Charles Green, now CEO of “The Rangers Football Club” said on Thursday, “Today we are out of the SPL. Today we are not in the SFA. These are problems that we have to deal with to get this football club back playing football here.”
Is he right?
I do not think so. In a detailed analysis, considering the SPL Articles and Rules and the Articles of the SFA, I have concluded that Rangers FC does have a separate identity from that of Rangers Football Club PLC (In Administration). It is this separate entity that Charles Green has bought. However, Mr Green’s comments suggest that, despite having the opportunity to state unequivocally that Rangers FC remains in existence, he has declined this. Instead, he is setting up his new club, which will seek to parachute its way into a league that it is already entitled to take part in, subject to regulatory and disciplinary issues.
On one hand Mr Green talks of protecting the history. On the other his actions are consistent only with the football club he owns being a new creation. One hundred and forty years eliminated because Mr Green and his allies see that there are three separate risks factors for Rangers, any of which on its own could have destroyed the Sevco investment, and with the combination of all three present, Mr Green feels he has to stack the deck in his favour. He is playing for high stakes, and cannot afford to lose.
I apologise for this piece being lengthy, but I wanted to be as thorough as I could. Please comment especially if you see the gaping holes I have missed!
First, let us see what, if anything, is clear.
What Happened to The Rangers Football Club PLC?
The assets of “The Rangers Football Club PLC (In Administration)” have been sold by the administrators, Duff & Phelps, to a consortium headed by Charles Green. This sale was for £5.5 million, on the basis that, according to D&P, it was the best deal for creditors once the CVA was rejected by HMRC.
The fact that a consortium headed by Walter Smith has now appeared with a higher offer may cause some concern, for both D&P and Mr Green, but that is for another post.
On a side issue, I note that Mr Green is saying that the sale is to “The Rangers Football Club”. It cannot be to “The Rangers Football Club PLC” as that still exists and is in administration, and is the seller. Presumably, the intention is to change the name of Mr Green’s company, Sevco 5088 Ltd to “The Rangers Football Club PLC” once the existing company is liquidated. Alternatively, he may wish Sevco 5088 Ltd to use “The Rangers Football Club” as a trading name. As he has bought the rights to the name, in terms of the “intellectual property” then that is in order.
What Did Mr Green Buy?
To avoid extra confusion, I will refer to The Rangers Football Club PLC (In Administration) as “Rangers PLC”, to Sevco 5088 Ltd and “The Rangers Football Club” as “Sevco” and to the football club as “Rangers FC”.
It looks as if Sevco has bought everything. It was described as “the assets and business of Rangers Football Club PLC”. That could even include the rights to pursue the High Court cases regarding Collyer Bristow and the money due for the Jelavic transfer. I posted in detail about this yesterday here.
What is “Rangers Football Club”? (Only Polite Answers Please!)
This is where things get complicated. Dealing first with the Rules of the SPL, they define a “club” as follows:-
“Club means an association football club, other than a Candidate Club, which is, for the time being, eligible to participate in the League and, except where the context otherwise requires, includes the owner and operator of such club;”
So, a club is a club! The club must be eligible to compete in the SPL, and “includes the owner and operator of such club”.
I think this might turn out to be the key phrase in working out precisely where Rangers FC and Sevco now stand. This relates to whether Rangers FC can play in the SPL or SFL next year, and what happens to the ongoing disciplinary procedures.
The SPL definition of a club sees it as being separate and distinct from the owner. The words “club” and “clubs” appear 1,173 times in the 103 pages of the SPL Rules. The word “owner” appears four times.
The definition in the SPL Articles of a club is as follows:-
“Club means the undertaking of an association football club which is, for the time being, entitled, in accordance with the Rules, to participate in the League.”
Looking at the definition therefore, a club can be distinct from its owner, and therefore, subject to the remaining criteria, a football team playing as Rangers FC can be a continuation of the existing team, notwithstanding its sale to another entity.
Under Rule A2.5, the membership criteria are as follows, with my comments in bold after each relevant section:-
“A2.5.1 A Club participating in the League must be a member of the SFA. We will look at the definition of membership below. For now, note that the reference is to the club being the member, although under the definition, club includes owner.
A2.5.2 A Club participating in the League must have registered or be deemed to have registered its ground in accordance with Rule H6.1. Rangers PLC/Rangers FC will have registered Ibrox as its ground, one assumes.
A2.5.3 A Club participating in the League must:-
A18.104.22.168 itself, or through a subsidiary or holding company of such Club, own its Registered Ground; or
A22.214.171.124 have such other rights of occupation or tenure in its Registered Ground as may be approved by the Board. The Club, or by definition its owner, needs to have a legal right to play on its ground. Right now, and as long as the transfer of title has been registered in Edinburgh in the Land Register, Sevco owns the ground. It also owns “the club”, Rangers FC if it can be taken that the club has a separate identity from that of the owner.
Rules A2.5.4 to A2.5.6 deal with specifics of the ground such as seating and undersoil heating, and with the obligation of clubs to develop youth football. These rules are irrelevant for present purposes.
A2.5.7 Clubs and the Candidate Club shall from and including 1 January 2010 comply with the Financial Disclosure Requirements. This can only be a reference to the owner, as there are not separate books prepared for the club. However, in fulfilling this requirement, a change of owner simply means a different name at the top of the accounts? In any event, the deadline for producing all of the financial information, and satisfying all the requirements passed on 31st March, and an extension was granted to 15th June.
What is needed to satisfy the Financial Disclosure Requirements?
These come in two sections. Firstly what must be provided is proof and details of the following:-
Security of Ground Tenure
Employer Liability Insurance
Public Liability Insurance
Product Liability Insurance
Personal Accident Insurance
Secondly the club must produce and prove:-
Audited accounts for its last full financial year;
Future financial forecasts meeting Licensing Requirements;
Audited financial statements up to 30th November 2011; and
That, in respect of contractual and legal obligations with its employees, it has no payables overdue towards employees and social/tax authorities as at 31 March 2012 as a result of contractual and legal obligations that arose prior to 31 December 2011. It may be acceptable for the payments to be outstanding past this 31 March date outwith the terms mentioned above but only where the outstanding amount is subject to a not obviously unfounded dispute submitted to a competent authority (see Annex VIII of the UEFA Regulations). To meet this requirement the club shall prepare a List of Employees (as per definition) showing any overdue sums. This shall be reviewed by an auditor. The requirements for the List and the auditor review are detailed in Schedule A 50 and Template Letter A 50.
Rangers PLC has been unable to produce audited accounts which are now many months overdue legally. They were required for PLUS Stock Exchange purposes by 30th November 2011. Mr Whyte made many references to how close they were to being produced, but they never arrived. It was in fact one of the terms under which D&P were to become administrators that they were to attend to the lodging of all relevant papers. Therefore it is highly unlikely that audited accounts for year ended 30th June 2011 were forthcoming for yesterday. In addition, the SPL is unlikely to have seen audited financial statements to 30th November. It is of note that the SPL spokesman quoted in the piece linked above referred to “Rangers FC” not to the PLC. Therefore that seems also to be recognition that it is the club, not the company, which matters.
In addition, the club by its own admission had very substantial sums owing to the taxman as at 31 March 2012.
Therefore, unless some remarkable accountancy work was done over the last couple of days, Rangers FC, if treated as the existing club, cannot have met the extended deadline for the submission of papers to satisfy the financial disclosure requirements. In addition, it cannot get round the fact that substantial sums were owed by way of tax.
If it was argued that, because of administration and the rejected CVA, it was legally impossible after 14th February 2012 to settle the outstanding taxes in full, then that could work if we were dealing with a case in a court. However, this is a footballing matter, and one would expect consideration to be given to the fact that Rangers PLC could, if it had wanted, sold Mr Jelavic in August for far more than he was sold for in January, and sold every valuable player in January to settle the tax bill. Rangers PLC did not do so, and maintained the players it ought to have sold, gaining Rangers FC substantial advantage.
Why It Is Important that Football Has its Own Set of Governance Rules
Here is where we start to see the differences between how the law treats insolvent companies, companies in administration and new companies. Sevco cannot be pursued for the debts owed by Rangers PLC. HMRC, no matter the result of the Big Tax Case, cannot demand a penny from Sevco, even if Sevco fields a Rangers FC team playing in the same colours, and claiming the same history, as the one which ran up such debts to the taxman. Any attempt to sue Sevco would fail because, even if it subsequently adopts the same name, it is not the same entity.
For all the talk of phoenix companies, HMRC have no power to demand payment from Sevco for Rangers PLC debts. In addition, although HMRC has now increased power to demand substantial security deposits from new companies closely connected to old companies where there were tax defaults, the fact that none of the Sevco team were connected with Rangers before means that too cannot come into play.
For all legal purposes therefore Rangers PLC and Sevco are unrelated.
But football is different. It is not, despite what some might say, football trying to be above the law. It is simply that organisations are entitled to make their own rules to regulate their activities, and if these do not encroach into areas where there is already law to the contrary, then the courts will not interfere. The Court of Session became involved in the Rangers FC situation before because the SFA Disciplinary Panel exceeded its powers.
The Rules, both of the SFA and the SPL, refer primarily to the “club”, not to the owner, although the owner, as we have seen, can be included in the definition of the club. Therefore, on a strict reading of the rules, the football authorities can still investigate and impose penalties upon the club, notwithstanding the change in its ownership.
Membership of the SPL
Rule A4 of the SPL Rules states:-
“The owner and operator of a Club participating in the League shall become a member of the Company by acquiring one Ordinary Share therein at par for cash, such Ordinary Share to be acquired, through the Secretary, in accordance with the provisions of the Articles of Association. The owner and operator of a Club ceasing to be entitled to play in the League shall cease to be a member of the Company and shall relinquish its Ordinary Share at the end of the relevant Season in accordance with the Articles of Association.”
This also makes clear that the club and the owner are seen as different entities. Under Rule A4 the chronology seems to run as follows.
1 A Club becomes entitled to play in the SPL.
2 The owner and operator needs then to acquire a share in the SPL. To do so, as the SPL is a private company, requires the consent of the company. If the SPL gives consent to the share being issued/transferred to the owner/operator then we come to stage three.
3 The owner and operator of the Club then becomes a member of the SPL by acquiring one share, for one pound, being par value.
In terms of company law, the share does not officially belong to the new club until the transfer is registered with Companies House. It would be possible to envisage circumstances where, perhaps because of an error in completion of the share transfer, or in the SPL resolution approving the transfer of the share, that a new season could kick off before the new member, usually the promoted club, would have the transfer registered properly.
If, for example, there was a problem with Ross County’s share being registered this close season (and the whole Rangers mess was not taking place) I do not see Dunfermline turning up on the first day of the SPL season claiming still to be in the SPL because the share had not yet been transferred across. In any event, the relegated team loses its membership as soon as the season ends, but by necessity the relinquishing of the share cannot take place instantaneously.
Therefore we see again that the club, owner and SPL shareholder are not synonymous.
However, What About Articles 6 and 11 to 14 of the SPL Articles, You Ask?
Good question! Article 6 of the SPL Articles states:-
“A Share may only be issued, allotted, transferred to or held by a person who is the owner and operator of a Club and if a Member shall cease to be the owner and operator of a Club then such Member shall cease to be entitled to hold a Share.”
Once again we see that the Member, being the owner is different from the Club.
The Member, at present, is Rangers PLC. The club is the existing and continuing nebulous thing, Rangers FC, which Sevco has acquired. Rangers PLC is no longer entitled to hold the SPL share, as it is no longer the owner and operator of a club. The SPL share has been sold off with everything else to Sevco.
The SPL Articles deal with transfers of the share outwith promotion/relegation.
“11. …the approval of the Members in General Meeting shall be required before the transfer of any Share shall be registered and the Members may, in their absolute discretion, refuse to approve the registration of the transfer of any such Share.
12. The Members shall not approve the registration of the transfer of a Share for the purposes of Article 11 unless the Board shall first have confirmed that the Board has approved the instrument of transfer and that there exists no circumstances in which the Members shall refuse to approve the registration of the transfer of the Share in terms of Article 13.
13. The Members shall refuse to approve the registration of the transfer of a Share:-
(i) to a person who the Board is not satisfied is or, at the time that the transferee will be entered in the Company’s Register of Members as the holder of the Share, will be the owner and operator of a Club; …
(i) a Member shall cease to be entitled to hold a Share; or
(ii) … an administration order shall be made in respect of a Member …; then that Member or its … administrator or liquidator or any other person entitled to the Share shall, on receiving notice in writing from the Board following the Company in General Meeting passing a Qualified Resolution that such notice should be issued by the Board and confirming the identity of the proposed transferee, transfer its Share to such other person as the Board shall direct at the price of £1 and the Club owned and operated by such Member shall forthwith cease to be a member of the League and the Club owned and operated by the transferee shall become a member of the League in its place.”
Once more this makes it clear that for SPL purposes Rangers PLC was the member and that Rangers FC is a different entity. Article 14 (ii) envisages the share of a member in administration or liquidation, on a resolution being passed by the SPL, being transferred to a new member, and as the Article makes clear, the club owned and operated by the transferor ceases to be a member of the League, and the club of the transferee steps into its place. It is not the same club staying in existence, in those circumstances.
What seems to be happening here is that the SPL Members will be asked to approve a transfer of the share from Rangers PLC to Sevco, on the basis that it will be the owner and operator of a football club, namely Rangers FC.
What about SFA Membership?
Under the SFA Articles of Association, a club means a “football club playing association football”. There are over 1,300 references to a club or clubs in the SFA Handbook. There are three references to “owner”. One relates to ownership of the Scottish Cup and one to ownership of the Scottish Youth Cup.
Article 6.1 of the SFA Articles states that a club undertaking to promote association football may be admitted as a member of the SFA.
6.2 provides how a club can be admitted as a registered member.
6.3 requires a prospective member to be an associate member prior to full membership.
There is nothing in these, or the subsequent articles, which actually says that the club and ownership are synonymous so as to require Mr Green to take the approach he mentioned on Thursday. If he has, as he seems to have done, acquired the assets and business of Rangers PLC, that, of necessity, includes the club, Rangers FC. Rangers FC was a member of the SFA, and therefore, despite the change in ownership, I submit that it remains so.
Article 14 forbids transfer of membership of the SFA except in accordance with the Article. A transfer from one entity to another within its own administrative group requires Board permission, which will not be withheld unreasonably.
Otherwise any application for a transfer is dealt with by the Board, who can impose any conditions as it thinks fit. (Again within the limits of reasonableness, fairness and rationality).
Mr Green’s statement at the top of the page seems to be an acceptance that the club he owns is NOT a member of the SFA. Therefore, as on my analysis the pre-existing Rangers FC was and remains a member of the SFA, MR GREEN HAS ACKNOWLEDGED THAT, DESPITE WHAT IS BEING SAID TO THE FANS, THIS IS A NEW FOOTBALL CLUB.
Where Does This Take Us?
If we take the position that the club, Rangers FC, and the company, Rangers PLC, are separate entities, as many Rangers fans have argued vociferously, and a view with which I can see some merit in terms of the rules as drafted, then Sevco is entitled to have its team play in the SPL, or at least be considered for such. It would appear that Rangers FC is a member of the SFA, and that it has its own ground, owned by its owner, Sevco. There is one problem though (apart from the disciplinary matters I will come to shortly).
The problem is that the existing member, Rangers FC, has not lodged yet and seems certain not to have produced by the extended deadline, the required information regarding financial disclosure. Accordingly, Sevco should not be making an application for membership of the SPL. Rangers FC is entitled to play in the SPL, but an application is required to allow it further time to lodge the financial details required, or indeed have these requirements waived. After all, the SPL is an organisation which can generally set its own rules. However, a waiver of the Financial Disclosure requirements could give a disgruntled team, such as Dundee or Dunfermline, cause to pursue a case against the SPL for acting unfairly and irrationally. It could also bring down the wrath of UEFA as Financial Fair Play is very much an issue close to Michel Platini’s heart, and one which is not intended to be evaded because it does not suit a member club! The SPL Board has a wide discretion here, but there are limits to how it operates that discretion.
Mr Green’s statement that “Today we are out of the SPL. Today we are not in the SFA” is wrong, if you follow the rules as framed closely, UNLESS IT IS ACCEPTED THAT HIS RANGERS FC IS AN ENTIRELY NEW CLUB.
It may be that, astute businessman as he is, he has decided to claim to be a new club, to avoid the regulatory risks of the ongoing investigations. However, it is very difficult for him to claim to be a different club, for disciplinary reasons, at the same time as claiming to be preserving the club’s history. It is either one thing or the other. It is either the existing club, with good and bad attached, or a new club.
If Sevco has a new club, then the SFA membership process is clear. Mr Green should be popping along to Hampden with his cheque for £1,000 and his application form.
If Sevco owns the existing SFA member, Rangers FC, then Mr Green should be asking the SPL for the waiver regarding financial disclosure, and for a transfer of the share from Rangers PLC, who now have no right to it to Sevco. He needs ask the SFA for nothing at all, as Sevco already owns a football club.
If Sevco Already Owns a Football Club, Why Does Mr Green Want to Bring in a New Club?
There are a few possible reasons.
1 I am Wrong
First, he might have had a different analysis of the position presented to him from the one I present above. However, despite the complex intertwining of the two sets of rules, I think I am right.
2 Mr Green Might have received Erroneous Advice from the SPL/SFA
Secondly, he might have been told by the SFA and SPL that this is what he needs to do. Bearing in mind the problems caused by the un-necessary complexity of the rules, I would not take as gospel what the SPL and SFA said about them.
As Lord Rodger said in the case of RBS v Wilson “… it would also be worth bearing in mind the observation of the Earl of Halsbury LC, that the worst person to construe a statute is the person who was responsible for its drafting, since he “is very much disposed to confuse what he intended to do with the effect of the language which in fact has been employed”: Hilder v Dexter  AC 474, 477.”
Asking the SFA and SPL to give authoritative interpretations of their own rules falls into the trap Lord Chancellor Halsbury identified over 100 years ago.
3 Mr Green Knows Exactly What He is Doing, But it is to His Advantage to have a New Club
Thirdly, it has been taken as a tactical decision, either with or without tacit support from the football authorities.
Right now Rangers FC faces two major investigations which could result in significant penalties. The SFA is due to re-convene its Appellate Tribunal under Lord Carloway, once the time for appealing Lord Glennie’s decision has passed. This Tribunal will determine what additional sanction, if any, is to be imposed on Rangers for bringing the game into disrepute. Interestingly the documentation produced by the SFA Judicial Panel refers to Rangers Football Club PLC.
On the other hand, and perhaps of more importance, the SFA website refers in its Disciplinary section to “Rangers FC” in connection with the matter. Lord Glennie, in his judgement on the appeal by Rangers Football Club PLC, stated the following:-
“This is a petition for judicial review by the Rangers Football Club plc, a company presently in administration. That company presently operates Rangers Football Club (to whom I shall refer as “Rangers”). Rangers are members of the Scottish Football Association (“the SFA”), and are bound by the Articles of the SFA and by the Judicial Panel Protocol which sets out the disciplinary rules relating to the conduct of members of the SFA and the conduct of disciplinary proceedings to enforce such rules….
 A number of complaints were brought against Rangers by the SFA. Those complaints relate, amongst other things, to the fact that although their Director, Craig Whyte, had been disqualified for a period to act as a Director, Rangers had not disclosed that to the SFA; and to the fact that Rangers had suffered what is called in the complaint “an insolvency event”.
 … Rangers were found guilty of that charge and certain others with which I am not concerned. The Disciplinary Tribunal held in respect of that charge
“…that it was proven upon a balance of probabilities that Rangers FC was in breach of Disciplinary Rule 66 as specified in the Notice of Complaint”
… It then added this:
“Further the Tribunal imposed an additional sanction, under the terms of Articles 94.1 and 95 of the Articles of Association, prohibiting Rangers FC, for a period of 12 months from the date of determination, from seeking registration with the Scottish FA of any player not currently registered with the club, excluding any player under the age of 18 years.”
 Rangers appealed to an Appellate Tribunal of three members, presided over by a judge of the Court of Session, Lord Carloway…”
All of the above seems to recognise, with the exception of the reference to the Insolvency Event, that the club, Rangers FC and the company, Rangers PLC were separate, though related, entities.
Rangers FC awaits a decision, which could be a suspension from football, a termination of membership (remember it is the club which is a member of the SFA) or expulsion from football. Any of those would be a disaster for Sevco, unless it manages to sell out for a profit in the next week or so. As the Judicial Panel referred to the bringing of the game into disrepute in this manner as worse than anything other than match-fixing, it is clear that it is being considered at the highest end of the punishment scale.
In addition, there is the SPL enquiry into the alleged “dual contracts/illegal payments” issue being conducted by the SPL. There has been comment that that has ceased pending clarification of the legal position. The SPL stated on 31st May:-
“The SPL confirmed that Rangers FC had today provided documentation to the SPL in relation to the SPL’s investigation into EBT payments. The SPL’s legal team will now review and provide an update to the SPL Board at the next SPL Board meeting on Monday 18 June.”
The SPL refers to this matter as relating to Rangers FC, rather than Rangers PLC. As the allegation is that, over many years, Rangers employed schemes to pay players which breached football rules and would have rendered the players ineligible, this could have dramatic effects if established. For a systematic process of cheating, if that is what the SPL finds, then expulsion from football would not seem unduly harsh!
Sevco has put a lot of someone’s money into this deal. Rangers FC could be barred from football. This could be because it has not complied with the Financial Disclosure Requirements. It could be that the SFA Appellate Tribunal suspends or expels Rangers FC. Finally the SPL investigation could lead to suspension or termination.
It might be asked why Mr Green battered on with the deal knowing the risks that the authorities could eliminate Rangers. Did he receive some friendly information as to what was happening? After all, from the commercial goals of the SPL, there is more money, or at least easily identifiable money, in Rangers being in the SPL.
It might be that Mr Green thinks he will get a better reception trying to bring all-new and improved Rangers straight into the top division, rather than taking his chances with the existing club. It also suits the conspiratorial to believe that the “demise” of Rangers PLC is of help to the football authorities as they get to drop their embarrassing investigations into Rangers, which threaten only to cause further damage to Scottish football.
As far as I can see, as the investigations could involve parties still in football, even if the existing Rangers had gone, the SPL enquiry should continue to its conclusion. I the same way that the recently announced investigation into Lance Armstrong could lead, if he is found guilty, to his seven victories in the Tour de France dating back to 1999 being taken from him and given to the highest placed non-doping cyclist each year. The illegal payment inquiry could affect a number of titles and trophies over the years.
I think it would be a cop-out if the SPL or SFA decided not to continue their disciplinary or investigative procedures because of newco.
As I have written before, history matters to football fans. Winning more trophies than your rivals allows you to crow over them and maintains feelings of superiority. It would hurt Rangers fans to lose the history.
The mantra that it was the company that had failed, not the club, was repeated ad nauseam. However, as I have suggested, perhaps that was right all along. Football treats the existence of a football club differently from how corporate law treats businesses.
However, we have the ironic situation where Mr Green is making statements, as I posted at the head of the article, consistent with this being an entirely “new” Rangers under his ownership. It is most likely that, touching on the points I made recently, he has seen the risks to Rangers from the alleged misdeeds of Messrs Whyte and Murray, and has decided that he needs to “kill off” the old Rangers to protect the new, and his consortium’s investment from possible contamination.
Mr Green is attempting to face both ways at once like Janus, the Roman god. He impliedly proclaims to the SFA and SPL that it is a new club; as long as we ignore the playing in oldco’s stadium, players, strip colour, fan base and name. At the same time, to keep the loyal Rangers FC fans interested in buying season tickets and supporting the club, he needs to maintain that he is fighting for the club, and its history. The only problem is he has to maintain the two contrary positions in full public view at the same time.
We come back to where I was in my last piece on this issue. If Rangers FC is willing to pay the price for its misdeeds, then it gets to keep its history. If it wants instead to be a new entity confusingly enough called “Rangers” but without any baggage from the past, then it cannot claim the history either.
Mr Green – what’s it gonna be boy, yes or no?
Posted by Paul McConville