Self – Preservation Of The SPL – Liquidation Is Your Friend

Over the past few days we have seen the brilliant news that the SPL will be considering new regulations to tackle Insolvency events in football.

If not before time.

April 2002 I believe is roughly when this situation first reared its ugly head with the administration of Motherwell football club. This was followed by Dundee less than two years later, Livingston and of course Gretna who eventually paid the ultimate price. Granted, out-with the SPL, but Clydebank and Airdrie were further warnings as to the situation that currently faces one of the countries footballing pillars: Rangers.

It is no coincidence that current purposed ‘legislation’ by the SPL on April 30th finally falls at this time. It is not about Motherwell or Dundee, Livingston or Gretna. It is all about Rangers. More to the point; it is about self- preservation of Kilmarnock, Dundee United, Hearts, Aberdeen and any other SPL club facing financial hardship in the not so distant future.

I, myself – find myself torn over Rangers predicament. There is no doubt that the failure to pay HMRC for P.A.Y.E, coupled with other debts is wrong. It gains an unfair advantage by not paying ones due bills and therefore having more cash to enhance your playing squad(although,having suffered through many matches this season I am beginning to ask myself if this is actually true).

I excuse the E.B.T from this at present. The E.B.T ‘scandal’ in itself is a complex subject. It is not simply about ‘evading tax’. Indeed, the educated speculation was not regarding the USE of E.B.T’s themselves but the poor administration of such a system that has scuppered an otherwise ‘legal loophole’. Should Rangers be punished for such? A complex argument depending on what route you wish to take to view it. If Rangers implemented a system in full belief that what they were doing was above board: then did they do anything wrong? Either morally or legally? At the end of the day if you take a fundamental principle such as ‘mens rea’ then it would be rather difficult to prove. Then again, is it like driving your car with a baldy tyre? You might not have known you had a baldy tyre but it is penalty points if the old bill catch up with you; like it or lump it.

I am not stipulating what side of that particular fence that I personally fall on; I am just saying that I can see the argument. It IS a complex situation and one that could sway many. Outside of the E.B.T situation though is where Rangers have really shamed themselves.

There is no doubt that the new rules are welcome, especially if such a situation is going to become more regular in Scottish football; as I predict that it may in the coming years. The problem for the SPL is that this should have been done a long  time ago and by doing so it would not have attracted even half of the controversy as it will now- considering it looks to be rushed through to specifically catch Rangers at this present time. I look at it in a different way from most Rangers fans. I think this whole new regulation system by the SPL is a blatant move to self-preserve and to do their damndest to make sure that Rangers football club, in whatever form, is kept in the top flight of Scottish Football – and at any cost.

So let’s have a look at the proposals for the meeting:

Resolution 1 proposes an increase in the sporting sanction (point’s deduction) on any Club which suffers or is subject to an Insolvency Event from 10 points to the greater of 15 points and 1/3 of the Club’s SPL points in the preceding season.

The first thing that strikes me about this is: what happens if it is Ross County? How then, does this work? It doesn’t!

Also, what if a club were to have a dire season before an epic assault on the championship? Unlikely, but it does still point out another flaw – although I admit, hypothetical.

Personally, I believe that the best and easiest way to deal with it is keeping it as it stands: 10 points with the additional penalty that should the team maintain itself in a strong position then their European football position for the next season be lost, and forfeited to the next team in the league.  The whole idea of 15points plus a fractious amount of the clubs previous points total in past times is over-complicated and absurd. There is a huge margin or injustice there.

Resolution 2A proposes further sporting sanctions in the event that any Club undergoes an Insolvency Transfer Event (i.e. transfers its share in the SPL to a new company where this occurs because of the insolvency of the transferor) of 10 points in each of two consecutive seasons from the Insolvency Transfer Event.

I would love to see this happen – and then swiftly go to court where I could watch it laughed halfway up the street.

The SPL is the ruling body on SPL football – it is not the law of the land. It can introduce rules to govern its games and its members, but those rules must fall within the laws of the country. As it stands; a Limited company has its own legal persona (like being a human being). It can enter into contracts and deals in its own name. Therefore, if that Limited company were to ‘die’ so to speak and then a remarkably similar company were to form again( like an identical twin) then there is no mechanism for punishing the new company (person) for the crimes of the old one. You cannot pursue them for the old companies’ debts, either. The whole idea of this regulation is absolutely ridiculous to be frank.

On the flip side, it is this regulation that forms the basis on my argument that this is all about self-preservation of the SPL and in particular, keeping Rangers in the league.

This whole regulation seems to point directly at Rangers; and no one else. For example, what if this was Dunfermline? Ok, so Dunfermline gets relegated but fold and start as ‘Dunfermline 2012’ playing in the same stadium etc. Where does this leave the ruling? When does this apply to Dunfermline 2012 if they have already lost their share in the SPL anyway? This whole rule is in place to Govern Rangers who, as it stands, will not be relegated.

This entire Regulation opens the doorway for Glasgow Rangers to liquidate, form as a ‘newco’ and walk straight back into the SPL in time to start again. The problem with this is that the 10 point penalty is a toothless tiger, it just wouldn’t stick on a new company- I am entirely confident on that because it just doesn’t fit in the rule book. Not the SPL rule book, the REAL rule book.

Resolution 2B proposes revisions to the fee payment arrangements i.e. SPL fees to any Club which has undergone an Insolvency Transfer Event will be reduced by 75% in each of three consecutive seasons from the Insolvency Transfer Event.

Again, toothless tiger! Sounds like a nice threat to make but it just WILL..NOT…STICK. You cannot go punishing someone for someone else’s crime and this is effectively what the SPL is attempting to do. Lovely idea chaps, but it won’t work and why on earth anyone presiding over such regulation changes thinks that it will is absolutely flabbergasting to me.

Resolution 3 proposes extending sporting sanctions where an Insolvency Event is suffered by a Group Undertaking of a Member Club of the SPL (Group Undertaking is defined in Section 1161(5) of the Companies Act 2006).

Yet another rule I don’t see working. Without copying and pasting the companies act  which you will find at legislation.gov if you are interested( and incidentally reads like a riddle) ,this more or less means a parent company or a company that is a subsidiary of the club.

So, say I owned a company that prints CD’s and decided to buy Rangers through that company( i.e. Craig Whytes ‘The Rangers Football Club Ltd’ buying Rangers) but my company  goes into some serious financial difficulty- then Rangers would be punished for my CD company going off track. (Even if Rangers were running a steady ship). Quite what relevance this has is beyond me. Quite how they expect this to stand up in a court is also…beyond me. It is like saying, ” I know your big brother done the crime, but we have decided to punish you for it”.

Resolution 4 proposes updates and extensions to the definition of Insolvency Event in the SPL Rules.

Fine….

Resolution 5 proposes updates and extensions to the definition of Insolvency Event in the SPL Articles and clarifies the process in the event that a Member which is the subject of an Insolvency Event is required to transfer its share in the Company.

This is another regulation that makes me think that this is wholly about keeping Rangers in the league. This wish to ‘clarify’ the way that a team can transfer its share (and therefore position) in the SPL.

At present, there doesn’t seem to be a transparent way to transfer the share in the SPL from an old company to a new one. My guess is that this is going to be a rather straightforward process that will open the doorway to a club (Rangers) entering into the SPL on the backbone of a previous companies membership.Effectively taking the last of the ‘good’ bits from the old company and walking into the new one…..

Resolution 6 proposes a specific requirement in the SPL Rules that Clubs must pay their Players in terms of their Contracts of Service on due dates and places a duty on any Club to report any failure to pay its Players in a timely manner to the SPL.  Failure to pay Players and / or to notify such failure to the SPL would be a breach of SPL Rules.

This appears to be an issue that has only been raised due to Hearts failure to pay their players – remember? That thing they escaped scot free from……

Resolution 7 proposes a requirement in the SPL Rules that Clubs report to the SPL any failure to make payments to HMRC in respect of PAYE and NIC (a Default Event).  Any Club suffering such a Default Event will be subject to a Player Registration Embargo.  Any failure to report a Default Event shall be a breach of the SPL Rules.

This is another rule that appears to be fairly straight forward, but it isn’t. Will the SPL now be chapping on the door of  HMRC asking them to get a receipt book handy for their routine inspection, because otherwise – until the end of the tax year, no one will be able to tell unless clubs become very truthful and honest all of a sudden.

This rule clearly points towards Rangers, and that is completely acceptable because it is something that needs to be stamped out and quickly; so we do not find ourselves in another situation like Rangers have with Craig Whyte at the helm.

I am actually all for this regulation, but I want to see how it can be implemented because as we have seen in recent times in the SPL – the ‘self-policing’ mechanism relies on a great deal of honesty. As we have seen with Craig Whyte, honesty is not always guaranteed from club owners.

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The rest of the document that can be found on the SPL website points out that these rules will be implemented, when agreed of course, on May 12th and that with the exception of resolutions 2B and 5, the resolutions will require the support of 8 of the clubs.

There are many Rangers fans who feel that these regulations are a witch-hunt against the club. I am far from a believer of this. Duff & Phelps have said that this process is a hindrance to the sale of the club. I am more willing to believe that Duff & Phelps sat down to help write these new regulations.

The Regulations purposed, in my opinion, make completely clear that should Rangers liquidate then they will be welcomed straight back into the SPL next season, playing at Ibrox stadium, playing in blue and using the motto ‘Ready’. Of course the new regulations will come into play before then meaning a new Rangers would face some penalties when they are welcomed back in. My argument is that they won’t. Indeed, there is no mechanism in Scot’s Law to punish a new company for the failures of an old company: no matter how corrupt that may seem I would point towards the mystic corporate moves of ‘Cakes for the connoisseur’ that have opened and shut like a barn door, owing fortunes yet still plying their trade. (Or at least they did for a number of years; they may finally have gone now).

As I alluded to earlier, there would not be so much controversy if the SPL had penned these new rules 18months ago. They didn’t and now that the shit has hit the fan- they are going to. Nothing subtle either.

The top rank of Scottish Football have history for this. This is the same country that stopped teams from being rightly promoted on the basis that they didn’t have large enough stadiums. Or more to the point, to save Motherwell from relegation.

My argument is that Rangers deserve punishment for severe financial mismanagement that has led to them not paying their dues and henceforth giving them more money to spend and thus forth gaining an unfair advantage on the playing field. This new ‘legislation’ does not do that.

The new regulations show entirely that this is all about self-preservation of the SPL clubs because from what I can see the whole principles that are set down here are NOT to have a new Rangers flung to the depths of Division 3 but rather guarantee their place in the SPL in time for next season. I am sure some of the SPL clubs would love to see that happen, and more importantly some of the club Chairmen. But this is all about self-preservation. Remember we have a SKY deal for cash that insists upon 4 Rangers v Celtic games per season. That deal would be scuppered (it is presumed) on the back of Rangers not being there. There is also the financial gain of the odd full house when Rangers come to town. Self- preservation at its very best- or is it just blatant hypocrisy? To guarantee Rangers walk straight back in the door in time to keep the pockets of the other SPL clubs lined and therefore help to keep their respectively huge debts in order. Yes, I mean Mr Thompson of Dundee, and others from Kilmarnock, Aberdeen and Edinburgh that might not ‘like’ Rangers, but quite like the cash they inadvertently generate.

More than ever I am now convinced that liquidation is the best way to go for Glasgow Rangers and in turn, the formation of new Rangers. It might not be a popular choice among the Rangers fans but it would be my choice.

Rangers fans do not wish to lose their ‘history’ but with all history comes the chance to wipe out the less than savoury aspects of such. People can denounce new Rangers from the 9 in a row all that they want, but they cannot remove the moment that the victory was had. You can’t take back the hangover and you can’t decant the party. It has been done, not in the same name but it has been done. History in writing is only history in writing. There is much more to be gained from Rangers being liquidated than there is from fighting it out and surviving under a sea of crippling debt for many years to come. Morals? I wouldn’t get too caught up in that. This country and these new purposed Regulations (If agreed) are so morally corrupt for the sake of self-preservation that anyone voting FOR these changes accusing Rangers of moral corruption would be like the pot, which called the kettle black.

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3 Comments on “Self – Preservation Of The SPL – Liquidation Is Your Friend”

  1. Gwared Says:

    Garry, amazingly we are in complete agreement. Rangers should go to the 3rd Division as a penalty for their financial missmanagment/ corruption, that one is for later.
    What everyone seems to miss in this dirty little tawdry affair called Scottish Football is this, when Rangers do enter Div 3 every club can then cut it’s cloth accordingly, Celtic will benefit from European monies for 3 years 6 Clubs will benefit from Cup Final Competitions all the small Clubs will enjoy the full grounds with Rangers Fans. However more importantly Celtic will reduce their overall spend, less foreigners will play in our domestic game, more Scottish players will participate as a result and finally when Rangers rejoin we will have a league which can finance itself!
    I look forward to a time when we can recognise our own home grown players, the ones who learned their craft in Scotland and are proud to be in the SPL rather than looking at it as a stepping stone to the EPL.
    We need to recover from the Souness/Murray madness and enjoy a sport again where Aberdeen and Dundee Utd etc can dominate Scottish Football.
    People talk about Dignity and Respect well sport should be an exemplary leader of those themes and not a bystander to money and self preservation.

  2. perthlurker Says:

    Hi Garry

    Another great response and well thoughout piece. Mmmm are you sure that you support Rangers?

    It must be Stranger in a Strange Land territory for you at Ibrox.

    As a Celtic fan i want to see Rangers come back through the divisons as it will be good for the club and football.

    Cheers again from a warm Perth in Oz

    Gary

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