Football Club, owned by Charles Green.

    1) There are no players, unless they decide to transfer their contracts to Sevco, if they do not wish to join Sevco, they are free to leave, as their contract with Rangers has now been terminated by Liquidation.
    2) There is no backroom staff, or indeed any other employees, unless they decide to transfer their contracts to Sevco, if they do not wish to join Sevco, they are free to leave, as their contract with Rangers has now been terminated by Liquidation.
    3) There is no membership of the Scottish Football Association. Any application will be made in light of all recent events and, of course, be subject to sanctions for “bringing the game into disrepute”, together with the investigation into “double contracts”
    4) There is no membership of the SPL. Any application will be considered and voted on by all member clubs at the end of June.
    5) There is no possibility of competing in European competition until season 2015/16 at the earliest
    6) There is little or, no Season Ticket revenue, as the fans appear not to trust in Mr Green – they want the consortium led by Walter Smith to take over.
    7) There are no commercial sponsors signed up.

    So just what has Mr Green and Sevco actually bought?

    1) The assets of the Rangers Group, formerly known as Wavetower Ltd
    2) These assets include, Ibrox Stadium and its contents, The Training Facility in Milngavie and its contents and the leasehold of the Albion Car Park and Goodwill, if of course, there is any left.

    Q) Were Douglas Park et al, just standing back, so as not to be ‘tainted’ during the Liquidation process?

    Q) Is it possible that two clubs, a la AFC Wimbledon and MK Dons, could emerge?

    Sevco will be doing all in their power, in the short-term, to ensure that the umbilical cord attaching them to McCoist, and by definition their customer base, is not cut, until they figure a way out.

    • Niall Walker.

      Good afternoon John,

      Your post just about sums up Mr Greens current poker hand and he is bluffing like crazy, there is no investors money and his revenue streams are shrinkig daily. However he owns something of value to more interested parties and he wil seek a return for his efforts.

      One small point that confuses me,, if Rangers are out of Europe for3 years because they are not the same club, then how can a different club be penalised for any of the previous actions of another club or its directors ?

  22. Niall Walker.

    Smith & Co only got involved when it became apparent Green’s investors left when the CVA was rejected, seemingly Green was struggling to raise the 5.5 million to buy the assets. They believed ( correctly in my opinion) the newco was doomed to fail without significant investment and fan support, Green has neither.

  23. mick

    if a was a newco fan a would give green a chance walter and his band of men seem to stench of the oldco which to me could hold the team back its blattenly ovious socalled good rangers men seem to take the pixx out of the monies so a independene like green could be best walter and co are fighting for there gravy trian the cashcow is not in there hands any more .walter turned a blind eye and was part of the oldco team that made them the dodos of scottish football.

  24. mick

    the cash cow has a new maid now

  25. Pingback: Why Rangers FC Continues, Even In Newco, and Why This is No Use to CEO Green | Random Thoughts Re Scots Law by Paul McConville

  26. Fisiani

    Who pays the wages of Rangers players and staff this week?
    Who pays their tax and ni contributions?
    If no other club wants your skills then sign up with Club X and keep your wages. ClubX may not get a licence. Great money for doing nothing.
    If another club wants your skills then sign with them on generous personal terms for you are a free agent.
    Thus by August Green may have a crap team and a stadium but no place in football. A business with no marketplace.

  27. ian lewis

    Uncle Walter and his money men clearly didn’t want to waste money giving creditors a decent payout(easily done by McColl AKA the richest man in Scotland).Like everybody else at Rangers Smith of course new absolutely nothing about anything that was going on.A knighthood can only be months away.

  28. Pingback: For Sevco’s £5.5m It Bought all Rangers’ Players, Fixed Assets, Goodwill AND £2.67m prize money | Random Thoughts Re Scots Law by Paul McConville

  29. Pingback: As We Await the Nimmo Smith Decision, My Reasons For Saying “Rangers FC” Is NOT a New Club | Random Thoughts Re Scots Law by Paul McConville

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