What now for Rangers F.C?
Whilst the recent statement from the Administrators that the Club is unlikely to go into liquidation will have come as a welcome relief to its supporters, it begs the question of what the future holds in store for Rangers F.C. following its entry earlier this week into Administration.
The Club plans to use the breathing space afforded to it to propose a Company Voluntary Arrangement (CVA) to its creditors. A CVA proposal usually seeks the agreement of creditors to waive a proportion of the debt due which is then paid over a period of time or from the realisation of assets at some time in the future. The Administrators have indicated that they are reasonably confident that the Club’s proposal will be accepted by its Creditors. However, it is worth pointing out that a majority of more than 75% in value of the Creditors must vote in favour of any Arrangement in order for the proposal to become binding on Creditors. If the debt to HMRC exceeds 25% of the total amount of the
Club’s indebtedness then HMRC could, block any CVA proposal made by the Club.
The Administrators have also indicated that there are a number of parties interested in acquiring the Club and should the Club fail in its attempts to agree a voluntary arrangement with its Creditors then it seems likely that the Administrators will then try to sell the Club as a going concern. That sale could be either to the existing owners or new owners. Whilst, in my experience, most expressions of interest in the acquisition of Football Clubs rarely turn into firm offers, it is clear that the Administrators believe that this is a viable route for them in the event that a CVA proposal is not accepted by Creditors.
However the Club emerges from Administration and in what form and under whose ownership, the major challenge facing the Board is to deliver future sustainability. The current owners have estimated that the Club’s expenditure exceeds its income by some £10m per year. There are those who believe that the game North of the border is in decline and as evidence of that fact point out that had it not been for Sion FC’s expulsion from European competition, no Scottish Club would have survived in Europe beyond the preliminary rounds this season. The inability to compete in Europe, it is said, reduces revenues and makes Clubs less attractive as a destination for top European players. The recruitment of lesser quality players affects attendances which in turn reduces income which in turn makes it more difficult to complete in European competition. Trapped in that vicious circle, some argue any reprieve for Rangers could only be temporary without radical change.
That may result in a renewed clamour for the admission of Scotland’s top two Clubs into the English league pyramid system. Clearly membership of the English Premier League would substantially increase the revenue streams of both Clubs and, for all of Celtic’s protestations this week that they can exist independently of Rangers, it is difficult to imagine that they would turn down the opportunity if it arose.
Could it be that this week’s events represent the beginning of a process that sees Rangers and Celtic abandoning Scottish football for greener pastures and if so, what fate lies in store for those left behind? In a few short years, will the fans of Motherwell, Aberdeen and Dundee United all be suffering the same agonies as those experienced by Rangers fans this week?
Associate and Head of Insolvency
Insolvency
IScobbie@LawBlacks.com
0113 227 9327
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Ian Scobbie
