Of Assets and Liabilities

Much has been written on this blog, and previously on RangersTaxCase.com regarding the assets and liabilities of the former Rangers football club – however little has been done to look at the rest of the SPL and Scottish Football as a whole.  Was it just Rangers making ridiculous ‘asset’ valuations or is there other clubs in real danger of following RFC to the grave?

Before we get started a quick explanation on the figures.  They were all taken from the latest accounts as appearing on Duedil.com, so some are from 2010’s figures.  I have also ‘tidied’ them up a little so that they are easily understandable, removing things such as minor stock holdings.

The big story in the Rangers case was how over valued their ‘assets’ were, and especially the freehold property.  To remind you Rangers Balance sheet in 2010 was as below:

While on paper the net assets look very healthy, we all now know that the 130m of Fixed assets was in fact worth just 5.5m in the real world.  If we change that 130m to the real life figure their balance sheet would have looked like this…

So, how do the rest of the SPL compare?  This is a list of ‘fixed assets’ for each club as noted in their last accounts.

Predictably, Celtic lead the way, but a quick scout through the notes reveals the freehold properties are valued at 45m.  Dundee prop up the table, but with no freehold properties to their name, this is not so surprising.   One thing to note is the difference in value of the assets held by Aberdeen and Kilmarnock compared to clubs like Dundee Utd and St.Johnstone – this is important when we look at their balance sheets.

As you can see above, I have broken the balance sheet down into a few categories.  We have the fixed assets we just discussed, followed by the cash in bank.  Next is the debtors (money owed to the club within the next year) and then the creditors (money the club owes to others within the next year).  A crude calculation gives us the Net Current assets or liabilities.  A red number means that club owes more money in the next 12 months than they have in the bank, or are owed.

We then move on to long term creditors (money that is owed but not immediately – more than 1 year away) which will constitute loans from banks, or from shareholders.  In the case of Hearts, who have the highest amount of long term debt in the SPL, 98% of this debt is owed to the parent company UAB, controlled by Romanov.  This debt attracts a further 4.5% interest a year, while UAB also hold a floating charge over the clubs assets.

The final column gives us the Net assets or liabilities, taking into account the fixed assets of the company.  As we saw earlier, Rangers had posted Net assets of 70m, only achieved by their ridiculous freehold property valuation.  Are Hearts and Aberdeen doing the same?  In the case of Hearts they include in their fixed assets 159,000 worth of ‘Memorabilia’…  in addition to 15m of freehold property, while Aberdeen state in their accounts that the valuation of Pittodrie is a ‘rebuild’ value rather than a likely realistic sale price.

By declaring such high values on their balance sheets though, it produces a net asset figure, rather than a large liability that, in reality, is the case.  Kilmarnock and Hibs to a lesser extent would also see their figures turn red with asset valuations downgraded.

What is heartening to see though, is two clubs with net current assets, in St.Johnstone and Motherwell.  Saints were rescued from near bankruptcy in the 80’s by Geoff Brown and have lived within their means ever since.  Motherwell likewise have been in financial trouble in recent times, but the club appears to have stabilized and is now living within their means on and off the park.

If another insolvency event hits an SPL club, the MSM will blame it on the demise of Rangers.  What can be clearly seen here though is the damage was done years ago to clubs like Hearts, Dundee Utd and Aberdeen – it will be a battle to get back to the kind of financial position that clubs such as St.Johnstone currently enjoy.  However, the message that Saints are currently sending out is that its possible to have a competitive team without breaking the bank, as long as others aren’t artificially inflating wage demands.

The accounts I used to get the above figures are downloadable here:  I was unable to find for Inverness – if anyone can find please let me know and I can add them to the table.  When time permits I will extend this to include SFL clubs as well.

Aberdeen Celtic  | Dundee Utd | Hearts  | Hibs | Kilmarnock | Ross County | St.Mirren | St.Johnstone

1,119 thoughts on “Of Assets and Liabilities


  1. Danish Pastry says:
    Wednesday, October 31, 2012 at 12:11
    0 0 Rate This
    Long Time Lurker says:
    Wednesday, October 31, 2012 at 11:41
    3 1 Rate This
    https://twitter.com/huddleboard

    Don’t know how they are doing it – Tweets on proceedings, appears to be the most up to date.
    ———–

    Latest Huddleboard tweets have vanished??

    —————————————————–

    court probably onto it, and insisted.


  2. By the sounds of it it looks like LH isn’t just going to sign it off with no questions asked.
    Are we possibly at the start of the search for the truth?
    How long can this saga continue and what other twists and turns are still to emerge?

    Will I ever get any work done before Christmas?


  3. wottpi says:
    Wednesday, October 31, 2012 at 12:20

    No we won’t, and I’m thinking we may get the referendum result first….


  4. I hope his Lordship has a spot of lunch about 13.00 – we could then get some more reports from the Court


  5. I thought Mark Daly said that copies of the tapes had been / would be sent to Lord Hodge and the IPA.


  6. Don’t let the Duffers have lunch… They’ll be claiming it!!!


  7. Agrajag says:
    Wednesday, October 31, 2012 at 12:27

    That was the published material, the issue here, I bet, is the unpublished material, notes etc


  8. mrgreenwhytebrown says:
    Wednesday, October 31, 2012 at 12:28

    They can have a bowl of this weeks broth in Ginglin Geordies….


  9. scapaflow14 says:
    Wednesday, October 31, 2012 at 12:28
    1 0 i
    Rate This

    Agrajag says:
    Wednesday, October 31, 2012 at 12:27

    That was the published material, the issue here, I bet, is the unpublished material, notes etc

    ======================

    Got you, thanks.


  10. Paul McConville @Paulmcc12 – just tweeted, lunch normally at 13.00


  11. From Paul at CQN:

    I see Charles Green dismissed out of hand the suggestion that his new company’s property assets were worth in the region of £8.5m, as suggested in a recent blog [he may be referring to Celtic Quick News, but we made no comment on what the assets were actually worth], although he refrained from disputing heads of terms exist for the sale and leaseback of Ibrox, Murray Park and the Albion Car Park.

    Green told Talk Sport, “The blog I’ve seen said that we’re going to enter into a sale and leaseback for £8.5m, you can shove the offer where the sun don’t shine. We’ve got a valuation in the share prospectus in excess of £80m.”

    Mr Green is clearly an experienced negotiator.

    I am grateful to Paul McConville, who yesterday employed our favourite legal term, Gratuitous Alienation. It was June this year when Celtic Quick News suggested “Gratuitous Alienation [will] enter the lexicon soon. Gratuitous Alienation is the Scots legal term describing when property (or cash) is transferred to another party without any, or adequate, consideration.”

    Paul reminds us that “Mr Green bought all the assets, including the right to over £3 million in cash due to the former Rangers, at a cost of £5.5 million. Now he says that the fixed assets are worth in excess of £80 million, and that a sale and leaseback at a price of £8.5 million is nonsense.

    “If BDO [liquidator of the club formerly known as Rangers] challenges the transaction as a gratuitous alienation, then it is for the purchaser to establish that “adequate consideration” was paid for the assets. That is NOT the same as saying it was the best offer anyone made.

    “If BDO do raise a court action, I struggle to see how Mr Green can state that he has paid “adequate consideration” for the assets. Maybe someone could ask him”.

    I am absolutely sure Mr Green will be able to demonstrate that he paid adequate consideration for the assets. He is a resourceful and experienced businessman. If anyone is going to find newly established oil under the Ibrox pitch, he will.

    I am also sure that BDO are far too busy to worry about such questions and that the interests of creditors are best served by forgetting about this whole business, haven’t these poor creditors been through enough?

    Mr Green also told Talk Sport “The club has got cash, and it’s still got no debts.” This claim was modified slightly by a statement on rangers.co.uk, “The Rangers Football Club Ltd is a company free of external debt”, perhaps suggesting the company is in debt to people or organisations involved in its operation.

    It would be interesting to learn what internal debt The Rangers Football Club Ltd has, what terms exist on the debt and whether money raised in the forthcoming IPO will be used to repay debt. If only Mr Green ever spoke to someone in the media, exposing himself to such questions.


  12. Looks like LH reining in recalcitrant children that were let loose with lucky bags and squabbling
    Head teacher will restore order and get to the bottom of this. Might need new prefects and monitors


  13. Is Lord Hodge likely to clarify what assets have been sold to Sevco as part of these proceedings?

    Could he determine whether the history of RFC Ltd has or has not been sold as an asset?


  14. Anyone know who is actually representing D&P? Sounded as though they had sent someone other than THOSE two.


  15. Danish Pastry says:
    Wednesday, October 31, 2012 at 12:44

    Rate This

    Anyone know who is actually representing D&P? Sounded as though they had sent someone other than THOSE two.

    ~~~~~~~~~~~~~~~~~~

    Don’t know her name but a lady lawyer apparently. I don’t think it would ever be THOSE two. Are they not accountants?


  16. Interesting if true!

    doug.k ‏@douglas_kane
    @ClydeScoreboard Greene has given away 11,000 free tickets for tonights game ..sweep sweep sweep

    Interesting. 11,000 free tickets?

    That’s desperate if true.


  17. torrejohnbhoy says:
    Wednesday, October 31, 2012 at 12:55

    Be interesting to know effect of all these free tickets on Rangers cash flow


  18. torrejohnbhoy says:
    Wednesday, October 31, 2012 at 12:55

    ========================

    The folk who paid for theirs will be a bit annoyed one would have thought.


  19. scapaflow14 says:
    Wednesday, October 31, 2012 at 12:56
    Rate This

    torrejohnbhoy says:
    Wednesday, October 31, 2012 at 12:55

    Be interesting to know effect of all these free tickets on Rangers cash flow

    ~~~~~~~~~~~~~~~~~~~~~~~

    It’s 11,000 more pies and cups of tea sold.


  20. scottc says:
    Wednesday, October 31, 2012 at 12:58

    It’s 11,000 more pies and cups of tea sold.
    ————————————————————————————————————
    I hope Swally gets there early then. He’d hate to be at back of the queue 🙂


  21. 11,000 free tickets?
    ——–
    11,000 extra bums on seats means x extra stewards, y extra catering staff and z extra police and security staff to hire for the night. It’s not even cash neutral but fairly heavily cash negative. Green must be desperate to boost his attendance figures. Will these figures be quoted in the share prospectus? If so it reminds me of the practice in the old US West when cattle were allowed to gulp down as much water as possible immediately before going to the market where they were sold by weight – it was known as “watering the stock.”


  22. thebasharmilesteg says:
    Wednesday, October 31, 2012 at 13:03

    I’m afraid any prospectus will be a case of “watering” on the fans….


  23. Cara Sulieman‏@carasulieman has just started tweeting – nothing of great significance yet.

    Right. Duff & Phelps are applying to end administration and hand over to BDO for liquidation.


  24. verselijkfc says:
    Wednesday, October 31, 2012 at 11:33
    6 5
    Rate This

    Agrajag
    Is someone seriously suggesting that in order to help Scottish football we should artificially limit the numbers attending games.

    I don’t even understand that.

    Maybe my logic is a bit out these days but the principle reason that Celtic have a built-in advantage is having a 60K-seater stadium. That is what gives it financial clout that no other club, bar one, can compete with. Over time, this financial advantage will manifest itself as success on the pitch, though not always. The stadium capacity and good football choices, in the main, meant it could compete with the now-deceased club. In terms of a financial arms-race, which is the starting point for two clubs being the principal winners of the SPL, size/capacity is/was the only game in town. Not sure what is contentious about that. What will improve the football and increase competition for all, is the improvement in quality (my point about Wotte’s program). If AZ or FC Twente can win the Eredivisie over clubs with huge stadia-advantages, then there is no reason (none) why Aberdeen, Hearts and the like, cannot be winning the SPL.
    ~~~~~~~~~~~~~~~~
    So are you saying that Ajax, Feyenoord & PSV reduced their capacities to allow AZ/Twente to win the Dutch league or did they knock down some of their grounds ?


  25. Personally I think the issue is about getting more people into the other grounds.


  26. Cara Sulieman‏@carasulieman

    But they maintain they achieved another “minor objective” of “getting a better return”. #Rangers

    Cara Sulieman‏@carasulieman

    D&P say the main purpose of the administration – “to maintain the company as a going concern” – was not achieved. #Rangers

    What about the creditors?


  27. No laughing at the back, D&P apparently claimed that they met the “got a better return for creditors” objective


  28. Cara Sulieman‏@carasulieman

    We haven’t heard from Collyer Bristow yet so not heard detail of their objection. #Rangers

    More to come in the afternoon?


  29. Cara Sulieman ‏@carasulieman
    The “estate” handed over would include £1.7bn in cash plus “other assets”. #Rangers

    We know about the MSM bigging up rangers news, but that takes the biscuit!!


  30. Of course Duff n Phelps achieved the minor objective of a better return, they’ve trousered approx £3M in costs when Googly Eyes wanted it all done & dusted for £500K as agreed with Grier.


  31. neepheid says:
    Wednesday, October 31, 2012 at 10:06

    twopanda says:
    Tuesday, October 30, 2012 at 22:20

    So without Lord Hodge’s unprecedented intervention in June, Sevco would be playing in the juniors (if they would have them), or alternatively have had to buy another company with existing SFA membership (Cowdenbeath were being touted at one point).

    We should find out today what Lord Hodge’s intervention actually represented. Was it :
    a) A genuine enquiry regarding a potential conflict of interest, or
    b) A mechanism to ensure that the RFC membership was kept alive and available for transfer to Sevco.

    If today Lord Hodge just nods in the liquidators, then so far as I’m concerned the answer is b), and the whole COI business was just a pretext. I’m guessing today will be a 10 minute hearing, liquidation will be rubber-stamped, job done for Sevco and its backers. But I might be wrong.
    ===============================================================

    Hang on – Lord Hodge only stalled the liquidation because of new information about a potential COI which came out of the Mark Daly BBC investigation. If that hadn’t come out them one can only presume the liquidation would have proceeded.


  32. Since when did the main objective of an administration (once the CVA had failed) become a minor one. Their job was to maximise the return for the creditors, with no heed given to keeping the busioness going. Are we really to believe the best they could do was the amount raised from Green. A man now publicly claiming to have bought assets worth £80m.


  33. http://www.bbc.co.uk/news/uk-scotland-glasgow-west-20141946

    It is good to see the change shift in the reporting of old rangers and new rangers. Watch out for more letters, emails, phonecalls in the form of threats and slurs to the BBC.

    “The Scottish Football Association later approved the transfer of the licence held by the old club to the new club started by Mr Green’s consortium.

    It has since started life in the Scottish Third Division.”


  34. Cara Sulieman@carasulieman

    Lord Hodge also mentioned he is “very concerned” about recent allegations & has asked BBC for DVD and transcript. #Rangers


  35. Cara Sulieman@carasulieman

    Lord Hodge went on to mention these allegations are not relevant to today’s proceedings.
    ——————————————————————————————————————–
    Booo Hissss 🙂


  36. AZ managed to win the Dutch League because they were bankrolled by DSB Bank. When DSB got into serious financial trouble in 2009 so did AZ soon after and their footballing success and big spending was abruptly halted.

    In the case of FC Twente they are chaired by Dutch media businessman Joop Munsterman. Since gaining control of the club he has set the club on a course called “Working on a Dream” which has involved rapid expansion policies of big spending on players, coaching staff and stadium expansion to almost double capacity. This big spending has proved successful on the pitch and earned some Champions League income as well as atracted highly paid coaches like Steve McLaren ……..how sustainable these policies prove to be remains to be seen.

    What is indisputable is the only way that AZ & Twente managed to win the title and beat traditional giants like Ajax, PSV & Feyenoord was by very big spending speculate to accumulate policies relative to the clubs historic size & resources.


  37. wottpi says:
    Wednesday, October 31, 2012 at 13:32

    mmm Wonder if I can get odds on admin continuing while milord seeks further info from BBC?


  38. bogsdollox says:
    Wednesday, October 31, 2012 at 13:25

    Hang on – Lord Hodge only stalled the liquidation because of new information about a potential COI which came out of the Mark Daly BBC investigation. If that hadn’t come out them one can only presume the liquidation would have proceeded.
    ======================
    So why, exactly, did that require the liquidation to be stalled? This is the question I keep asking, but no one can give me an answer.


  39. thereek says:
    Wednesday, October 31, 2012 at 13:11

    I’m saying the opposite – “small” clubs can and do compete by investing in, retaining and managing quality.


  40. I imagine CB are objecting based on the flimsy case D&D launched to cover there arses in the belief they would be long gone before it got to court, they’d already got Withey or wonthey to delay proceedings as the case was originally scheduled for this month.
    I hope LH actually carries through with this as opposed to hauling them over the coals then okay’s the end of administration.

    No tweeting in court & the polis get the hump if people are continually in/out, lunch normally ends at 2pm.


  41. neepheid says:
    Wednesday, October 31, 2012 at 13:35

    ==========================

    It’s not about “stalling the liquidation” it’s about allowing the administration to end.

    He said he would not allow that to happen until he was satisfied that it had been conducted properly and without a conflict of interests.


  42. Just how many of us are in the Court room?
    I’m just out, quite a boring morning.
    lord Hodge has/will make an application to the BBc for the dvds of the documentaries /CW interview and will, by court order if required, askf or the transcripts of phone calls.

    He also complained that he had only just got some documents from Administrators’ QC this morning which he has not had time to study.

    Some time was then spent satisfying hm that Ticketus had had notice of this hearing.

    QC for D&P then went on about the fact that the English court cases had not yet been resolved, and that the FTTT decision was not available ( and LH ,it seemed to me ,accepted that that was so)
    so nothing there to stop the end of administration:liquidators could deal with the outcome of them if need be.

    There was then a boring bit about D&P having secured the creditors’ agreement to their propsals re end of admin and their remuneration, so the court would have business to say yea or nay to that,. unless someone specifically asked it to,or on appeal.

    LH made it clear that since the Administrators are officers of the court, the court did have an interest, since there were allegations against D&P’s probity which of course he would be obliged to let them dispute in court.
    There was a 10 minute adjourmnment while a court officer asked who was tweeting. And on resumption, LH warned that anyone tweeting would be doing so without permission, and if they did it again. they would be in contempt of Court. ( who said anything about Huddleboard?)

    Collyer Bristow will argue against end of admin, basing their argument on the actions of MCR, apparently.

    Bear in mind that I am not a lawyer/ This is what I remember, and what I’ve written is not written in the order that actually happened.
    Sandwich now, and back for the 2.00 p.m second half.


  43. Regardless of the massaging of attendance figures for inclusion in the IPO docs, the giving away of 11k free tickets to schoolchildren is a sensible course of action and should be admired.
    Wish Celtic would do it – last night would have been the ideal opportunity.


  44. Duff and Duffer are acting as officers of the court, if they have been at it, then the whole admin process could be nullified, Lord Hodge didn’t have any choice really, Arguably should have removed D&P at that point, but, where was the hard evidence at that point?


  45. Correction, should read ‘so the court would have NO business to say ‘


  46. neepheid says:
    Wednesday, October 31, 2012 at 13:35

    bogsdollox says:
    Wednesday, October 31, 2012 at 13:25

    Hang on – Lord Hodge only stalled the liquidation because of new information about a potential COI which came out of the Mark Daly BBC investigation. If that hadn’t come out them one can only presume the liquidation would have proceeded.
    ======================
    So why, exactly, did that require the liquidation to be stalled? This is the question I keep asking, but no one can give me an answer.
    ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

    I’m thinking it was because Judges don’t like to be blindsided and are not prepared to waive through liquidation where they are “very concerned” about COI during the administration period.By keeping D&P inplace it left them on the hook. I doubt he cares one way or the other about the transfer of the SFA licence.


  47. Will LH ask why the Administrators thought it was necessary or for the good of the creditors to change the name of the company from Rangers Football Club PLC? I assume the company appearing in this case is RFC 2012 plc.


  48. bogsdollox says:
    Wednesday, October 31, 2012 at 13:48

    Agree, integrity of process would outweigh any other considerations, I would have thought….


  49. neepheid says:
    Wednesday, October 31, 2012 at 13:35

    Presumably once the administration is concluded as things stand D&P would be entitled to remuneration to the tune of £3million and Lord Hodge does not want that to happen whilst their is dubiety about conflict of interest


  50. billy no.12 @nil_by_mooth 2h
    @alextomo alex, i know your not one for answering Rangers
    fans for fear of intimidation.Do you support OUR armed
    forces ???#yesorno
    ~~~~~~~~~~~~~~~~
    Whatever could he mean? Have the Bears got their pitchforks at the ready?


  51. Charlie Brown says:
    What is indisputable is the only way that Twente managed to win the title and beat traditional giants like Ajax, PSV & Feyenoord was by very big spending
    ———————-
    As a ST holder at FC Twente for 5 seasons I can tell you ,you are talking bunkum
    FC Twente have the best youth set up in the NL,every season they have sold off their top players and recruited from the ranks at little to no cost.
    The stadium has tripled in size from 10k to 35k and still has a waiting list for STs
    The rise of Twente was well underway before McLaren came on the scene
    Joop Munsterman is the Fergus McCann of Enschede
    now back to the COS


  52. Lord Wobbly says:
    Wednesday, October 31, 2012 at 14:01

    ============================

    That’s an interesting question when the club he supports stole millions from the nation. Money to pay for things like schools, hospitals and the forces.


  53. The ref has just blown the whistle for the second half.

    Cara Sulieman‏@carasulieman
    Going back in. Will update when I can. #Rangers


  54. bogsdollox says:
    Wednesday, October 31, 2012 at 13:48

    I’m thinking it was because Judges don’t like to be blindsided and are not prepared to waive through liquidation where they are “very concerned” about COI during the administration period.By keeping D&P inplace it left them on the hook. I doubt he cares one way or the other about the transfer of the SFA licence.
    ================
    Tell me, please, in simple terms, how D&P would have been “off the hook” if RFC had been liquidated in June. As administrators, D&P were officers of the court. They would have been answerable to the court at any time, regarding their conduct of the administration. So why no liquidation in June?


  55. Surprising (?) lack of coverage of this on the BBC website – last updated 04.08. Can someone confirm if Douglas Fraser is actually in the courtroom?


  56. “Douglas Fraser‏@BBCDouglsFraser

    Spanners in the works of oldco #Rangers being wound up in Court of Session today. Last minute objection from lawyers Collyer Bristow… … Lord Hodge calling for more info on BBC Scotland report of administrator conflict of intetest, and will Duff & Phelps get £3.1m fees? “


  57. neepheid says:
    Wednesday, October 31, 2012 at 14:03

    Again, Lord Hodge has refused to let the administration be ended. He has made it clear he did this because he is not satisfied that it was conducted properly and that there was no conflict of interest. He is hardly likely to sign off on it if that is still the case.

    The liquidation isn’t being “blocked” it simply can’t happen while the administration is ongoing.


  58. Charlie Brown –
    What is indisputable is the only way that AZ & Twente managed to win the title and beat traditional giants like Ajax, PSV & Feyenoord was by very big spending speculate to accumulate policies relative to the clubs historic size & resources.
    ————-

    There were a number of other factors including, but absolutely not limited to, other clubs not retaining their best players (due to their own financial crises). There has been a lot of good talent around the Eredivisie in the last 5-6 years, which is spread around the league, not limited to 1 or 2 clubs. What is true is that neither Celtic nor dead-club would have been even close to winning the Eredivisie in this last period, based on the playing-squads available.

    Scheringa (via DSB) had owned and been investing in AZ since 1993. Financing the new stadium combined with the financial crisis in 2008 was no doubt the straw that broke the camel’s back; it certainly was not over-investment in the first team. Winning was down to a having a good bunch of well-coached and managed players who could maintain their form over the whole season.
    Ajax are primarily a selling-club (> 100m euro’s worth of players during the last 10 years but not for team/player reasons; to feed their shareholder dividends); Feyenoord have been in deep financial trouble since well before Fortis took a serious bath in 2008 and P”$”V had been hemorrhaging money with +20m Euro losses regularly being incurred; (thus reason the city council bought and leased back their stadium for 48,5m Euro to help save them from oblivion – this combined with major cost-cutting and other restructuring activities have effectively put them back on the track, if a little way off where they ought to be). FC Twente are an ambitious club but relative to their peer group they are not investing unlimited sums to achieve what they have done (they have also been financing and building an extension to their stadium).


  59. timtim says:
    Wednesday, October 31, 2012 at 14:02
    ——-

    I’m with you brother…


  60. billy no.12 @nil_by_mooth 2h
    @alextomo alex, i know your not one for answering Rangers
    fans for fear of intimidation.Do you support OUR armed
    forces ???#yesorno

    __________________________________

    Ha ha ha ha rich is not the half of it!
    100 million would have bought a fair few state-of-the-art flak jackets.
    This is a gimme for Alex, hope he is not to hard on them.


  61. The balance sheets of most football clubs defy any reasonable interpretation. If we look closely at the “asset position”, it is difficult not to cast your mind back to the tragic events of Hillsborough and Heysel and the shadow that these events cast on the fledgling SPL many years later.

    Rules were brought in requiring 10,000 all seater stadia for SPL membership – the 10,000 was subsequently reduced to 7,000, but both figures are risible if you are a provincial club that may face the prospect of relegation. Clubs such as Dunfermline and Kilmarnock faced mountainous levels of debt in building an “asset” that only actually has any value to a football club. And, regrettably, there are not very many clubs in waiting who need to purchase a used football stadium.

    Add into the mix the absurdity of ground sharing being an absolute non starter in most cities, and, for me, you have one of the main reasons why so many balance sheets look shot to pieces. The true “asset value” of most of these stadia is the land value and that, as we have seen during the Sevco debacle, is pretty close to hee-haw.

    So, for once, I am in the “blame the SPL” gang with Charlie. The SPL needed to take a step back and try to find a way to deal with situations where a club with an average gate of 5,000 was required to build a 10,000 seater stadium largely for 2 Old Firm visits a year. But, perhaps fuelled by the visions of some brave new world of financial nirvana, they pressed on with a requirement that, umpteen years later, was a huge millstone round the neck of nearly every top flight club in Scotland.

    Financial illiteracy has been football peoples specialised subject for many years. As i commented several times on the RTC blog, I had the unenviable job of speaking to errant football clubs about spiraling wages bills and the nonsense of budgeting for losses. But that illiteracy was compounded by the sheer folly of the Gavin Masterton inspired HBoS funds splash into a football league they sponsored. No one asked how the debts were going to be repaid. No one bothered looking at how a stadium might be built to generate alternative income streams (some clubs, to their credit, are looking at that now) and there was precious little effort made to explain how clubs with massive debts and year after year of trading losses could be considered solvent, or indeed ever in a position where they might be able to meet their debts. Like much that was going on in corporate lending in the 90’s and 00’s, the notion seemed to be that the money tree would never run out of money!

    There really isn’t much brain power required in all of this. You add up all your income – ignoring improbables like 25 horse acumulator – and that tells you how much you can spend. To run a model, as Dundee once did, along the lines of “we’ll pay Cannigia and Ravanelli the equivalent of 5,000 extra on the gate” is economic suicide. More fool the Banks for allowing it.

    At the core of football is an absurd mindset that you can only improve by shelling out more in salaries or transfer fees. Were it that simple Man City would not be pumped by Ajax and outclassed by Dortmund. Even now, Neil Lennon talks of “rewarding” players in mid contract with even more money out of a Champions league windfall. Quite simply, this is chaos theory in practice. And worse, football then thinks it is a “special case” and, despite budgeting that would shame a 3 year old trying to save up for a comic, preferential treatment is given to football related debts in the event of insolvency. Its high time this bollocks stopped, especially where there is as much evidence as there has been that clubs actually set out with a budget designed to generate losses.

    Better commentators that I have tried to shoe horn in the Rangers financial meltdown into antics of the wider corporate banking world. Whilst there are similarities, football finances have been both naive and out of control for many, many years. I would bet that many clubs in Scotland – and certainly in England – are running at giant operating losses and live in fear of a tap from the tax man or from the local authority over unpaid rates.


  62. agropelican says:
    Wednesday, October 31, 2012 at 11:29
    15 4 i
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    While we’re waiting on Lord Hodge.

    “Hearts boss John McGlynn says all SPL teams would have chance of claiming title without Celtic in top flight.”
    ____________________________________________________

    Where did you read that, was it a direct quote from McGlynn or an MSM hack’s spin on what he said? Take a look at easyJambo’s post at 11.01, it appears he (McGlynn) was asked a question and gave what looks to me like a sensible answer. He suggests there’s so little between the teams, apart from Celtic, that they are all capable of finishing second and, as follows naturally from this, they would all have a chance of winning the league if (as he’d been asked), Celtic weren’t in it. If there’s one thing we should all have learned on here and RTC and that’s never to take anything the MSM publishes as fact, or at least accurate, before it’s analysed on here. We should all be treating everything they write as dubious at best, and only believe it when someone more reputable, like a taxi driver, tells you it is so 😉

    I wrote earlier that I didn’t read the article (until I read easyJambo’s post later) as I wouldn’t value McGlynn’s, or any other manager’s, opinion on the subject, but was pretty sure it would be more an attempt by the press to create bad feeling between Hearts and Celtic, or at least their support, as part of their deflection campaign as the anticipated bad news for Rangers trickles out.


  63. Agrajag says:
    Wednesday, October 31, 2012 at 14:07

    Again, Lord Hodge has refused to let the administration be ended. He has made it clear he did this because he is not satisfied that it was conducted properly and that there was no conflict of interest. He is hardly likely to sign off on it if that is still the case.

    The liquidation isn’t being “blocked” it simply can’t happen while the administration is ongoing.
    =====================
    So why is the administration still ongoing? If the administration hasn’t been conducted properly, then the court can deal with that at any time. The administrators were officers of the court, and subject to the supervision of the court. Refusing to allow the administration to end, is, as a matter of fact, blocking liquidation. Why? What interest does it serve?


  64. Gym Trainer says:
    Tuesday, October 30, 2012 at 23:16
    monsieurbunny says:
    Tuesday, October 30, 2012 at 22:52

    Does that mean Berwick will get a large police bill?
    _____________________________________________

    Northumbria Police aren’t well-known for being charitable – I think they invoice for time spent at traffic collisions (and were amongst the first to do so)
    ————————————————————————————-
    Which means maybe all this extra cash the wee 3rd division clubs will be getting out of Rangers won’t be all that much extra after all?


  65. neepheid says:
    Wednesday, October 31, 2012 at 14:36

    Lord Hodge did not, could not, sign off on a process that he thought might be compromised. Frankly, the identity of the company would have been entirely irrelevant.

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