Rangers crisis: Door closes on European ambition for next season
THIRTY-ONE unbroken years of participation in European football will come to an end for Rangers next season, in whatever shape or form they exist.
The latest in a seemingly endless series of blows to the pride and stature of the ailing Scottish champions was confirmed by administrators Duff and Phelps last night as they admitted there was no chance of meeting Uefa licensing requirements by the 31 March deadline.
Since the side managed by Scot Symon and captained by George Young welcomed Nice to Ibrox for their maiden European Cup fixture in 1956, there have only been four seasons when Rangers have been absent from continental competition.
When they last failed to qualify for Europe, after a fifth place league finish in 1980, their supporters probably believed they had witnessed the club’s lowest ebb as Rangers were instead forced to settle for Anglo-Scottish Cup football against the might of Chesterfield.
But few could have foreseen the ultimate nadir which Rangers are enduring now. The financial chaos at the club has left the administrators with no choice but to admit defeat in their hopes of securing a Uefa club licence from the SFA by the end of the month.
“As regards the club playing in European competitions next season,” said co-administrator Paul Clark last night, “there is no realistic prospect of the club being able to fulfil its obligations prior to the 31 March deadline set by Uefa. There are four main reasons for this and they lie in the stewardship of the club prior to going into administration. First, as we have stated from the outset, the likelihood of the club being able to emerge successfully from administration before this deadline as indicated by the chairman [Craig Whyte] was, at best, optimistic given the perilous financial situation at the club at the time of insolvency.
“Second, the company accounts cannot realistically be signed off by auditors in a manner that would meet the criteria required by the footballing authorities. Even if the audited financial statements are issued prior to the end of March 2012, we would expect them to be qualified by the auditors such that under Uefa requirements the club will have to satisfy a going concern test confirming how it will continue to be funded until the end of next season. Without knowing who will be the owner of the club at 31 March, it is impossible to provide suitable comfort in this respect.
“Thirdly, under Uefa regulations the club must have paid or come to a satisfactory settlement with all social taxes that were outstanding at 31 December 2011. We estimate those social taxes [being PAYE and NIC] to be at least £5m. We cannot now see a scenario where those taxes will have been paid or compromised to the satisfaction of HMRC by the end of March 2012.
“The final major hurdle is that the club must have paid or compromised all of its outstanding “Football Creditors” prior to the deadline of 31 March 2012. That issue is again extremely unlikely.”
A one-year absence from Europe, of course, could simply be the thin end of the wedge for Rangers. In the event of liquidation, which director Dave King believes is inevitable, they would be barred from European competition for at least a further two years under Uefa rules.
Co-administrator Clark challenged King’s comments and expressed his continuing optimism that Rangers will not be liquidated. There appeared to be more than a degree of semantics in his comments, however, as he suggested that Rangers could still maintain an unbroken line to the club’s footballing history and identity even in the event of its current ownership being dissolved. “As administrators, we will make every effort to seek dispensation from the footballing authorities given the extraordinary circumstances in which the club has been placed,” added Clark.
“There has, perhaps inevitably, been speculation about Rangers Football Club facing liquidation. As we have stated previously, we remain very confident that Rangers will not cease to exist and the team will continue to play at Ibrox.
“If a Company Voluntary Arrangement is not possible for any particular reason, any buyer of the club and its assets would complete that purchase through a sale by the administrators allowing the football club to continue to operate with the old company then being placed into liquidation prior to dissolution.
“We are, however, doing our best to ensure the company trades viably during administration and this will require a rigorous cost-cutting programme. Our preferred option remains to reach a point where a Company Voluntary Arrangement is reached and the club can emerge from administration as a viable business within its existing corporate shell.
“As stated, there is a possibility that, if a new buyer is identified, a financial case may be made to sell the business and assets of the old company, but that is not our preferred approach at this time.”
The administrators are understood to have held a meeting yesterday with senior figures at HMRC at which they formed the impression the tax authorities will consider a CVA positively, both in terms of the short-term liabilities left by Craig Whyte and the imminent First Tier Tax tribunal ruling on the “big tax case”. But if Rangers were to emerge from administration as a “phoenix” or “newco” company, serious obstacles would have to be overcome to participate in both domestic and European top flight football. “A CVA is still very possible and the more likely route to achieve the greater value for creditors,” said co-administrator Dave Whitehouse.
“We have to look at the time constraint and if it is possible to conclude a transaction within a very short timetable, simply because we can’t deliver the cost-cuts necessary to keep the fabric of the business in place, then we would also have to look at selling into a ‘newco’ scenario.
“That brings with it risks in terms of the level of European activity in the coming years and also sanctions from domestic football which would need to be subject to negotiation.
“If we were to look to a very early sale of the business that is probably a more likely scenario.
“What we don’t want to do is mix the terminology here and start to portray liquidation as a process which creates the cessation of the business. The liquidation will wind up a business following the sale of the business activities into a ‘newco’.
“So, in any scenario, we would still envisage that Rangers Football Club could play football and operate as a football team. We have always said that liquidation is a possible scenario. The preferred scenario from our perspective, both in terms of the return to creditors and a platform for retaining an on-going continuous business, is through a CVA.”
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