The Rangers debate… replying to a real fan

When I posted my ‘How are they affording Sandaza’ article last week, I half expected some of the vitrol that was forthcoming from RangersMedia and FollowFollow (so much so that I placed a block on any incoming traffic from those websites – now removed!)

However, I was also hoping to appeal to the ‘Good Bears’ – those whose voices have not been heard over the ‘We are the Peepil’ brigade.  So it was really refreshing last night to get an email with a new post in moderation from a poster called ‘Garys’.  It was a well thought out reply, well written and well researched.  It was so good I felt it deserved a blog post of its own.  The below is Garys post, with my replies underneath in blue.

It was reading this that hit home with me, what we (the internet bampots and the #notonewco campaigners) and the Rangers fans see as fact are two entirely different things.  I hope this blog post will address some of those issues and allow a factual and reasoned debate.  I encourage everyone to post their views – what I will be doing this time however is immediately deleting anything that tries to steer the discussion off track, make threats or anything that doesn’t contribute positively to the post.  Rangers fans are more than welcome – just please follow the rules.

Gary said:

After reading your blog and comments I have a few comments/questions I put to you and hope you answer them all honestly and to the best factual basis (like I’m sure you’ve done already). I will also used “oldco” and “newco” to differentiate between the old company and new company (same club though as discussed below).

1)You state that newco rangers aren’t entitled to 800K for Davis, that this will go to Rangers IA (oldco). This is incorrect as the oldco sold the players registrations to newco (see point 12). The reason the 800k went to SFA and not directly to newco is at that point in time the newco didn’t have an SFA licence. Please see article

Firstly, I think there is two factors in this one.

Factor one is that TUPE laws allow an Employee (in this case a player) to decide on whether to accept the transfer to the Newco.  In the case of Davis he clearly rejected the transfer of his employment to the new company.  This was widely reported in the media.  This would mean he no longer has a contract with Rangers (IA) or the newco.  He would be a free agent.

Now, in your scenario you are assuming the Newco held the right to the ‘registration’.  However, it is my opinion, and I believe one that the whole ‘Bosman’ case hinged on, that freedom of movement of an employee is a human right.  Therefore, it follows, that if Davis had no contract with either Rangers IA or the Newco then he was free to choose whatever club he wanted, and therefore his ‘registration’ had no value whatsoever.   In fact, the SFA withholding the transfer could be construed as restricting his free movement.  I cannot see any legal right of the SFA or a Newco to hold a registration for a player who has clearly rejected the contract, in the same way that an out of contract player can move to another club without the permission of their former club. 

To allow Newco to claim the rights to the Oldco’s players would be going back to Pre Bosman days.

The second factor is that Southampton have never released details of the fee.  In fact, the 800k fee has come from one source – the Daily Record ‘understands’.  Now, forgive me for being skeptical, but the Daily Record is not the best source of news.  Southampton themselves have only confirmed a ‘minimal’ fee was paid to the English FA to speed up the process.  I have no fact on this, but my understanding having talked to Southampton fans is that the fee lodged with the English FA was a deposit in case of a tribunal ensuing which they later lost.

2)You also state that when the players rejected the Tupe that they instantly became free agents. If that was the case then why did Southampton pay 800k? And that the other clubs are being taken to court/tribunal for a fee? Why were these players only granted temporary licences by FIFA.
per your point – I don’t know any employment lawyers however I believe you should look at Southampton’s.

Only temporary licences are issued as it has to go before an investigative board.  They will then check everything and issue the full licence.  To issue a full licence without checking all the facts would put FIFA on par with the Daily Record.  From everything I have read, the full licence is just a case of crossing the T’s and dotting the I’s.

3)You include 2.5millton catering/food and beverage in expenses, but there is no corresponding income. Are you trying to suggest rangers make a loss of 2.5million on catering every year? I find this impossible to believe.

The corresponding income was in the ‘Hospitality’ line.

4)Where did you get your PAYE/NIC figure from? It is ridiculously high, 50% of players salary? Rangers will pay the employers NI contribution of its employee’s salaries. Using the link below, enter 5K per week salary and you will see the NI contributions. This is the PAYE/NIC that rangers will pay.
On the link the tax due is personal tax that the individual will pay (just like you and I our tax is deducted every month from our gross wages.)

I mentioned elsewhere in the comments that the PAYE/NIC figure I used wasn’t entirely for just that.  I used a figure that a lot of business use to calculate the cost to the employer of the employee.  This can en compose not only PAYE and NIC, but also staff meals, company cars, accommodation, travel, bonus’ and the like.  It is a rough guess and I concede may be on the high side.

5)You correctly pointed out that any debt of oldco is not owed by newco, including any result of FTT (big tax case). (ignoring the sanctions with regards to SFA licence) This was confirmed by HMRC when they voted against CVA proposal.
Read more:
According to a statement from HMRC, ‘liquidation provides the best opportunity to protect taxpayers, by allowing the potential investigation and pursuit of possible claims against those responsible for the company’s financial affairs in recent years’.
HMRC also stressed their decision did not undermine the sale of the club but would allow Rangers a ‘fresh start’.

I think this is the one thing that both Rangers and non Rangers fans agree on!  The newco cannot, and should not be held responsible for any of the oldco’s debts.

However, the flip side of this is that the Newco cannot pretend to be the Oldco, without accepting the Oldco’s debts, regardless of agreements made with D&P for the sale of the assets.  There is laws in place to try and prevent this, especially when there has been common directors.  Remember, Charles Green is listed as a director of the Old Co, before he bought the assets.  This brings him dangerously close to falling foul of the Phoenix rules.

6)With regards to ticketus, this was taken to court of session. Here Lord Hodge declared the deal could be breached if it was in the interest of the creditors. This is what happened and ticketus became a creditor of oldco. They also confirmed they are not involved with Green.
“Ticketus is now a creditor in a CVA and it is not involved in the future of the club in any way.”

The one thing we have seen throughout this saga is that the people involved are great with words.  To you that phrase ‘Ticketus are not involved” means they are out of the picture altogether.  The way I read it however is highlighting the last bit, which states “of the club in any way”.

Now, neither of us were there when the question was asked to the Ticketus representative.  But, as the story was pre newco, it is a given they were being asked about their involvement in the Oldco.  In this respect, it is entirely accurate.  They no longer have any involvement in what goes on.

However, they have not said they are not involved in a Newco. 

The evidence is mounting day by day of strong links between Brian Stockdale, Zeus Capital, and Octopus Investments, who, of course, own Ticketus.  In the absence of any progress in Ticketus suing D&P, as Lord Hodge noted would be a certainty if D&P cancelled the contract, I find it difficult to believe there is not some involvement somewhere.  Transparency of ownership would clear this up. Something John Brown demanded, but was never forthcoming.

The full text from Lord Hodge can be found here.

One of the interesting points to note is that the contract between Rangers and Ticketus was entered into under English law, however the asset resides in Scotland.  There is subtle differences in the laws.  In England Ticketus would undoubtedly have legal claim to any future income at Ibrox, irrelevant of owner.  In Scotland this falls more towards a contractual right, which, can be broken.  This is further complicated by the fact security was held by Rangers Group Ltd, owned by Craig Whyte.  Further, they had passed on a floating charge, held over Rangers PLC to Liberty Capital… an offshore company, which is where the trail goes cold.

In the absence therefore of a legal case, my only conclusion can be that Ticketus must still be involved somewhere.  That Green has still not released details of who exactly is behind the club makes the suspicions even stronger.

7)Ticket prices do vary from £260 – £600 (bar 72) for adult season tickets. I accept that it is very difficult to get an average figure without knowing the amount of kids/concessions so although I believe you average figure is low, I will accept it as it is a guess the same as mine would only be a guess.

When tickets went on public sale most prices seemed to be around the 280 – 300 mark.  If I therefore take 80% of the season books being sold at 300gbp, 10% at 150GBP (concessions) and 10% at 70GBP(kids), I get an average of 262GBP a ticket.  I therefore don’t believe my guess is far off.  Even increasing the average by 10gbp will only contribute another 350,000 to the topline, which is fairly insignificant in regards the other sums mentioned.

8)At the time of writing the article you estimated 25K season ticket sales and I know you said you will update the article at a later date. The most recent quoted figure was 33k by charles green 5 days ago. This will undoubtedly have risen since although there is no official figure to date. This will significantly increase revenue.

I agree.  However, I also would need to reduce the number of ‘match day tickets’ sold, as I fail to see how you will get 45,000 fans every game.  If you do, in the depths of winter, then fair play to Charles Green and all Rangers fans.  Another reason I want to wait a while before doing the figures again to get a more accurate idea of how attendances will fair.

9)In you income figures you only include 18 games (home) per season. This is wrong as you are completely ignoring cup games. Already there will be at least 3 home games for rangers (east fife, falkirk and QOS), and this could be rise depending on cup runs.(I know 50% of sales go to away team after expenditure but this will still be a significant amount of money per game). We will also be entitled to 50% of away games in cup.

Correct.  I purposely left these out as budgeting for cup runs (Champions League last year and Maribor anyone?) is a recipe for disaster!

10)We were entitled to 3million per year from JJB after initial 18million upfront. This has been reported numerous times in the media throughout the years and confirmed by David Murray at the time. Yesterday this deal was ended, as we are a newco and we have reached an agreement with sports direct (JV). Although we don’t know how much money rangers will make Green quoted he hoped to bring in 5 – 10million. (I know he can say any figure!). Even mild assumptions you much surely see we will make more than 800k considering you think celtic made 8million (If I read your comment correctly)?

This is another question that is worth a whole post.  The JJB deal was with Oldco, however, it was interesting the JJB didn’t claim to be a major creditor, seeing as there must be circa 9million outstanding in lost revenue.  The fact that it was discussed with Newco seems to suggest that this was transferred in some way.  Whether it was a pay off, or something else we will probably not know until Newco release audited accounts (not due until April 2014!!).

Now, re: the JV with Sports Direct.  Apart from a statement from Green saying its a joint venture, there is nothing to indicate this is the case.  The company, ‘Rangers Retail’, is 100% owned by Sports Direct.   Has Green just mortgaged off the shirt sales for immediate income?  Why is he claiming its a joint venture, when it clearly, legally at least, isn’t?

The 8million from Celtic includes the kit deal, kits sponsorship as well as merchandise sales.  I do not know if they mange this themselves, or through a JV.  I also should note Celtic are a much much bigger global brand than Rangers.  I have been based in Asia for the past 10 years, and I can tell you the clubs people know are Man Utd, Chelsea, Liverpool and Celtic.  You can argue this all you like, but that is what I have observed from Tokyo, to Shanghai, to HK, to Bangkok to Manila.  They are the (pirated) shirts that are sold and worn for British clubs (the only other shirts you see belong to Real Madrid or Barcelona).

Reading between the lines I think the Sports Direct deal will bring an immediate cash benefit to Rangers, however, it remains to be seen whether this will stunt future revenue.  Given the actions of others over the past 5 years, if I was a Rangers fan, I would be demanding to see how this deal has been constructed.

11)With the oldco vs newco argument I would like to make a few points.
Oldco company name was “The rangers football club plc”. This was recently (July I think) changed to “RFC 2012 plc”.
The newco company name was “Sevco Scotland ltd” and has since been changed to “The rangers football club limited”.
The club (not company) has always and will always be rangers not “the rangers”. The clubs name is the same as it always has been despite the wrong propaganda by many media and fans of other clubs. This is the same as celtics company name is “The celtic football and athletic company ltd”(Of which there are 2 companies that own celtic). Why do you not (or any others in media or other fans) refer to celtic as “the celtic”. There are numerous examples I could use of teams in scotland and abroad. The company and the club are separate.

This is one argument where I think the blue tinted specs are clouding your judgement.  There can be no difference between a club and the company.  Legally they are one and the same.

An incorporated company is the legal mechanism by which the club operates.  It is therefore the same as the company.  Any contract the club enters into is entered in a legal contract formed by the legal mechanism, which is the company. 

Take for example when you buy your season ticket.  Who do you pay for it?  The club, or the company?  If the club, who pays the VAT?  If the company, how does the club get the money?  The answer is in all cases the company, as they are one and the same.  There is no legal club.

Rangers FC did have a holding company – this was formerly called Wavetower and changed their name in May 2011 to Rangers FC Group Ltd.  That was a separate company that owned the club, Rangers FC PLC.  If Sevco Scotland ‘bought the club’, then they also, unfortunately, bought the liabilities and debts of that ‘club’.

Another question to ask is re: share issues.   Many Rangers fans bought shares in ‘their club’.  Now, these shares were for the company.  So did they just buy company shares, or did they buy the club?  The answer is of course they bought club shares, as the company and club is again, one and the same.

Further, Charles Green has said he will offer a share issue in the newco.  Are you just going to buy shares in the company, or are you buying shares in the club.  If only the company, who owns the club?  Show me the paperwork that says the club are a seperate legal entity.

Now, I know you can’t do that.  I also know what the answer is – the answer is that the ‘club’ is what is in the hearts of the Rangers fans.  Note how I always refer to Rangers fans as just that – Rangers fans.  I may refer to the club as Newco, or Sevco, or TRFC, but I also refer to the fans as Rangers fans.  I do believe that the club exists within your fan base.   A good example would be Wimbledon. 

Wimbledon were bought and moved to Milton Keynes.  The club that plays as MK Dons has the history of Wimbledon, as that is the club they bought.

However, the fans reformed a new club, called Wimbledon AFC.  They may not have the history of Wimbledon, and they do not claim it – they accept themselves as a new club.  But that is where the spirit of Wimbledon exists, not up the road in Milton Keynes.  This example can also be seen in Scotland with Airdrie Utd.  They may have the spirit of Airdrie FC, but not the history.  They are not one and the same.

Re: Celtic I am not going to get into this, as I don’t know the real answer.  I do believe it is structured similar to the Rangers PLC/Rangers Group scenario.  Maybe a Celtic fan can post in the comments the answer to this one?  Or maybe I will add to the list of research items to do.

12)Leading on with regards to rangers history I wish you to look at the below document/report provided by D & P. This clearly shows the newco has all history (amongst other things including trademarks etc.)(and player registrations). This proves we have the full history of titles etc of the oldco and that the “club” has never stopped and if we win any trophy at the end of this season it will get added to the collection we already have won throughout our history.

see sections 4.2, 4.6, 5.38, 10.5, 10.9

Here is a hypothetical argument.  I change my name to Usain Bolt.  I then approach Usain Bolt (the gold medal winner) and buy all his ‘rights’.  I become the owner of his house, his car, even his gold medals. 

Am I now the multi Olympic Gold medal sprinter?  Is it my name in the record books?

No, of course not.  History is just that – history – it has already happened.  You cannot sell it, as there is nothing to sell!  If history was trade-able, then St.Johnstone would have already ‘bought’ a trophy off someone, and we would not have gone 100 years without winning any meaningful silverware.  Could we buy Celtic’s European trophy?  Would the record books then reflect ‘St.Johnstone’ as the European champions?  No, of course not – that would be silly right? 

The same applies to Rangers FC, and The Rangers FC.  They are separate clubs – you cannot transfer the history over.  You can transfer the assets, even the physical trophies – but TRFC didn’t win those – Rangers FC did.

This is the ONE point that leads me to believe Green is leading you down a bad path.  I, and I’m sure most other Scottish Football fans would welcome a strong Rangers back in Scottish Football.  But as long as they maintain they are the same ‘club’, I, and others, will maintain that they should be responsible for the actions and the debts of that ‘club’.  The minute they accept its a new start, and a fresh beginning I will welcome them into the Scottish football leagues as a respected and vital member of Scotland’s Football future.

I accept this is a long post but would appreciate any feedback and will do my best to respond in a factual and unbiased way.

I also look forward to your updated prediction to rangers finances for the next year.

I will do so probably next month, once more details are available.  In the meantime you might like to read this spreadsheet done by @Auldheid.  If anyone has Rangers financial accounts for 2010 I would love to see them!

Go on guys – discuss away!

One final point why in the title and throughout the article do you call rangers “Sevco” and not the correct company name “the rangers football club limited” or the club name that you use when you refer to any other football club in the world ie. “rangers”?

Sevco is easier to type, is shorter, and I’m a lazy *******.  Not good enough?  Damn…

Seriously though, my views above should be a good enough answer to this question.  The club and the company are one and the same.