UEFA Club Licensing. – To Comply or not to Comply ?
On 16 April 2018 The UEFA Club Financial Control Body (CFCB) adjudicatory chamber took decisions in the cases of four clubs that had been referred to it by the CFCB chief investigator, concerning the non-fulfilment of the club licensing criteria defined in the UEFA Club Licensing and Financial Fair Play Regulations.
Such criteria must be complied with by the clubs in order to be granted the licence required to enter the UEFA club competitions.
The cases of two clubs::
Olympique des Alpes SA (Sion Switzerland )
and
FC Irtysh (Kazakhstan)
are of particular interest to those following the events under which the SFA awarded a UEFA License to Rangers FC in 2011 currently under investigation by the SFA Compliance Officer because
- The case documentation tell us how UEFA wish national associations to apply UEFA FFP rules
- The cases tell us what might have happened to Rangers FC in 2012 had they not gone into liquidation and as a consequence avoided the same type of sanctions that UEFA applied to Sion and Irtysh.
FC Sion (Olympique des Alpes SA)
Here we are told how the Swiss FL and then the UEFA CFCB acted in respect of FC Sion in 2017 where a misleading statement was made in the Sion UEFA licensing application.
Full details can be read at
but this is a summary.
In April 2017 the Swiss FL (SFL) granted a licence to Sion FC but indicated that a Disciplinary case was pending.
In July 2017 the CFCB, as part of their licence auditing programme, carried out a compliance audit on 3 clubs to determine if licences had been properly awarded. Sion was one of those clubs.
The subsequent audit by Deloitte LLP discovered Sion had an overdue payable on a player, amounting to €950,000, owed to another football club (FC Sochaux ) at 31st March 2017 as a result of a transfer undertaken by Sion before 31st December 2016, although the €950,000 was paid in early June 2017.
Deloitte produced a draft report of their findings that was passed to SFL and Sion for comment on factual accuracy and comment on the findings. Sion responded quickly enabling Deloitte to present a final report to the CFCB Investigation Unit. In response to the Deloitte final report Sion stated:
“il apparaît aujourd’hui qu’il existait bel et bien un engagement impayé découlant d’une activité de transfert. Ce point est admis” translated as
“it now appears that there was indeed an outstanding commitment arising from transfer activity. This is admitted”
What emerged as the investigation proceeded was that the Swiss FL Licensing Committee, after granting the license in April and as a result of a Sochaux complaint of non-payment to FIFA, had reason to refer Sion’s application to their Disciplinary Commission in May 2017 with regard to the submission of potentially misleading information by FC Sion to the SFL on 7th April 2017 as part of its licensing documentation.
Sion had declared
“Written confirmation: no overdue payables arising from transfer activities”, signed by the Club’s president, stating that as at 31 March 2017 there were no overdue payables towards other football clubs. In particular, the Club indicated that the case between FC Sion and FC Sochaux regarding the transfer of the player Ishmael Yartey was still under dispute.
The SFL Disciplinary Commission came to the conclusion that FC Sion had no intention to mislead the SFL, but indeed submitted some incorrect licensing documentation; the SFL Disciplinary Commission further confirmed that the total amount of €950,000 had been paid by the Club to FC Sochaux on 7 June 2017. Because of the inaccurate information submitted, the SFL Disciplinary Commission decided to impose a fine of CHF 8,000 on the Club.
Whilst this satisfied the SFL Disciplinary process the CFCB deemed it not enough to justify the granting of the licence as UEFA intended their FFP rules to be applied.
Sion provided the CFCB with a number of reasons on the basis of which no sanction should be imposed. In particular, the Club admitted that there was an overdue payable as at 31 March 2017, but stated that the mistake in the document dated 7 April 2017 was the result of a misinterpretation by the club’s responsible person for dealing with the licence (the “Club’s licence manager”), who is not a lawyer. The Club affirmed that it never had the intention to conceal the information and had provisioned the amount due for payment and that, in any case, it has already been sanctioned by the SFL for providing the wrong information.
The CFCB Investigation Unit accepted that the Sion application, although inaccurate, was a one off misrepresentation and not a forgery, (as in intended to deceive ) but that nevertheless an overdue payable did exist at 31st March and a licence should not have been granted.
Based on their findings, the CFCB Chief Investigator decided to refer the case to the CFCB Adjudicatory Chamber and suggested a disciplinary measure to be imposed on FC Sion by the CFCB Adjudicatory Chamber, such measure consisting of a fine of €235,000, corresponding to the UEFA Revenues the Club gained by participating in the 2017/2018 UEFA Europa League.
The CFCB Investigatory Chamber submitted that it was appropriate to impose a fine corresponding to all the UEFA revenues the Club gained by participating in the competition considering the fact that FC Sion should not have been admitted to the competition for failing to meet one of its admission criteria.
The Adjudicatory Chambers took all the circumstances (see paras 91 to 120 at http://tiny.cc/i8sxsy ) into consideration and reached the following key decisions.
- FC Sion failed to satisfy the requirements of Article 49(1) of the CL&FFP Regulations and it obtained the licence issued by the SFL not in accordance with the CL&FFP Regulations.
- FC Sion breached Articles 13(1) and 43(1)(i) of the CL&FFP Regulations. (Documents complete and correct)
- To exclude FC Sion from participating in the next UEFA club competition for which it would otherwise qualify in the next two (2) seasons (i.e. the 2018/19 and 2019/20).
- To impose a fine of two hundred and thirty five thousand Euros (€235,000) on FC Sion.
- FC Sion is to pay three thousand Euros (€3,000) towards the costs of these proceedings.
Comment in respect of the award of a UEFA Licence in 2011 to Rangers FC.
It is now public knowledge that an actual liability of tax due before 31stDecember 2010 towards HMRC, was admitted by Rangers FC before 31st March 2011.
This liability was described as “potential” in Rangers Interim accounts audited by Grant Thornton.
“Note 1: The exceptional item reflects a provision for a potential tax liability in relation to a Discounted Option Scheme associated with player contributions between 1999 and 2003. A provision for interest of £0.9m has also been included within the interest charge.”
The English Oxford Dictionary definition of potential is:
Having or showing the capacity to develop into something in the future.
Which was not true as the liability had already been “developed” so could not be potential.
This was repeated by Chairman Alistair Johnson in his covering Interim Accounts statement
“The exceptional item reflects a provision for a potential tax liability in relation to a Discounted Option Scheme associated with player contributions between 1999 and 2003. “ where he also added
“Discussions are continuing with HMRC to establish a resolution to the assessments raised.”
This could be taken as disputing the liability but In fact the resolution to the assessments raised would have been payment of the actual liability, something that never happened.
In the Sion case it was accepted the misleading statement was a one off misrepresentation, but at the monitoring stages at June 2011 in Ranger’s case the status of the liability continued to be misrepresented and in September the continuing discussions reason was repeated, along with a claim of an instalment paid whose veracity is highly questionable.
The Swiss FL Licensing Committee did at least refer the case to their Disciplinary Committee when they realised a misleading statement might have been made. The SFA however in August 2011, when Sherriff Officers called at Ibrox for payment of the overdue tax , did no such thing and pulled up the drawbridge for six years, one that the Compliance Officer is now finally charged with lowering.
The case of FC Irtysh of Kazakhstan is set out in full at http://tiny.cc/y9sxsy and is a bit more straightforward but is nevertheless useful to compare with events in 2011 in Scotland.
Unlike Rangers FC , FC Irtysh properly disclosed that they had an overdue payable to the Kazakhstan tax authorities at the monitoring point at 30th June 2017. This caused the CFCB Investigatory Unit to seek further information with regard to the position at 31st March
It transpired that Irtysh had declared an overdue payable at 31st March but cited their financial position (awaiting sponsor money) as a reason for non payment to the Kazakhstan FA who accepted it and granted the licence. The outstanding tax was paid in September 2107.
The outcome of the CFCB Investigation was a case put to the CFCB Adjudicatory Chamber who agreed with the CFCB Investigation Unit that a licence should not have been granted and recommended that Irtysh be fined the equivalent of the UEFA prize money, (that had been withheld in any case whilst CFCB investigated.)
The CFCB Adjudicatory Chamber however decided that a fine was not sufficient in sporting deterrent terms and ruled that:
- FC Irtysh failed to satisfy the requirements of Article 50bis(1) of the CL&FFP Regulations and it obtained the licence issued by the FFK not in accordance with the CL&FFP Regulations.
- To withhold four hundred and forty thousand Euros (€440,000) corresponding to the UEFA revenues FC Irtysh gained by participating in the 2017/2018 UEFA Europa League.
- To exclude FC Irtysh from participating in the next UEFA club competition for which it would otherwise qualify in the next three (3) seasons (i.e. the 2018/19, 2019/20 and 2020/21 seasons). This sanction is deferred for a probationary period of (3) three years. This exclusion must be enforced in case the Club participates again in a UEFA club competition having not fulfilled the licence criteria required to obtain the UEFA licence in accordance with the CL&FFP Regulations.
- FC Irtysh is to pay three thousand Euros (€3,000) towards the costs of these proceedings. “
The deferral was because unlike Rangers FC, FC Irtysh had properly disclosed to the licensor the correct & accurate financial information required, so the exclusion was deferred for a probationary period of (3) years.
Comment in respect of the award of a UEFA Licence in 2011 to Rangers FC.
From the foregoing it could be deduced that had Rangers FC qualified for the Champions League (or European League) and not gone bust as a result and so not entered liquidation BUT it became public knowledge by 2012 that a licence had been wrongly and possibly fraudulently granted then
- Rangers would have been fined the equivalent of their earnings from their participation in the UEFA competitions in 2011
- At least a two year ban from UEFA Competitions would have been imposed, but more likely three in view of repeated incorrect statements.
- The consequences of both would have been as damaging for Rangers survival as the real life consequences of losing to Malmo and Maribor in the qualifying rounds of the Champions and European Leagues.
Karma eh!
Interestingly in the UEFA COMPLIANCE AND INVESTIGATION ACTIVITY REPORT 2015 – 2017 , the CFCB investigatory chamber recommended that both the Kazakhstan FA and Swiss FA as licensors
“pay particular attention to the adequate disclosure of the outstanding amounts payable towards other football clubs, in respect of employees and towards social/tax authorities, which must be disclosed separately;
Would the same recommendation apply to the Scottish FA with regard to their performance in 2011 and will the SFA responses thereafter to shareholders in a member club be examined for compliance with best governance practice by the SFA Compliance Officer investigating the processing of the UEFA Licence in 2011?
This would be a welcome step in fully restoring trust in the SFA.
The SFA promised an investigation into the processes that resulted in Rangers Football Club (now in liquidation) obtaining a UEFA Competitions licence at a time when the evidence appears to be that they did not meet all the criteria under the FPP rules.
That promise was made 7 months ago.
Nothing has been heard about it since.
Whar are we to make of that?
Would we not be justified in believing that the SFA is simply as untruthful a governance body now as it is alleged to have been before, and that once again it will make a whore of itself to ensure that a club that says it will only remain a ‘going concern’ if promised loans from certain parties are made AND if it gets a wee hurl in the blanket of European football, is granted a UEFA licence, and bugger any rules relating to the FPP policy?
Are the other clubs with some claim to a place in European football next season watching keenly, to ensure that this season at any rate there is no jiggery-pokery aimed at sliding a few million to an unentitled club-at their expense?
Are they simply going to accept what the SFA Licensing committee might say?
Is the CEO-in-waiting another glib chancer, working to an agenda that has nothing to do with Sporting integrity?Has he the forked-tongue verbal agility of a Regan?
Will TRFC Ltd be granted a UEFA licence?
What does William Hill say?
So many questions, such a level of distrust.
I think some kind of planned insolvency to force out King must be imminent. King is now point blank refusing to co-operate with a court order and his presence can only pollute the entire club.
To remove him without an insolvency event would be collosally expensive and would still leave a club with an unsustainable and growing debt whose business model is the very definition of financial insanity. It would take the present investors to double or treble their present exposure to financial loss, and to then begin a process of austerity while managing expectations and promises of further investment.
They would be putting in tens of millions more for the pleasure of being traduced by the vast majority of Rangers fans.
No-one is coming to the rescue here.
Every day and every week that passes merely deepens the crisis. The Gerrard squirrel is another tranche of expense and, to date no retail or shirt sponsorship deal has been announced and the Hummel deal does not appear to offer significant improvements on the Puma one.
I just don’t see a way out. King basically admitted as much, if you read between the lines and ignore the bombast and blister.
Not to go from the sublime to the gorblimey, and completely OT, can I say that I have just read that William Hill of this parish offered odds of 500-1 ( yep, five hundred to one) against Hungary beating England in 1953!
It’s fairly clear that not too many punters punted, else there very likely woudnae be any William Hill today!
Hmm. Must have a look out for something equivalent these days!
What are the likely odds on TRFC Ltd NOT getting a UEFA licence?
ALLYJAMBO MAY 9 22.47.
Sorry Ally but i am unable to provide you with any names. One is a journalist (non-football) who works for a national title, the other has been 100% accurate in the past when providing information.
As i said previously i believe the assurances sought regarding future funding are standard practice at UEFA when any club is running at a loss over a period of time.
Bit of a disappointing night for my team last night, as a person who typically supports the underdog it now looks like I’ll be shirking tradition and supporting the hoops on cup final day.
If Celtic do win that game we’ll be looking at European representation of the strongest Celtic side in years, a solid Aberdeen side, an exciting young Hibs team (with a manager who’s done well in Europe previously) and a Rangers side which could be anything but one would guess will be stronger than they are currently.
In terms of our co-efficient this can only spell good news, I’ve no idea where to find such information but I wonder how close a contender in the Champions League knockout stages and one in the Europa League Group stage would put us to an extra European place in coming seasons?
That scenario is probably unlikely but certainly not as far-fetched as a few years ago.
SLIMJIMMAY 10, 2018 at 07:40
ALLYJAMBO MAY 9 22.47.Sorry Ally but i am unable to provide you with any names. One is a journalist (non-football) who works for a national title, the other has been 100% accurate in the past when providing information.As i said previously i believe the assurances sought regarding future funding are standard practice at UEFA when any club is running at a loss over a period of time.
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So this is information only given to a few people, and not the general public, including the shareholders of RIFC, of the existence of more comprehensive accounts and an auditors’ review. While RIFC clearly provided sufficient detail in their interim accounts to satisfy legal requirements of an unlisted company, there can be nothing that prevented them from disclosing the fuller accounts, if they existed, and I find it hard to believe that these more comprehensive accounts would have produced better reading than those published, for it would not have been in the club’s interest to withhold improved figures from public gaze. Did your contacts let you know what the auditors’ review said? Did it give a positive outlook and ensure the reader that the uncertainty as a going concern had been fully removed? You see, if that uncertainty remained, then I’d imagine that would be a red flag to any license application, and prompt greater scrutiny than even repeated losses!
Do you think your club’s greatest achievement (as per Dave King) of acquiring some additional funding, by way of a secured loan, post interim accounts, would have assuaged UEFA’s concerns in any way? I have my doubts, and reckon they’d view it as cause for yet another red flag.
Nick May 10, 2018 at 08:45
In terms of our co-efficient this can only spell good news, I’ve no idea where to find such information but I wonder how close a contender in the Champions League knockout stages and one in the Europa League Group stage would put us to an extra European place in coming seasons? That scenario is probably unlikely but certainly not as far-fetched as a few years ago.
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Scotland is ranked 23rd for 2018/19. You need to be ranked 15th or higher to earn a 2nd CL qualifying spot and a 5th European place. You have to reach the giddy heights of 10th to get an automatic entry to the group stage.
We are not going to get an extra place in the foreseeable future. With the exception of Celtic, all Scottish clubs will be unseeded in all but the first or second qualifying rounds.
Bert Kassies site is good for seeding info.
https://kassiesa.home.xs4all.nl/bert/uefa/
EASYJAMBOMAY 10, 2018 at 10:46
Thanks for this, the website looks brilliant.
For Nick and others,
http://kassiesa.home.xs4all.nl/bert/uefa/
This site is way better than uefa,s own when it comes to coefficients, dates, seeding etc.etc.
bookmark then enjoy
Edit just saw another poster posted this before me. Two stattos on this list whodathunkit?
pete
ShadySlim said “when DK gained control he said the club would be funded by “soft loans” from certain shareholders, this is what has happened”.
This was said at the AGM in 2016 where he also said “(the board) believe deficit funding to meet anticipated operational shortfalls was and remains necessary – as the Club cannot regain its former status by relying solely on the income it presently generates from its normal operations”.
To be fair I think everyone believes that Sevco needs deficit funding to offset their current level of spending, though I am unsure what exactly he means by “regain its “former status” – debt ridden pariah perhaps? They had after all just reached the top tier of Scottish football – the same status as Celtic, Aberdeen, Kilmarnock etc.
But why does that deficit funding has to be in soft loans rather than investment per se, which they have apparently rejected, that has been the $64k question…
Slim only mentioned the soft loans. King also said that they wouldn’t borrow against future revenue streams. He even cited the cautionary tale of the “folly” of Leeds United (wonder why he didn’t use a more recent example a lot closer to home?) But that IS what happened with Close Bros – no wonder they tried to dress it up as an overdraft!
Looking back at his address at the AGM it is a study in contradiction – the previous board were reckless but they underspent: he however will overspend “prudently”, requiring loans every year until such time that they break free from the drudgery of Scottish football and elevate themselves to new revenue sources. And what might these be?
King stated “With any football club there is an obviously direct relationship between the amount invested in its football resources and its success on the pitch. Success on the pitch, in turn, feeds back to the quantum of resources available to invest back into the Club and so the virtuous cycle would appear to continue.”
So that’s the “virtuous” cycle of spending outwith your means chasing European success in order to fund that overspend? Again, wasn’t that the folly that sunk Leeds United?
He went on to say they had been “making attempts to convince dissenting shareholders of the merit and business sense of our funding strategy.” Good luck with that! And said they wanted to “finally be able to put our longer term funding plan into action” – what? Get Champs League money again? But didn’t you just say…?
Oh you mean release more shares to the benefit of these debt holders “which a few of us are” at the expense of equity investors “which all shareholders are” as the understanding of these “soft loans” was that they would turn into equity, perhaps at a discount which would depress the market value of the shares.
Was that why the chosen few were “allowed” to offer soft loan (sic) investment whilst other investors were rejected? But wouldn’t that lead to even more concentration of shareholding? Ah but maybe then they have to sell those discounted shares in order to not trip over the 30% limit (no laughing) thus making a wee profit themselves…
Of course this is all speculation on my uninformed part.
https://rangers.co.uk/news/headlines/full-dave-king-agm-speech/
JOCKYBHOYMAY 10, 2018 at 11:22
I do wonder why it is that TRFC have to regain their former status (whatever the reality of that might be), as though it is some God given right, and everyone, including UEFA, should just accept that imperative and let them get on with it.
Why must TRFC spend big? Is there a reason why, with a support second in size only to Celtic, they cannot be satisfied with spending only what they earn, staying more or less in the black, while growing ever stronger?
Does anyone think that had they maintained a break even policy, from the word go, they would not, at the least, be playing Hibs on Sunday looking to finish second in the Premiership? Does anyone actually believe that their ‘over-investment’ policy has worked in a way that suggests it will prove to be wise to continue in the same vein?
To me it appears that if they ever get shot of their current debt – by debt for equity swops, or administration – they will just be compelled to return to the same old, same old method of spending other peoples’ money, with whatever it is they believe to be their rightful place just as elusive as it has been since the club’s inception.
https://www.scottishfa.co.uk/media/3584/club-licencing-current-status-2018.pdf
Newly updated, it appears all Scottish clubs have met the licencing criteria for this season.
ALLYJAMBOMAY 10, 2018 at 12:35
I’ve noticed this point made lots of times it seems to boil down to “they should know their place”.
Of course pragmatism is important but if they have several HNW investors willing to fund a few million on top of revenues generated each year to show a bit of ambition & they stay within FFP rules then why shouldn’t they?
If it was funded on bank debt or was on a Gretna style level where it was unsustainable in comparison to the club’s revenue or the shareholders who are funding it’s overall wealth then fair enough but it actually appears to be fairly modest amounts funded by rich fans. Those fans are mugs in my opinion and seem to just get grief for funding peoples’ hobby for them but if they want to do it then that’s their prerogative.
Investment into our game should be welcomed as should ambition.
Could be daft questions but may someone like Easyjambo could answer.
Separate for the TOP requirement to put out an offer to existing share holders – I understand the new rights issues spoke about on Monday will put 81.5 million shares onto the ‘internal market’ for existing shareholders.
I have seen talk of these shares being issues on a one for one basis against the existing 81.5 in the hands of various parties.
Therefore can you, first, only buy shares in accordance to your existing shareholding and then…sweep up any that are not taken up by others?
I am wondering that if people such as the Easdales and the likes (according to King) aren’t going to be interested in selling their shares through the required TOP issue, what exactly is in it for them to have their share ownership diluted by the new rights issue.
Therefore if they are not on the ‘restricted list’ the options must be either buy during the rights issues to maintain the status quo of have your share ownership diluted. (Or just get rid of their shares when the TOP get there act together and enforce their action or Cold Shoulder King)
If people decide not to take up their 1 to 1 proportion in the rights offer, who then has to take up the slack, including taking control of the proportion of 1 to 1 shares held by those currently not allowed to trade/vote etc.
If it is the existing main shareholders and possibly 1872 is there any possibility of ownership exceeding the 30% mark along with once again straying into concert party territory given James Blair wearing two hats.
There must be balancing act here re the numbers but I haven’t quite got my head around it!!
AllyJambo – totally agree with you regarding “having to spend big” – as the Battered Bunnet’s “SomeOldHat” blog that Auldheid linked to showed, The Rangers have a domestic income (ex player trading) 2x that of the next biggest earner, Aberdeen, and close to 3x that of your good selves (great result last night btw, well not what I was wanting but does put a wee gloss on your season).
Their spend was unsustainable even when they were getting Champs League money, but they got their 9IAR before admin and liquidation (which King referred to in that same speech), and could have taken their lumps and rebuilt on a sustainable model, biding their time until the inevitable Celtic pack of cards (sic) collapse (c. Dave “Lyin'” King), but no, that doesn’t fit with the “weearrapeepulll” mindset so it’s deja vu all over again…
Nick MAY 10, 2018 at 13:36: I don’t believe UEFA’s FFP distinguishes between the origins of loans.
They simply say “break-even requirements, which require clubs to balance their spending with their revenues and restricts clubs from accumulating debt. In assessing this, the independent Club Financial Control Body (CFCB) analyses each season three years’ worth of club financial figures, for all clubs in UEFA competitions” – now sure, not paying interest is nice, and it does help cash-flow but if The Rangers stated business case is to build up debt until some “black swan” event eventually bails them out
a) that’s not a business case that’s a basketcase
and b) it’s totally against FFP rules.
Specifically on UEFA’s own site “Financial Fairplay – All you need to know” http://www.uefa.com/community/news/newsid=2064391.html
7) Some clubs have enormous debts or do not pay their debts. Can those clubs still comply with financial fair play?
“A certain level of debt is part of a normal financing approach for any business. However the build-up of net debt is restricted by the break-even rules, which require owners or investors to recapitalise and cover any losses. In addition, in the future any investors looking to conclude a voluntary agreement with the CFCB will be expected to commit funds in advance, ex ante rather than ex post. Finally certain debts with added importance, such as debts to players or key staff, social/tax authorities and other clubs are monitored on a regular basis by the CFCB.”
So it is clear that having built up a level of debt through “soft loans” over the previous couple of years, King and his band need to “recapitalise and cover any losses”, he even said so, hence this share issue.
But what then? King has said this debt funded model may run for years – does that mean recapitalisation every 3 years? What does THAT mean for the long term share price?
JOCKYBHOY
But what then? King has said this debt funded model may run for years – does that mean recapitalisation every 3 years? What does THAT mean for the long term share price?
I think you’ve nailed their plan right there and I do think that ensures they will comply with FFP for as long as they want to chuck money at their hobby. That’s the key point here as well, this is rich men funding their hobby who don’t care about the share price. Unless there is some sort of ingenious end game that no Bampot has managed to work out as yet their actions to date have proven they aren’t in this to make money or even break even.
A lot of people are uncomfortable with that model and I understand why but I keep coming back to the fact that if people want to put their own money into our game then surely that’s a good thing? The FFP rules are a mess as is highlighted by the illustration below:
Man United – Owners don’t put a penny into the game, load the club with debt, siphon off massive interest payments so effectively take money out of the game. The club still turns a profit though so they are fantastic owners and breeze through FFP.
PSG – Owners put hundreds of millions into the game, take nothing out, club makes a loss funded by those owners so they are in the eyes of FFP at least worse owners than the Glaziers.
It’s a complex topic and there is a counter argument which has some substance to it “is itright that clubs like PSG win everything just because they have rich owners” but the current setup isn’t fit for purpose in my opinion.
WOTTPI: posted this previously (May 9, 15:29)
“If you don’t wish to participate in a rights issue, the share price will still fall and your investment (sic) will have been devalued regardless.
Final option, if it is available, is to sell your rights to someone else who wouldn’t usually be eligible or to the underwriter. Problem here is that there will not be an underwriter, as that would usually be an investment bank or similar and no-one in The City will deal with King.”
In some cases rights are transferable and can be sold, offsetting equity losses which will usually occur after a rights issue, but if someone wants to protect themselves or exclude potentially hostile buyers from hoovering up shares, it may be that rights are not transferable.
As I also said, there would usually be an underwriter for such a share issue to ensure all shares are sold – the underwriter(s) effectively stockpile the shares and release them into the market as conditions dictate in order for them to maintain a profitable price. Sometimes the issue price was really wrong and they take a bath, getting stuck with stock they won’t break even on, other times it can work in their favour. But as King seems to be getting cold-shouldered it will be interesting to see who, if anyone, underwrites this.
As usual more questions than answers.
ALLYJAMBOMAY 9, 2018 at 22:47
Are you able to tell us how you know that more comprehensive accounts were submitted, and that an auditors’ review was included? I have no knowledge of it, and no one else has confirmed it either.
As to assurances regarding future funding plans, why do you think UEFA are seeking these? Do you think they would be seeking such assurances if TRFC’s application was fully compliant?
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I confirmed it on the 30th March in direct response to an article written by James Forrest. I was given sight of the submission and confirmed the interims had been submitted the previous night and 24 hours later the abridged version was posted on the website.
The interims are non negotiable. The SFA have a set template that needs to be completed by EVERY club who can qualify for Europe. This was done by Rangers and that licence has now been granted.
Ally, can i please ask if you are able to show me the interims of any other club in Scotland with the exception of Rangers and Celtic and if not, how can we tell that they all meet the set out criteria ?
PS – the fuller version doesnt read any better NOR worse than the abridged version. The template to the SFA is more about the overdue payables than anything else. Rangers livcence doesnt need further scrutiny by the SFA. Its UEFA who will now decide on FFP if anything further needed.
Tris, can i please ask if this is in moderation that its put to the end of the posting queue as i feel the points are being missed due to time of moderation. Thanks in advance.
ALLYJAMBO
MAY 10, 2018 at 12:35
Yes, I think that they would be better off on and off the pitch within a couple of years of doing that, and soon enough they’d win the league. The demand for instant success, however, has been compounded by the constant thrashings at the hands of Celtic, and the crushing imminence of 10 in a row. They are going to outspend their means and finally be liquidated just like Rangers.
There will be no cutting of cloth, and no happy ending for Rangers Mark 2, but Rangers Mark 3 will probably be competitive for the league in 7/10 years time.
TheLawMan2May 10, 2018 at 14:32
Ally, can i please ask if you are able to show me the interims of any other club in Scotland with the exception of Rangers and Celtic and if not, how can we tell that they all meet the set out criteria ?
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Wouldn’t know where to look, and can’t be bothered, but I do know there’s a view available of Hearts’ certificate showing their exit from administration, the only way to avoid liquidation for a football club that has been remiss enough to enter administration in the first place.
If we are going to enter a, ‘you show me yours and I’ll show you mine’, episode, might as well start with that one.
But ignoring that childish repost of mine, I was not suggesting that TRFC won’t get a license, or that they’d fail to meet UEFA’s FFP criteria, but was saying that, due to their repeated losses and going concern issues, that UEFA might well take a closer look at TRFC’s accounts and look for more in the way of support for interim accounts than they would for clubs whose most recent audited accounts have been reasonable and free of any auditors’ concerns. UEFA, if the SFA have bothered to make them aware of it, must also be concerned that the man whose promises of continued funding to see the club through this season, not only failed to provide the funding, forcing the club to look elsewhere for loans, is now embroiled in a legal mess with a UK regulatory body and has failed to comply with a Court of Sessions order.
You also wrote:
‘Rangers livcence doesnt need further scrutiny by the SFA. Its UEFA who will now decide on FFP if anything further needed.’
I presume then that TRFC have not yet been granted a Euro license, or, at least, it has not been ratified by UEFA?
SlimJim told us earlier that the accounts submitted to UEFA carried a review by the club’s auditors, yet you haven’t mentioned it as being with the documents you were shown. I take it no such review was present, or if it was, you’ll be able to give us some insight into what it said.
wottpi May 10, 2018 at 13:55
Could be daft questions but may someone like Easyjambo could answer.
Separate for the TOP requirement to put out an offer to existing share holders – I understand the new rights issues spoke about on Monday will put 81.5 million shares onto the ‘internal market’ for existing shareholders.
I have seen talk of these shares being issues on a one for one basis against the existing 81.5 in the hands of various parties.
Therefore can you, first, only buy shares in accordance to your existing shareholding and then…sweep up any that are not taken up by others?
============================
That’s exactly how it works.
Let’s say Ally McCoist thinks King is doing a great job and the club is destined for Champions League glory, so he want’s a bigger part of it.
He currently owns 1m shares, so he will be offered the opportunity to buy 1m new shares at 20p (the expected price). That would cost him £200k.
He accepts the offer, but subscribes for up to a further 5m shares. If there enough new shares not taken up by the current shareholders, and the offer is not over subscribed, then Ally would get his 5m additional shares at a cost of £1m.
If the offer is oversubscribed, e.g. there are 80m new shares, 60m are taken up on a one for one basis, but there are subscriptions for 40m additional shares. In that scenario, the 60m are guaranteed, but those offering to buy the additional 40m would see those requests halved, as there would only be 20m available to go round.
If Ally’s subscription for 5m shares was part of the over subscription above, he would only be able to buy 2.5m extra shares at a cost of £500k.
Big Sutton rubbing it in.
Blagged off Twitter.
ALLYJAMBOMAY 10, 2018 at 15:58
1) If we are going to enter a, ‘you show me yours and I’ll show you mine’, episode, might as well start with that one.
2) But ignoring that childish repost of mine, I was not suggesting that TRFC won’t get a license, or that they’d fail to meet UEFA’s FFP criteria, but was saying that, due to their repeated losses and going concern issues, that UEFA might well take a closer look at TRFC’s accounts and look for more in the way of support for interim accounts than they would for clubs whose most recent audited accounts have been reasonable and free of any auditors’ concerns.
3) ‘Rangers livcence doesnt need further scrutiny by the SFA. Its UEFA who will now decide on FFP if anything further needed.’
I presume then that TRFC have not yet been granted a Euro license, or, at least, it has not been ratified by UEFA?
4) SlimJim told us earlier that the accounts submitted to UEFA carried a review by the club’s auditors, yet you haven’t mentioned it as being with the documents you were shown. I take it no such review was present, or if it was, you’ll be able to give us some insight into what it said.
________________________________________________________________
Ally, i have numbered your points to address them hopefully a bit easier.
1) The purpose of me asking that question was not to meet that purpose. It was to simply point out that no other club reproduces the interims for shareholders, Companies House, fans or their website. Just because Aberdeen dont show anyone these, apart from the SFA, it doesnt mean they dont produce them to the required standard. On Social Media, it is only ever aimed at Rangers. If everything is about fairness, then everybody should show them to all. (though i disagree with that as they are a waste of time)
2) UEFA may take a closer look at the accounts or to be more precise the UEFA Club Financial Control Body may take a closer look. I use may, but its more probable than may in my opinion. Just to clarify again though, Rangers audited accounts were submitted in addition to the interims. All clubs have to do that. There still seems to be a view that Rangers didnt have audited accounts for the licence submission. They 100% did.
3) Rangers have been granted the licence and will play in Europe next season. Admittedly i could have worded that sentence a bit better. The “anything further” part will apply to next seasons competition should an offence be deemed punishable in that manner or a fine. I dont believe the club will be fined or face any disciplinary issues though thats just my opinion and not concrete as with Rangers, who knows what goes on week to week.
4) The submission carried an auditors review in the EXACT same manner that Celtics publicly released accounts carried. Its a requirement to be included in the submission and it was in there. It was a bog standard statement that covered the ongoing commitment by the directors to cover any shortfall.Tris – thanks for puting last comment to the end for people to see and would appreciate you doing so for all future posts if thats ok. Much appreciated.
EASYJAMBOMAY 10, 2018 at 16:06
Thanks for clearing that up EJ.
That covers the ‘everything is rosy’ scenario when everyone who currently has shares puts in for more and gets what they want and go away happy.
However if I recall correctly the shares are spread across various parties who may or may not be interested in both the rights issue and the enforced TOP offer from King.
As you said the other day it looks like it may be 20p per share if the talk is £16m.
Given the share ownership, how many shares do King and the others without outstanding loans need to sweep up to make a decent stab at the debt for equity swap?
Are there enough shares floating around to clear all their debt, without anyone going over the 30% rule or due to lack of shares / to stay on the right side of 30% are they only going to be able to bag so many shares but still be left with outstanding debt albeit to a lesser extent?
At an issue price of 20p and assuming that the lender will accept that as the true value 5 shares would be needed for every £1 of loan to be paid off. 5x 20million, if that is what needs paying off, would require 100 million shares. If only 80 million shares are available the price needs to be correspondingly higher 25p. That leaves nothing for warchest requirements. Additionally the ursine ones are only a proportion of those entitled to partake in the rights issue for their £20m to be cleared would mean jacking the issue price up further. There are other costs involved but the principle remains the same. Changes in the value of shares with more in issue but no debt would also need to be accounted for.
Perhaps there should be some kind of preference share created clearing the debt but with dividends attached. I understand that Celtic did something like that.
Curioser and Curioser as Alice in Wonderland said (IIRC)
NickMay 10, 2018 at 12:56
“…..https://www.scottishfa.co.uk/media/3584/club-licencing-current-status-2018.pdf
Newly updated, it appears all Scottish clubs have met the licencing criteria for this season.”
__________________________
No, it appears that the SFA are telling us that UEFA have been told by the SFA that the SFA’s licensing Committee have said that TRFC Ltd have been scrutinised appropriately and that all is in order and that they should be granted a UEFA competitions licence.
We have nothing to indicate that UEFA has NOT been told lies, as many of us think they were told by that licensiing Committee some years ago in relation to RFC(IL).
So many questions were raised about the award of that licence then that even Stewart Regan had to order that the current Compliance Officer should carry out an investigation_ and get to hell out of the SFA.
Not a cheep has been heard from that supposed investigation.
Are we to believe what the Licensing committee says now?
I don’t think so.
I think they need to be called out. NOW.
JOHN CLARKMAY 10, 2018 at 17:58
We have nothing to indicate that UEFA has NOT been told lies, as many of us think they were told by that licensiing Committee some years ago in relation to RFC(IL).
____________________________________
And on the flip side of this John, we have nothing to indicate that UEFA has NOT been told the truth.
Given the scrutiny of the SFA by Social Media and the Resolution 12ers over the last few years, i would imagine they would be double scrutinising everything to make sure that they dont make a mistake. (this does not mean i believe they made a mistake the last time incidentally)
wottpi May 10, 2018 at 17:02
Given the share ownership, how many shares do King and the others without outstanding loans need to sweep up to make a decent stab at the debt for equity swap?
Are there enough shares floating around to clear all their debt, without anyone going over the 30% rule or due to lack of shares / to stay on the right side of 30% are they only going to be able to bag so many shares but still be left with outstanding debt albeit to a lesser extent?
=================================
You would need all the £16m “raised” to do a complete conversion of the loans which would leave no cash available for other purposes.
My understanding from what King said (in the off-chance that he was telling the truth on that topic), he and the Concert Party will not be allowed to increase their stakes in the club as part of the rights issue.
The Concert Party currently holds 34.05% of the shares, so on a one for one take up of a fully subscribed offer, then they would account for £5.55m of the £16m+ raised. That would be the full extent of the possible write down of their loans. At the end of June 2017, King/NOAL was in for £6.7m, other Directors (including Park) £3.8m, and other shareholders (including Letham and Taylor) £5.4m, so those debts would fall pro-rata in accordance with King and the 3 Bears’ shareholdings, as a proportion of the £5.5m.
I don’t have a clue how the £6m new cash will be raised and from which shareholders. Club 1872 might have £800-£900k (although half of that is supposedly earmarked for projects), so they could well be diluted as they would need £1.75m just to retain their 10.72% share of the club if the issue is fully subscribed.
Who else has cash available and who has loans to be repaid? B Scott, A Johnston P Murray, S Murdoch, J Bennett and A Ross have all reported to have loaned cash, while Julian Wolhardt bought half of Ashley’s shares. Are are any of them likely to invest more or would they want their indebtedness reduced?
King thinks the share issue can be completed by the end of June (in time for the end of the financial year or maybe even a UEFA monitoring checkpoint?), so I’d expect something on the offer to be forthcoming in the next two or three weeks, and certainly by the end of this month.
The SFA have published the list of clubs granted a Licence in April 2018 and TRFC are a recipient.
This seems to contradict what Phil Mac Giollabhain published yesterday when Phil’s blog suggested SFA had reservations they passed to UEFA.
Now if those have been looked at by UEFA and dealt with then a licence has been granted and that is that ( although an explanation of how would be great for trust and transparency) but there was a similar situation a couple of years ago when the Greek FA had reservations about a licence they had granted to Giannina FC.
The Greek FA signalled that they were uncertain on the overdue tax situation as reported to them by Giannina.
This caused the CFCB to send in a team of auditors in early June who found that an overdue tax situation did indeed apply.
The thing was CFCB were notified early enough at end of May to investigate before fixtures etc established. This makes it a current issue for TRFC rather than one of closing the stable door next year IF SFA have reservations not examined by UEFA.
The licence to Giannina was refused by UEFA after investigation and CAS upheld an appeal against UEFA by Giannina.
This does not mean a licence will be refused to TRFC because the issue is not overdue payables but debt funding and compliance with the rules that allow it.
However it might mean UEFA setting conditions on breaking even henceforward. They did so with Olymiakos and just banned them for 3 years for not complying over the agreed timescale.
This could b a very smart move by SFA. It puts blame on UEFA for making TRFC live within its means which is good for the integrity of Scottish and for TRFC supporters who are presently supporting a House of Cards.
If Celtic only need to fail once getting into Europe at CL level, TRFC need to get access pretty quickly before their House of Cards collapses as it did in 2012 after they failed to qualify in both CL and EL in 2011.
If Celtic only need to fail once getting into Europe at CL level, TRFC need to get access pretty quickly before their House of Cards collapses as it did in 2012 after they failed to qualify in both CL and EL in 2011.
————–
So true.Funny how the smsm never reported as such.
From the Rols of Court
LORD MALCOLM –N Glass, Clerk Tuesday 15th May Debate (3 days) A293/16 Paul Clark v Chief Constable of the Police Service of Scotland &c Campbell Smith LLPScottish Government Ledingham Chalmers LLP
A295/16 David Whitehouse v Chief Constable of the Police Service of Scotland &c A & W M UrquhartLedingham Ch
JOHN CLARKMAY 10, 2018 at 18:45
—————-
Thanks for that.
Will you be in attendance?
See thread…
https://twitter.com/timomouse/status/994612435448410112?s=20
Doesn’t sound like Celtic are overly worried about Dave King’s opinions. Spending around 4m this summer on stadium improvements – pitch, lighting & sound.
So much for the SMSM anxiety that Celtic would go on a panic spending spree.
ps, 1st signing – Bain – good signing, but how many millions?
I smell a large putrid rodent at the timing of publication of the SFA’s domestic licencing document, the day after it was confirmed that their preferred representative would finish in a European qualification spot.
“There has been fevered speculation online as to whether the SFA would grant Rangers a UEFA licence.So-called experts cast this in doubt due to the finances of the Ibrox club.”
(Daily Record on line today.)
My goodness do any of their sports reporters ever dip in here?
“So called experts” Dear God, this site and it’s top posters are a depository of rules & regulations (and past breaking of same).
Much more than they will ever know.
Still The Record has a history of mocking internet bampots. James Traynor anyone?
A question for the guys in the know , if they would be so kind as to offer an answer . I was under the impression that the loanees at TRFC were contracted until August , thus allowing them to compete in any Europa League qualifiers , but am told that isn’t the case . Transfermrkt has the loans ending either May 31 or June 30 . Does anybody have a clear idea of the position ?
borussiabeefburgMay 10, 2018 at 20:13
And I am losing the will to live!!!
Cluster OneMay 10, 2018 at 19:22
‘…Will you be in attendance? ..’
___________________
Deo volente, I hope to be, at least on the Tuesday.
If I remember correctly, the criminal case against them what we called for convenience D&P , Duff and Duffer etc (probably to the annoyance of their American parent, Duff and Phelps) collapsed, and it is interesting that the wrongfully accused should now be seeking damages.
I think I’ve mentioned before how much I enjoyed “The Untouchables”, the film version with our Sean Connery. [ I think most of my generation were hooked on the TV series from 1959, with Robert Stack as Ness]
In the film, Richard Bradford played quite wonderfully well the part of a double-dyed villain of a police chief. Double dyed because not only a corrupt polis, but also a betrayer of a former, trusting friend and colleague.
It is only a film ( and, apparently, scarcely related to the truth!).
But how blessed we are that Glasgow of the 21st century is not Chicago of the 1920s and 30s, eh, what?
I’m not a fan of it on here when people follow the Celtic = good, Rangers = bad line of thinking, but Dave King’s pronunciations are mortifyingly embarrassing.
A simple look look at the Celtic accounts makes it clear that he is full of sh1t. They could literally buy and sell Rangers several times over so claiming that it is a house of cards is nonsense. He also claimed that Rangers have greater resources than Celtic – again, for that to be the case you’d have to have something akin to £150m cash in hand by the time you factor in Celtic’s ability to borrow on top of their large stash of cash.
I find the fixation with Celtic wearying, troubling and terrifying. As others have pointed out today, Rangers could outspend the rest of the league, put a chunk of money into youth development and coaching and while unlikely to get anywhere near Celtic, would still likely be ahead of where we are now. Indeed, if such an approach had been followed since liquidation, we’d be sitting on our own stash right now.
Rangers have nobody body to blame for their current predicament and requirement to repeatedly fund deficits, in short, than their own appallingly negligent management, across several different stewardships including the current incumbents.
Very well said RyanGosling.
Well said Ryan. The post that struck me most today was Jockybhoy’s at 11.22am.
“This was said at the AGM in 2016 where he also said “(the board) believe deficit funding to meet anticipated operational shortfalls was and remains necessary – as the Club cannot regain its former status by relying solely on the income it presently generates from its normal operations”.
(My highlights)
Surely that is the aim of any business? I know firms have short term needs for funds throughout a financial year usually covered by overdrafts. And then outside funds for major capital investment. In order to generate bigger future income/profit.
But it’s this need for finance for normal expenditure – keeping the lights on as people say – normal running costs – that is very distressing for a business.
As you imply, if they (various boards) had cut their cloth in 2012, who knows where you would be now. No lower than the rest of the best I would guess. And with a lot less uncertainty.
RyanGoslingMay 10, 2018 at 22:37
‘……..Rangers have nobody body to blame for their current predicament ..’
______________
You deserve honour for your appreciation of the general situation, RG.
But I think there are others to blame for the lack of reasonable, objective criticism and questioning of the stuff that was coming from any and all of the various Boards from day one.
A significant culprit here was the SMSM. Even the DK presser ended up as positive PR job, with absolutely no serious questioning of the almost manic verbiage of the boy frae Catlemilk.
But the more insidious culprit was , is, Club 1872. No harm to those well-intentioned fans, but to allow themselves to end up as , virtually, a tool of the Board of RIFC plc was a serious mistake, in my opinion.
If the SMSM had been able to be objective, been able not to worry about being banned from Ibrox or other quarters, been ready to exercise the kind of cynicism that real journalists need to exercise, the arch-devil whose cheating was the cause of the death of RFC might have been halted in his tracks.
Certainly, the subsequent Jacksonsian MBMB notion would have been exposed as the nonsense it was.
And the warnings from some reasonably sensible people on the Board might have been acted upon.
But the chief culprit is undoubtedly the SFA.
In 2012, had the SFA done their bounden duty, TRFC Ltd would have been treated as a new footballing entity.
And on the basis of sporting and legal truth, would have had , I imagine, such honest and helpful support as a new football club might hope and expect to receive.
The supporters of the Rangers FC that is now in Liquidation can rightly blame quite a lot of people for the fact that their club died, and that in consequence they are forced to transfer their emotional attachment to a new creation in the hope that wishes can be translated into truth.
According to an excellent source, Brendan Rodgers flew to London today “for talks”. But was it Arsenal ??
PADDY MALARKEYMAY 10, 2018 at 20:27
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A question for the guys in the know , if they would be so kind as to offer an answer . I was under the impression that the loanees at TRFC were contracted until August , thus allowing them to compete in any Europa League qualifiers , but am told that isn’t the case . Transfermrkt has the loans ending either May 31 or June 30 . Does anybody have a clear idea of the position ?
——————–
SPFL adjusts loan rules.
https://spfl.co.uk/news/article/spfl-adjust-loan-rules/
some adjustments to loan rules from 2014 but it does not cover your question.But as best as i can i will try and answer it.Maybe someone with better knowledge will help.Anyway
———
As for the loanees at TRFC were contracted until August.If they were and they were to return to their parent club they would miss the start of their parent club’s season, would they not?
——–
allowing them to compete in any Europa League qualifiers.What if the loanees parent club has Europa League qualifiers ?
I believe as you say the loans ending either May 31 or June 30
PADDYMALARKEY MAY 10 20.27
Goss, Martin, Murphy, Cummings. Contracted until 31/05 iirc.
The SFA have published the list of clubs granted a Licence in April 2018 and TRFC are a recipient.
This seems to contradict what Phil Mac Giollabhain published yesterday when Phil’s blog suggested SFA had reservations.
Now if those have been looked at by UEFA and dealt with then a licence has been granted and that is that ( although an explanation of how would be great for trust and transparency) but there was a similar situation a couple of years ago when the Greek FA had reservations about a licence they had granted to Giannina FC.
The Greek FA signalled that they were uncertain on the overdue tax situation as reported to them by Giannina.
This caused the CFCB to send in a team of auditors in early June who found that an overdue tax situation did indeed apply.
The thing was CFCB were notified early enough at end of May to investigate before fixtures etc established.
This is a similar situation if licence granted to TRFC with reservations.
The licence to Giannina was refused by UEFA after investigation and CAS upheld an appeal against UEFA by Giannina. This does not mean a licence will be refused to TRFC because the issue is not overdue payables but debt funding and compliance with the rules that allow it.
However it might mean UEFA setting conditions on breaking even henceforward. They did so with Olymiakos and just banned them for 3 years for not complying over the agreed timescale.
This could b a very smart move by SFA. It puts blame on UEFA for making TRFC live within its means which is good for the integrity of Scottish and for TRFC supporters who are presently supporting a House of Cards.
If Celtic only need to fail once getting into Europe at CL level, TRFC need to get access pretty quickly before their House of Cards collapses as it did in 2012 after they failed to qualify in both CL and EL in 2011.
A wee blast from the past below. It’s difficult to sort the truth from the lies when Dave King speaks, what with him being a mendacious witness whose evidence should not be accepted on any issue unless it is supported by documents and other objective evidence. It’s always hilarious listening to people like King consciously trying to avoid saying the club went into liquidation and equally hilarious reading the linguistic gymnastics so-called journalists contort themselves through to avoid telling the truth.
https://www.scotsman.com/sport/football/teams/rangers/dave-king-wants-to-take-oldco-rangers-out-of-liquidation-1-3883729
Chairman Dave King claims it is ’emotionally important’ to try to restore Rangers to their pre-insolvency status.
STEPHEN HALLIDAY Published: 00:17 Friday 11 September 2015
DAVE King has revealed his desire to restore Rangers to pre-insolvency status by taking the old company out of its current liquidation process and placing it back in the ownership of Ibrox Stadium and other assets.
The Rangers chairman outlined the startling ambition during his first visit to Glasgow from his South African home this season. King claims it is “emotionally important” to try to reverse some of the damage done to Rangers’ image since Craig Whyte led the club into administration and then liquidation in 2012.
A former director of The Rangers Football Club PLC, which is in liquidation under BDO, King seized control of its successor, Rangers International Football Club, in March this year.
Both Whyte’s acquisition of Rangers from Sir David Murray in 2011 and the subsequent purchase of its business and assets by Charles Green following failure to come out of administration the following year are currently the subject of various legal proceedings.
BDO, meanwhile, had to postpone an interim dividend payment of 7.5p in the pound to Rangers’ unsecured creditors last week after receiving a claim from Law Financial Ltd, one of Whyte’s former companies, for £25 million in priority to other creditors. In November last year, BDO secured a settlement of £24m from lawyers Collyer Bristow who acted on Whyte’s behalf when he bought the club. The final amount due to creditors will also be dependent on settlement of the long-running HMRC tax case against Rangers for which the latest appeal ruling from a First Tier Tribunal is still pending.
There appears to be no precedent for taking a company out of liquidation but despite the myriad complications which are clearly involved in Rangers’ case, King insists it could be achieved.
The businessman says it would have no material impact on the current running of the club but would be a positive response to taunts from rival supporters that Rangers are not the same club as they were prior to insolvency. “We have a vision going forward where I would like to see us taking Oldco out of liquidation and putting assets back into Oldco – putting the old Rangers back into the old company,” said King.
“We can’t do it while all this stuff is being sorted out. But these are the areas behind the scenes where we are fairly senior commercial people and I think we can do that. “The timing will depend on the litigation. Craig Whyte’s got this latest claim – is it a serious claim? We don’t know that yet. “I’m just hoping we continue to do what is right on the football field and leave us to deal with the other challenges as best we can when they arise.
“I don’t think it is important, I just think it would be a good thing to do. It would be back to the traditional Rangers.
“That is the company and it is a valid thing to take a company out of liquidation and put the assets back into it. I think the supporters would like it. It is not economically important but it is something I would like to do.
“You can never rewind what has happened but you can try and look back in 100 years’ time and say there was a blip of four or five years in Rangers’ history when this all happened and it was resolved to the norm again.
“It’s an emotional thing as well with the supporters. They hear all this ‘You’re not Rangers any more’ and ‘you are a new club’. “We just want to put all that behind us and say we had this unwanted period and now we are back to where we were. It’s more emotionally important than practically important.
“The jibes don’t bother me. I’m told about it but I’m not in here all the time. It’s part of being in Glasgow, it’s part of the history of the two clubs.
“Rangers fans over the years have been keen to have a dig at Celtic when there is an option to do so. To me that’s not really serious. But, if we could do it, I think it would be a nice thing to do.
“It is practically feasible and legally feasible. We just have to get in the position where the liquidators have done everything they can.
“The club can then be rehabilitated. But if you have all these claims floating around, where we don’t really know who is claiming assets and what they are, then it will continue for a longer period.”
King believes it is ultimately possible that “Oldco” Rangers creditors could get all of their money back. But he added: “You don’t have to pay 100p in the pound to creditors. “If creditors accept a compromise and waive some of the debt, it could be 50p or 60p in the pound. That’s not a legal requirement, but certainly the creditors have to be happy with the settlement. “At the moment, if you look at the potential for the liquidation, with getting the money from Collyer Bristow plus potential other claims, if HMRC are taken out the picture, then there is an opportunity for them to get 100p in the pound. “Take Craig Whyte out of the picture as well with this new claim and people could conceivably get 100p in the pound, because there weren’t many other major creditors in the club. “Because of the situation with the tax case – not through frugality or conservatism or the way the club was being run – the club basically couldn’t get credit because people knew about the big tax case. So the club was fiscally responsible by default.”
I am really glad the SFA appear to be so vigilant in terms of granting UEFA licences. If they were not you could imagine all sorts of thing happening. For example, just imagine a club owed a tax bill of over £4m to HMRC which they had admitted was due, and then were granted a UEFA licence because the SFA were not so vigilant in their checks. Worse still, just imagine the SFA actually knew about the tax bill and still granted the licence. Can you actually imagine living in a country where such things might happen! As I said, I am really glad the SFA appear to be so vigilant in terms of granting UEFA licences.
AULDHEIDMAY 10, 2018 at 18:25
Not to be a “party pooper” but I think if your theory that the SFA had raised concerns was true they would have graded Rangers as Bronze status rather than Silver for finance (in the same way the Greeks did in the example you provided).
The debt funding to this point falls within FFP rules, Scottish teams are perhaps unfairly helped in this regard as UEFA look at amounts of losses rather than a percentage of turnover.
In terms of the SFA/UEFA licencing process my understanding is that UEFA are led by the domestic association’s decision and don’t carry out an assessment as such. It looks very much like the matter has been put to bed unless something very significant materially changes in the next 3 weeks.
EASYJAMBO
MAY 10, 2018 at 18:24
Once again many thanks for your response.
So to be clear if it is a straight one for one deal, the shareholders we know with loans worth £15.9, will reduce that total by £5.5m, roughly by a third, to £10.4m.
Therefore they will still be in hoc, jointly, for £10.4m.
If anyone of them want to forgive more of their debt with an equity swap they will need to take on a bigger stake in the Plc than they have at present. The condition being that spare shares are available and, most probably, they limit any new shareholding total to under the 30% ceiling. We also have to remember that some of the circa 66% of the share holding are on the banned list and just over 25% of those entitle to vote aren’t keen to see their shareholding diluted with the introduction of a new/external rights offer. So we have a number of unknowns on how folks will take to an internal rights issue. However, lets put the if buts and maybes on the back burner.
At the same time as wanting debt to equity swaps for the loans, the Close Bros will be wanting there £3m plus interest back. Whether it comes out of the season ticket money or the rights issue it is still got to come out of the the basket of assets somehow.
Lets be generous and call that, with interest, £3.5m in total which amounts, at 20p per share, around 21.5 % of the shareholding.
So to be clear for 1/3 of the directors/loan debt worth £5.5m and to deal with the £3.5m debt to Close Bros they need to use up 56.5% of the shares at 20p.
The remaining 43.5% of the shares can potentially generate circa £7m if sold at 20p.
£1m to Stevie G (75%) and McAllister (25%) as their signing on fee and £6m into a war chest to shell out on new players.
Simples?
If either the rights issue goes ahead or the TOP enforced offer we just need to wait and see who is going to take up the offer/s and who is going to stay stuff this for a game of soldiers.
The can is being kicked down the road but the path is still heading in the same direction.
Re the share offer.
What I am struggling to see is who will buy the £6m of shares that is supposed to supply the new working capital for TRIFC?
Converting debt to equity doesn’t provide a penny in working capital. And in any case those members of the concert party can’t buy shares anyway whilst the TOP case is unresolved.
Club 1872 might buy – but how much do they have £1m/£2m?
Who else? Sorry, I just don’t see it.
TINCKSMAY 11, 2018 at 11:42
What I am struggling to see is who will buy the £6m of shares that is supposed to supply the new working capital for TRIFC?
Converting debt to equity doesn’t provide a penny in working capital. And in any case those members of the concert party can’t buy shares anyway whilst the TOP case is unresolved.
Club 1872 might buy – but how much do they have £1m/£2m?
Who else? Sorry, I just don’t see it.
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My understanding is that it will be the existing concert party who will underwrite it and that its simply a way to get more money in as Working Capital without increasing the loans, whilst increasing their shareholding.
Club 1872 only have around £0.5m im pretty sure at last count. Not 100% on that though.
TINCKSMAY 11, 2018 at 11:42
Exactly, that is what I’ve being trying to get my head around.
The folks with loans will want to at least get 1 for 1 and possibly more but have to be careful not to exceed 30% of the share ownership. However even if they do end up with more than 1 for 1 it is still unlikely to be any new and spendable money given the level of loan debt being circa £15.9m as discussed with Easyjambo.
1872 will chip in but we know their funds are limited. Their cash has been a target for a while now as it is the only obvious ‘new money’ that will find its way into the Ibrox coffers. However its not going to be £6m.
We are wholly unsure what the rest of the existing shareholders will do and it is unclear how the share issue will be underwritten if there isn’t full take up of the 81.5m shares.
Unless they are died in the wool Bears with disposable readies, what is in it for the other shareholders to splash the cash when they could take the TOP 20p offer and run for the hills.
Thanks for the replies , peeps (it’s what young folk say , apparently ).
Tincks
May 11, 2018 at 11:42
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I hope you are not suggesting that a proven liar and convicted fraudster lied to suit his purposes.
Dave has already promised tens of millions of pounds and not all of them have been put in yet. Let’s not concern ourselves with common sense, knowledge and practicalities.
Just accept what the man said and move on.
TheLawMan2
May 11, 2018 at 00:25
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I’m sure with the £8m or so compensation, the promise of domestic dominance, European competition, a decent transfer budget and being the manager in a potential ten in a row winning season Celtic will be able to replace him if he goes anywhere.
Whilst he has done an excellent job since arriving at Celtic Park I don’t think many fans believe he will be here forever.
News just breaking.
Red Bull and a Japanese car manufacturer have joined forces to buy The Rangers and inject squillions of pounds.
Two provisos
The club must relocate to Northern Ireland and they must change their name to
Red Honda Ulster.
Its ok, my coat’s already on.
Also blagged from twitter
HS
The Uefa Licence
I suggested on twitter recently that the problem for the SFA is that there is no clear ruling from Uefa on the treatment of loans which are intended to be converted to Equity
Rangers fail to qualify for a Uefa licence on the basis that the accumulated losses over a 3 year period exceed the permitted levels.
Therefore the excess losses over €5M must be covered by contributions from equity participants ( shareholders ) or related parties. Which leads to the question of what is considered to be an acceptable contribution
Shareholders can purchase new shares which increase the share capital. This has not happened at this time , therefore Rangers fail to reduce losses under this option.
Rangers accounts show that current loans are treated as liabilities and are all repayble . Rangers therefore fail to reduce losses under this option as well .
What UEFA specifically exclude from counting as a contribution
I’d refer to clause iv) above . As previously noted Rangers themselves treat the loans as a liability . It says so in the audited accounts . It’s worth remembering Rangers produce the accounts and then have them agreed and signed off by their auditor .
Rangers loans , as described in Rangers own balance sheet , are liabilities and as such are not allowed by UEFA to reduce losses to the acceptable level to qualify for a licence
My view is that if Rangers are able to prove that they will convert sufficient loans to Equity before the end of the monitoring period in June 2018, then the SFA could reasonably award a licence , in the expectation that if the share issue doesn’t take place in time Uefa would reject the licence award.
It is though incumbent on the SFA to red flag this to UEFA given the history, and the current Takeover Panel and Court of Session rulings
There are 2 further wrinkles . Rangers , i suspect will claim the loans are not in fact loans , rather they are Capital Contributions . The problem with that , and i’d reject the claim on this basis, is that as noted the loans are repayable, and are in the liabilities section of the balance sheet.
Rangers need to receive loans which are not repayable and not treated as liabilities for a Capital Contribution to be able to be used as reducing losses to the acceptable level.
The last issue is that whilst there may be a case for the SFA to kick this can down the road to Uefa, last years award now looks wrong on all accounts.
Losses at that point exceded allowed level, and given it is now 14 months since the SFA awarded Rangers a licence for 2017-18 and NO SHARE ISSUE HAS TAKEN PLACE, then it must be clear to even the SFA that it was an error to issue the licence at that time
The SFA are well aware how contentious this matter has become. A new CEO should be clarifying the rationale behind their decision making and their process
Finally, King is wrong (no surprise there) when he claims that both the SFA and Uefa only want comfort that when running at a loss there will be funds provided to cover the loss.
UEFA specifically disallow loans which are repayable to be used to reduce acceptable losses. What UEFA requireis either loans which are then written off or fresh equity . Nothing else is acceptable
Barcabhoy,
Brilliantly set out.
Did King not say something on Monday that the soft loans would never be paid back?
My understanding (and I am happy to be corrected) is that members of the concert party are unable to take part in a share offer whilst the TOP matter remains unresolved. Happy to accept i am wrong about this if I am indeed incorrect on this matter.
BarcabhoyMay 11, 2018 at 13:12
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Great summary.
“Rangers need to receive loans which are not repayable”.
Just like the ones RFC(IL) used. No problem then, AJ and DK know how to do that.
Barcabhoy – The loans shown on the balance sheet. Are these for Rangers International Football Club or The Rangers Football Club ? What loans are shown under The Rangers Football Club Limited
Not something im in the position to do right now, but how does the losses for TRFCL stack up against the FFP rules ?
And a question i asked on Twitter a while back, if the club is the Company, then which of the above Companies is the Club ?
TINCKSMAY 11, 2018 at 13:57
Tincks, i think you are right about that but im not sure the timing of the events have been locked down and I may be wrong but ive not read that the issue is going to happen before the TOP issue is completed.
If my timelines are all out, then i agree that i cant see an additional £6m coming in.
TincksMay 11, 2018 at 13:57
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I’m no expert, but that was my understanding from the attachment provided by Tony, below, which I don’t know how to copy here.
tonyMay 7, 2018 at 20:36
THELAWMAN2MAY 11, 2018 at 14:03
The club in your question what form does it take?
[Apologies if covered already, as not been able to keep up with all the detail.]
If TRFC is allowed to play in Europe next season.
They may / may not win a few games and perhaps progres. 😉
It seems [?] that UEFA is aware of the concerns around TRFC – and its finances.
[Well they have certainly received plenty of communications from us Bampots in recent years.]
Yet apparently, the SFA is STILL willing to ‘rubber stamp’ their UEFA application, as per.
By supporting TRFC’s application: what are the risks to Scottish football ?
If TRFC goes bust whilst competing in a UEFA competition, what then?
As the SFA represents Scottish football, [I know], then shirley if any UEFA punishment is forthcoming, it won’t just be punishment for TRFC ?
…which would certainly not be for the good of Scottish football.
paddy malarkeyMay 11, 2018 at 15:27
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Thank You.
TheLawMan2May 11, 2018 at 14:03
And a question i asked on Twitter a while back, if the club is the Company, then which of the above Companies is the Club ?
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Pretty much the same as it was with the previous club I would have said.
Wavetower was the holding company, with the subsidiary being the club (albeit incorporated by that stage) which is currently in liquidation.
There couldn’t really have been a holding company had the club not incorporated.
For the benefit of anyone who despairs at this post, I won’t be getting involved in a circular argument about this so you can relax.
So what’s Mr Levein bleating about (keeping it topical ). Hertz will finish 6th and have more points than Motherwell in 7th regardless of the outcomes of the final games . Trying too hard to be relevant ,imo .
The loans are provided to RIFC , which owns all of the Equity in TRFC
Every £ of the loans to RIFC is repayable, is a liabilty on the balance sheet.
RIFC then pass the cash to TRFC as a Capital Contribution . Rangers think they are being cute by this transaction.
However Uefa have many times looked through these transactions designed to try and cheat their rules . If covering losses was as simple as having a Holding Co giving free money to a subsidary then PSG AC MILAN and MAN CITY would never have had an issue .
The SFA clearly doesnt have the balls to say to Rangers , “ This is smoke and mirrors , and its against the spirit and almost certainly the rules of FFP “
Take a hike and get your house in order. Group consolidated accounts and the ultimate treatment of the loans ……repayable or not , must be the deciding factor
However at the end of the day this is something that Uefa needs to have a black and white ruling on .
It’s ludicrous that the SFA can interpret Capital Contributions in a way that suits them ,whilst say for example the Dutch FA took an opposite view .
They could view that Capital Contributions were not allowed if they were just a device to move repayable loans and liabilities a step further away from the licence applicant .
This would be logical and for example deny PSV Eindhoven a licence , either that or force them to comply with the spirit of FFP
THELAWMAN2MAY 11, 2018 at 14:03
Could you provide the club incorporation date?