THE ‘statement to creditors’ published by administrators Duff & Phelps on the Rangers website today not only documents the real and potential indebtedness of the troubled club.
It also contains a wealth of detail about the increasingly chaotic state of the Scottish champions’ finances during Craig Whyte’s brief spell at the helm.
Whyte, who bought the controlling interest in Rangers from Sir David Murray last summer, was in charge from the completion of that purchase until he put the club in administration on 14 February. He said then that the process of entering then exiting administration could be a painful but swift one, and predicted that it might all be over within a month. Nearly two months on, however, the club’s position is unchanged.
As Duff & Phelps announced earlier today that they had narrowed the number of bidders for the club down to three, they also, for the first time, published information about a range of matters from the sale of the club’s shares in Arsenal to the date on which it could expect to own its own car park. And, while the scale of Rangers’ indebtedness captured most attention, Paul Clark and David Whitehouse of Duff & Phelps also quietly announced that they had submitted a request for the club to play in Europe, and had asked Whyte to agree to part with his shareholding.
FOR some time, Whitehouse and Clark have expressed a confidence that Whyte would be irrelevant to Rangers in the medium or long term. Their confidence has bemused many observers, who were sure that no legal mechanism could be found to force Whyte to part company with his majority shareholding.
If yesterday’s statement is a true guide, the administrators themselves have not yet found any such legal mechanism, but are still trying to do so. In the meantime, they have simply asked Whyte to give up his shares.
“It is likely that any purchaser wishing to invest monies into the club . . . will require the shareholding or substantially all of the shareholding of the club,” paragraph 16.6 states. “The joint administrators are investigating whether there are mechanisms by which they can compel existing shareholders to transfer shares to a purchaser, but no representation has been made that this can happen to purchasers. A formal request has been made of the current majority shareholder RFC Group [Whyte’s vehicle for running Rangers] which holds circa 85.3 per cent of the shares to make these available to a purchaser.”
RANGERS’ holding of 16 ordinary shares in Arsenal dated back to the early years of the last century. They bought two to help out the London club when it was in financial difficulties, and Arsenal later gave Rangers another 14 by way of thanks. Whyte sold the shares, angering fans who saw them as a sumbol of friendship between the two clubs. The administrators’ statement reveals that the money did not even go to Rangers.
“The club was the owner of 16 ordinary shares in Arsenal,” it is stated in paragraph 9.33 and subsequently. “The company instructed [financial firm] Pritchard to act as its broker for the sale of these shares during January 2012. It should be noted that Craig Whyte was the company secretary of Pritchard.
“The shares were sold for £223,214. However, the funds relating to the sale of these shares were not transferred to the company.”
The joint administrators have since begun a legal bid to recover the money for Rangers.
TO be able to play in European football next season, Rangers, like every other club, had to be given a licence by their national governing body. To receive that licence, it appeared that they would have to be out of administration and otherwise in good financial order by 31 March – last Saturday. Despite the fact that they did not meet that condition, Duff & Phelps have still asked the SFA to license the club.
Paragraphs 8.14 and 8.15 state: “The joint administrators have been in dialogue with Uefa, and Uefa have stated that generally speaking they are unlikely to grant a licence to any club whilst it is in administration given the Uefa Club Licensing and Financial Fair-play Regulations. The joint administrators have nevertheless submitted a licence application to the SFA.”
VALUATION OF RANGERS
BESIDES the worth of Ibrox Stadium and Rangers’ training ground at Murray Park as sporting venues, the administrators have sought to value everything owned by the club at those two locations down to “fixtures and fittings and chattel assets”. The latter term refers to anything owned by the club which might not be deemed fixtures and fittings – for example, furniture and other movable items.
The club’s freehold property including Ibrox and Murray Park is valued at £109.6m. The Albion Road car park next to Ibrox is on a leasehold and is valued at £2.93m. “It is anticipated that the club will gain right, title and interest to the car park in 2023.”
THE London-based company which loaned Rangers a multi-million-pound sum in return for the rights to future revenue from season-ticket sales has been a major stumbling block to the administrators’ hopes of achieving clarity preparatory to selling the club. Paul Murray and his Blue Knights consortium have reached an agreement with Ticketus to include them in the purchase of the club, but other bidders may choose to play hardball instead of treating Ticketus as major creditors.
Duff & Phelps accept that breaching the Ticketus deal could result in a claim for damages, but say that Ticketus would then become ordinary unsecured creditors (paragraph 10.15).
PLAYER WAGE CUTS
AFTER lengthy negotiations, Rangers’ playing staff agreed to their salaries being cut. The most highly paid players took the biggest cuts. Together with voluntary wage cuts from coaching staff, this process is stated (paragraph 8.21) to have saved the club £1m per month.
In addition to those cuts, Gregg Wylde and Mervan Celik agreed to an early termination of their contracts. Australian player Matt McKay was sold to South Korean club Busan I’Park for $100,000.