In my last blog I mentioned that I would cover what would happen if/ when Rangers Football Club goes bust. Let’s now take a closer look at two things: what should happen and what could happen if we listen to those who claim that the club must be given special treatment “for the good of Scottish football”.
So here’s the scenario. The outcome of the Big Tax Case is announced and, as expected, the result goes against Rangers. A bill of around £50,000,000 from Her Majesty’s Revenue and Customs arrives at Ibrox. There is no way to pay it and HMRC is in no mood for a deal. A winding up order is issued by the courts and the club is liquidated. Assets are sold off to pay back money owed to Craig Whyte’s company (as the priority creditor), with any others owed money, and there are likely to be a fair few, receiving only a fraction of the sums they are owed.
In terms of company law, Rangers simply ceases to exist once all of the necessary technical and administrate matters are resolved.
But what happens in footballing terms?
Well, for the answers we need to look at the Articles of Association of the Scottish Premier League Limited (SPL), which can be downloaded from its web site. The SPL is a company in which each Member, that is each club playing in the league, owns a Share. When one club is relegated at the end of each season the rules state that its Share must be passed to the club promoted from the first division. This is clause 15, for the anoraks out there.
Clause 14 sets out what happens when a member club goes bust, and the process to be followed is:
“that Member or its manager, receiver, administrative receiver, 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.”
Simple, isn’t it?
In essence what it says is that the SPL will decide on another club to which the share of the club that goes bust must be passed. This club will then become a company member in place of the one that has gone bust and will therefore play in the SPL.
So what is very clear is that a new club will come into the Premier League. But how will that club be selected? Well, first let’s look at another document, the Rules of the Scottish Premier League, which are also available to download.
Clause H5 tells us what happens if a club goes bust during the season:
“If any Club in the League ceases to operate or to be member of the League for any reason, its playing record in the League may be expunged and the number of relegation places from the League shall be reduced accordingly.”
That means all results involving the team going bust are forgotten, as if those games had simply never happened. The eleven teams remaining would play on until the end of the season and no club would be relegated.
The champions of the first division will then expect to be promoted as normal and there is a vacant space for them. So that club, be it Falkirk, Ross County or whoever, simply takes the place and we are back up to twelve clubs once more.
And, crucially for this piece, there is then no space for a new team to join the league.
But, we are told, if Rangers goes bust a new club will be formed and it could play at Ibrox. This phoenix arrangement, where a new company is quickly formed to take the place of an old one, is perfectly legal. The new company (Newco) is not responsible for the debts of the old one and can start again, pretty much with a blank sheet of paper. It may be slightly more complicated than I’ve made it sound, but not much!
Now, I’ve already shown that the rules of the SPL mean that there would be no room for a new club to join at the end of the season. There would, though, be a spare place in the third division once all of the promotion and relegation arrangements are decided. And the precedent here is clear: the Scottish Football League would advertise a vacancy, any clubs that wished to could apply and the members of the league would vote on which one to choose.
And that’s where the Newco should be. Applying for a place in the third division along with any clubs from the Highland League, South of Scotland League and so on who fancy their chances. Indeed, these clubs, for example Huntley or Dalbeattie Star to name but two, have a history and a place in their communities that arguably gives them a stronger case for admission than the Newco.
So that’s what should happen if all of football’s rules are followed.
But there is a view being propagated through the Scottish media that a different approach should be taken. The Newco, it is argued, should be allowed direct access to the SPL “for the good of Scottish football”.
This implies that all of the rules quoted above simply be ignored, that the Newco assumes the place of the departed Rangers in the SPL and then everything goes on much as before.
You see, we are told that Scottish football needs Rangers. It simply cannot live without them, in one form or another. TV revenue would drop, other clubs would lose gate income, the league would become uncompetitive. A swarm of locusts is probably next on the list of catastrophes that must be avoided at all costs.
But that is all, to put it politely, nonsense.
There are many arguments as to why the established rules should be followed. Basic fairness and sporting integrity are at the top of this list. The Newco is exactly that, don’t forget: a new company, a new football team. It has no history and no pedigree. And no right to any special treatment.
Think what the actual benefits to Scottish football of sticking to the rules would be.
Remove one of the big clubs from a small top division and every other team has more chance of success. Higher league positions. European qualification. A better chance of progressing in the cup competitions every season.
Successful football teams attract more fans; that’s always been true. Surely those in charge of SPL clubs would rather have more of their own fans at every home game? They might lose one or two big away supports each year, but would gain in every home game. And there would also be a greater chance of fans outside Glasgow following their local team.
Perhaps the most competitive period in Scottish football was the 1980s when the “New Firm” of Aberdeen and Dundee United challenged Celtic for trophies while a failing Rangers were amongst the also rans. Scottish football seemed to manage pretty damned well without them as a power. Just look at the success the New Firm had in European competitions to see how strong they were.
And let’s not forget that for the Newco to join the SPL another club must be excluded. Would that mean no promotion from the first division? Or would a side be relegated to make way? Either way one club must lose out in order to accommodate the Newco, which is hardly fair.
No, Scottish football would be just fine without the Newco in the SPL. And, if it did win the vote for admission to the third division it could always work its way up the league structure. That way any eventual place in the top division would be secured on merit rather than through a flagrant disregard of football’s rules.
And if the Newco inherits a chunk of the support of Rangers it will benefit all lower league clubs it plays through higher attendances. Surely that’s a win for our smaller clubs, bringing money to where it could potentially save other clubs.
If the scenario I have outlined does come to pass and Rangers goes bust, Scottish football will have a big decision to make. Does it stick to its own rules or does it make an exception for the Newco?
Pressure will be applied through the media for the latter course of action, but I hope that those who run the game will show the integrity to withstand it. There should be no special treatment, no favours, for the Newco.
There are those who think a Rangers Mark 2 has some sort of right to sit at the top table. But rights must be earned. And in a footballing sense, to gain the right to be in the Premier League you must fight your way up through the structure.
A special case or exception to disregard the established rules of Scottish football quite simply throws any measure of sporting integrity out the window. It would mean accepting that one club is bigger than the rest, indeed that one club is bigger than the game in our country.
And at that point we may as well all pack up and go home, because, to use a good Scots phrase, the game would be a bogie.
No, any Newco must start at the bottom. It must be given no favours. And this must be done for the good of Scottish football.
A good case for the SPL and SFA to apply their own rules without favour. There are potentially years of litigation(?) if they don’t.
And who’s to know whether, as discussed elsewhere, there is a possibility of more than one newco rangers (Judean People’s Front/People’s Front Of Judea stylee)?
excellent article, integrity and fairness must be placed above perceived financial expediancy, otherwise Scottish football will be an even bigger laughing stock.
So what you are in effect saying is that there will be an expansion of the SPL to 14 / 16 / 18 / 20 / a.n.other number, with a new constitution, new members made up of Sregnar FC plus whatever Quantity of other teams to reach the number chosen from above?
I just knew it would be simple!
Ulryc
Thanks folks.
League reconstruction could be an option for some. If there were only two divisions then it could take just one year for Newco to be back in the top teir,
Working on the figures quoted by the St Mirren chairman last season , then each visit of the “Old Firm” generated approx £80,000. On that assumption, and the assumption (as i can only find prices for 1/2 season tickets at the moment, so i have just doubled it) that St Mirren’s season tickets are priced roughly around £325. St Mirren would only need to get approx 490 new season ticket holders. This is also on the presumtion that they would entertain RFC twice at home, which is not 100% going to happen, as the split could leave them in the bottom 6 , and may have only 1 visit from RFC prior to the split. That is not taking into consideration any new visiting fans , who have decided to follow follow (sic) thier team on the road, after the demise of the great RFC.
Gordon.
Almost what I wanted to say but couldnt find the words. If the newco is revived from the ashes, I think the league structure in Scotland would be re-organised to bigger league to allow the newco to make less “hops” to make it back to the top tier. Its the best small country in the world! Isn’t it.
Excellent article, Gordon, do I hear a media clamour for any possible newco Hearts to be established in the SPL? Silence.
In the event of RFC being liquidated, will the Boards of Ross County FC or Falkirk FC meekly accept that what they have rightfully earned will be denied because of the greed of the SPL member clubs- or will Hibernian FC or Dunfermline FC accept relegation despite not finishing bottom of the SPL?
I would hope a long and painful legal battle will begin, with Celtic at the forefront.
In the event of a RFCnewco being given direct entry to the SPL then Professional Scottish football is effectively at an end as a sport with any integrity.
The Board of Celtic FC has a big decision to make. League of Ireland is perhaps not ideal but i would rather we played there than continue in Scottish football, and take our chances if anything else develops further down the line.
It has always been my fear that the ultimate losers in this game will be Celtic FC and our supporters.
When Airdrieonians folded, they were refused entry as a Newco to the 3rd division and subsequently bought Clydebank, re-located, changed their name and took up the 2nd division spot instead.
This option would of course be available to Rangers, should there be a Club chairman willing to fold his Club to accommodate !
Fame, cash and a directorship for a sympathetic chairman,(there’s no shortage) should not be ruled out.
..mant to add, further to rdk’s post, it has been proven at East End Park that if the home club provide enough tickets, the Celtic fans will come.
Clubs like Hibernian, Aberdeen, St Johnstone, St Mirren, ICT could easily make available another 2000-3000 tickets to Celtic fans, an EXTRA £50-75k per match x 2 per season.
Good point, Jackie.
r d k – thanks for working out the figures to prove my point!
Goldstar 10 – There are several clubs that could go down the phoenix route. But would the media see them as a special case like Rangers?
Jackie – I wouldn’t rule out Murray buying another club whatever happens to Rangers. If he has any money left, of course
Gordon, I completely agree with the sentiments of your article, but can you allay my fear that a Rangers newco can follow the precedent of Airdrie Utd and buy the assets/league position from the current Rangers out of administration?
Mentioned by Jackie earlier,but do we need another club in this scenario? Is the SPL position an asset that a Rangers administrator can peddle?
This article deserves a much wider audience.
Mikey, Anyone can set up a company – and any company can buy or take over another. A Newco could, in theory, buy another club and decide to rename it. But any transfer of the SPL Share currently held by Rangers requires the consent of the SPL. It cannot simply be passed on by an administrator or receiver.
Martin, thanks. A few folk have shared this one through Facebook and Trwtter, and links have been posted on CQN, The Huddleboard and Kerrydale Street. It’s been viewed 900 times in total so far.