Heard the one about the CVA and the 10 points deduction?

Whilst the Rangers* situation escalates on a daily basis as the Mainstream Media catch up on what the Internet Bampots have been reading and talking about for months it has been interesting to note that the CVA route has been highlighted as the likely route for their ultimate survival.  

The statement from Rangers after they entered administration stated "The club has put forward a CVA proposal to HMRC in which creditors would be paid and provision made for the legacy HMRC case, if approved by creditors within a month, would minimize any points deduction and enable the club to participate in European football next season”

A lot has happened in the intervening 10 days to suggest that the last point about European Football participation is now fanciful as Rangers* run roughshod over the SFA’s Uefa licensing requirements. In addition to this there is still no certainty of a CVA being agreed with HMRC anytime soon.

The point that interested me was the claim that agreeing a CVA would minimize any points deductions. This viewpoint seems to have gone un-challenged and has been accepted and repeated through various media sources as they hold the CVA up as the holy grail of Rangers* survival. But is this the case as set out by the SPL rules?

 A company voluntary arrangement can be proposed for the creditors and as long as 75% (by debt value) of the creditors agree then the CVA is accepted. All the creditors are then bound to the terms of the proposal whether or not they voted for it. This also has the effect of preventing those creditors from taking further legal actions as long as the terms are adhered to by Rangers*. During the CVA, payments are made in a single monthly amount paid to the insolvency practitioner and the fees charged by the insolvency practitioner will be deducted from these payments - kerching ££££

Now as we are all aware there is an automatic deduction of 10 points for every season that Rangers are in administration, so if the administration process continues into the start of the new season then they commence 2012 / 13 season with -10 points. This is covered under the SPL rules A6.9.

There is a perception that if a CVA is agreed then the club comes out of administration and the next season they start level pegging with every other team on 0 points. Having read the wording and definition of the SPL rules my interpretation is somewhat different and not having seen this mentioned elsewhere I was somewhat surprised.  

Rule A6.9 states “Where an Insolvency Event or in the vent that such Insolvency Event is part of an Insolvency Process that process, continues and / or is subsisting for more than one season then, for each such Season, during the whole or part of which such Insolvency Event or Insolvency Process is continuing and/or subsisting, the Club concerned shall be deducted 10 points or, as the case may be, shall start each such Season on minus 10 points”

The reason I have highlighted the term “Insolvency Event” is that under the terms of the SPL rules the definition of an Insolvency Event is recorded as including the following circumstance ;

Insolvency Event means, in respect of a Club, where:-

e. the Club shall enter into any arrangement with its creditors or some part of them, in respect of the payment of its debts or part of them, as a Company Voluntary Arrangement under the Insolvency Act 1986 or a Scheme of Arrangement under the Companies Act 1985 or any substituting amending or replacement legislation or any other arrangement or the like having the same or similar effect;

In instances where CVA’s are used to exit administration a payment structure is agreed to allow the percentage of the debts to be paid off over a reasonable period of time; the maximum is usually 60 months or 5 Years. Given the potential level of debt Rangers will eventually be left with after the bills are calculated, the only way they will reach agreement with the major creditor (HMRC) under a CVA is for a substantial value of the debt paid over a number of years. The CVA will not cease until the full, agreed revised debt is paid by the club, at which time they would be issued with a completion certificate. Until they receive a completion certificate they will therefore still be in the continuing process of an insolvency event.

This being the case and taking account the definition of the SPL Rules it can be interpreted that for every season Rangers are making payments in respect of a CVA they will be deducted 10 points. I don’t believe this has widely been reported as any media comment has focused on the advantage of utilising a CVA to exit Administration but does not highlight the continued 10 points deduction. In my view the only way they could prevent such an occurrence would be to pay the total amount of the CVA prior to the forthcoming season commencing. 

Taking the definition and rules further the following clause relates to the registration of players whilst in an insolvency event.

A6.20 - a Club that has taken, suffered or has been subject to an Insolvency Event or Events shall not be entitled or permitted to register any Player with the League and the League shall not register such a Player in terms of Section D of the Rules until such Insolvency Event or events shall no longer continue or subsist.

The interpretation is that whilst they are operating under a CVA, Rangers* could not sign / register new players. There are a couple of exceptions such as a replacement goalkeeper however in the main they could not open that famous warchest to improve the squad.

So whilst a CVA is being touted as the panacea for Rangers* I do not think it is without consequences to the detriment of their future ability to perform and compete in the SPL.

* - In Adminitstration

“Aye Ready” for Life Without Rangers (In Administration)

I was thinking of phoning Radio Clyde tonight to ask them what I would really like for my dinner as I am honestly not sure I can trust myself to be truthful with my own feelings. You see there have been a number of hardened Celtic Fans who took the bait and phoned up over the last week to share with the panel that they would still purchase season tickets regardless of there being an old firm game to watch. Thankfully Hugh Keevins and others were on hand to tell them that they were lying to the nation and to themselves and that they would in fact not buy a season ticket but desert the club they had supported both emotionally and financially all their life.

This is the new blackmail being directed towards the Celtic support along with the “be careful what you wish for” threat. The debate on the punishment that should be handed out to a newco Rangers (In administration) rages on and we all have our views on how this would impact on the Scottish game. I have previously stated in this blog that there is not going to be an extinction of Rangers (in administration), it is at worst going to be a three year sabbatical for them from the SPL and as such any debate and argument should have this at its foundation. The media are putting across this debate as if it’s a Rangers (In administration) in the SPL or no Rangers (in administration) at all.

My thoughts have turned to whether I would miss the matches against Rangers (In administration), albeit for three years and not the forever as the media would have you believe. My first derby game at Celtic Park was the 1-0 victory in 1988 courtesy of a Billy Stark strike and my first derby game at Ibrox was the 1-0 defeat when Maurice Johnston scored in the dying moments in 1989. The feelings of elation and abject misery experienced in the aftermath of both matches were to be mirrored for seasons to come as I became a regular attendee of the fixture. These along with the European matches were the ones that you looked forward to the most every season but not always the ones you derived the most pleasure from, as any Celtic supporter through the 90’s would concur with.

It was two years after my first Celtic match that I was permitted to go to a derby match and was a further year before I was allowed to attend ibrox. My parents, who by now were no longer match goers themselves had a fear of allowing me to attend, not due to my own conduct but for fear of being caught up in trouble gong to and from the match. It was always a real bone of contention at the time and my immaturity and enthusiasm to attend prevented me from acknowledging their concern. This concern had previously been expressed in even earlier years when I was not allowed to get a Celtic Strip and had to get an English team or a national team strip. I used to get my strips out of Robertson’s sports shop in the Trongate and to this day remember the brilliant way the strip came in a box which opened out to reveal the shorts and socks on one side and the top on the other side, alas it was never to be the Hoops for me. My first Celtic top was in the centenary season.

I often think how lucky supporters are down in England or even of other teams in Scotland who can wear their colours from an early age without fear of abuse or something much more sinister. As a parent myself now I have bought my child a Celtic strip but it is strictly for wearing at home and in the garden. I may be accused of being over protective but I know deep down I am not confident enough in the society we live in to allow those boundaries to be stretched. Down the years I have on occasion been subjected to what could clearly be defined as Sectarian motivated abuse, both verbally and physically not due to wearing Celtic colours but due to the colour of my school blazer. On one occasion as a 13 year old I was subjected to a torrent of abuse from an adult on a bus which culminated on him spitting on me as he exited the bus. The rest of the passengers stared out the window rather than intervene and I omitted to share this story with my parents for fear of more restrictions being placed on my attendance at Celtic matches.

When I was around sixteen my mates old man came in one Friday night and declared he wouldn’t be attending another match at ibrox, he had come to the conclusion that he could not square with himself the process of giving money to a club and a collection of people who hated him because of his religion. He was true to his word and after decades of going to ibrox for the derby matches he never returned. Myself and my mate scoffed at him and for years shook our head in disbelief at this decision to give up what for us was the biggest match of the season. Its funny what maturity and life experience does to you but I reached the same decision a few years ago now and attended my last match at ibrox in 2007. My last memory of seeing Celtic at ibrox will be Artur Boruc heading off the pitch waving a Celtic Champions Flag after we had been defeated in a meaningless match.  

I arrived at this decision for similar reasons as my mates old man all those years before. I no longer enjoyed the “occasion” of visiting ibrox and being surrounded by this threatening atmosphere of hate and bile directed towards us inside and outside the ground. I didn’t like the idea of sponsoring and encouraging this abuse by contributing £40 for the privilege, I would leave the place feeling drained and a little depressed at the state of sections of our society that bred so much hate and anger. The matches at Celtic Park are different, the songs we sing on these occasions are the same as the ones we sing every week and the volume is ramped up to block out the venom coming from the away end. The years of bias and social injustice suffered by the Celtic Community and our struggle through history to achieve equality on and off the pitch have been a defining character of our club. The discrimination of a community of people on the basis of their religion, miss-placed elitist arrogance and economic superiority has been the defining character of our rivals and is evident on match days at ibrox.

Following the politically engineered summit last year Strathclyde Police stated that the indirect cost to the country in policing the match and aftermath was £40 million pounds a year. There were even suggestions at the time that there should be closed door derbies for the next two or three matches following the “shame game”. Les Gray was quoted “Taxpayers are paying for policing. They’re also paying to pick up the excesses of violence” Obviously in referring to tax payers he was excluding Rangers (In Administration). Just think a saving of £40 million a year for three years would almost wipe out the losses incurred by the tax payers in funding Rangers this last decade – so there is the first positive. 

I am not naïve enough to believe that by removing Rangers (In administration) you remove the rancid sectarian element of our society, they will still exist and will still be offended by a young schoolboy wearing the wrong colour of school tie on a bus. However if one big part of the motivation and conduit for their unjustifiable hate is removed or lessened then it can only improve the world we live in. It may allow me to take my children to the football and enjoy the whole spectacle as a sport as opposed to having to explain to them why their biggest sporting rivals hate them for the religion they were born into.

So when the media tell me that I will miss the Rangers (In administration) game to the extent that I will drift away from the club I love then I can assure them without hesitation that I won’t. I already do not miss the matches and will continue to support my club as I have done all my life which is to buy my season ticket to see Celtic play. I will happily take my children along to a cleansed SPL and perhaps romantically hope for a day when you don’t have to think twice about letting your child out to play with their club colours on. I also look forward to a day when you could win the title on the date and at the venue it naturally falls rather than the governing bodies manufacturing it to avoid you winning it against a certain team.

It’s perhaps difficult for a media pundit to understand this sentiment given that they never have to buy a season ticket every year and don’t actually know what motivates people to watch their club and invest in it. It is also compounded by the realisation that there will be less of them required to service the sports pages when you remove Rangers (In Administration) from the SPL. Isn’t it amazing when you think back to the number of comments you have read from these same columnists criticising the amount of people who leave their local towns every week to support the big two clubs instead of supporting the St Mirrens, Falkirks, Hamilton etc. You would have thought they would be talking up the opportunities for these local teams to receive a boost to their supporting numbers wouldn’t you?

Well in the end I couldn’t get through to Clyde tonight so I had the thai green curry followed by Jelly and Ice Cream as I had intended to. I’m pretty sure it’s not the dish they would have recommended.

Rangers (In Administration) – A Special Case? Your MP Might Think So.

I had written a wholly different blog that I was about to post yesterday but due to what has happened to Rangers (In Administration) – to give them their proper title, it will need to be put on the back burner for a more appropriate point…..

The last two days has seen the Rangers (in Administration) End Game Story take on a whole new life of its own and has a plot which is faster moving, more intricate and more bizarre than an episode of Twin Peaks – watched backwards.

When I predicted in the #guessthedaterangersdie that it would be 14^th February 2012 I thought I was being optimistic but felt it would have a nice romantic ring to it. The real tipping point for me came when they exited to Dundee United in the Scottish Cup, It was their last pay day, there would be no more income coming into the club until 9,000 celtic fans turned up in late march. With all companies considering administration the optimum point is just after your last income stream and before you need to pay out to creditors or large monthly salaries. Unfortunately for Dundee United, Dunfermline and a list of others who will be revealed over the coming weeks, this was the optimum point. The posturing and ramifications of this will continue for the next week but as I stated in a previous blog, they will be unable to trade their way out of this position and liquidation is a racing certainty – remember the EBT case hasn’t even been declared yet. I am still struggling to calculate what income the Administrator will have to keep the place open on a week to week basis and surely reneging on Season Tickets and asking fans to pay at the gate again is a real possibility.      

                                                     The Crying Game

As the details are revealed over the coming days and weeks the case being put forward by the SFA / SPL / Media / Rangers (In Administration) supporters that they should be allowed to remain in the SPl will start to unravel as it will become harder to justify in the face of the damming evidence. As we have learned, Craig Whyte has continued the long held Rangers (In Administration) tradition of not paying tax; whether it’s PAYE, VAT or otherwise, he has chosen to keep the club afloat using money that was not his to play about with. There was never an intention to pay this tax just as there was never the intention to pay Dundee United or Dunfermline or the club from Sweden that they took Cellik from. Like the use of the EBT scheme before, the Establishment club have considered itself untouchable and above the laws of the land, they say in life there are two certainties Tax and Death and Rangers (In Administration) have tried and failed to avoid both.   

The number of supposed experts showing their complete ignorance of the circumstances who are taking to the airwaves nationally to talk about this situation is staggering. However the most abhorrent to my ears has been the abuse of position used by democratically elected members of parliament who have just and no more, stopped short of saying that Rangers (In Administration) should not be treated as any other tax evader.

Yesterday on national radio Central Ayrshire MP Brian Donohoe, (secretary of the Westminster Parliamentary Rangers (In Administration) Supporters Club), told the BBC: "It's absolutely devastating information that's come out today that the Inland Revenue would take such a silly decision.” I would have thought the devastating information that came to light was that a company had deducted PAYE at source from its employees and used the tax to then pay the employees the following month. With high earners on 50% tax rate Rangers (In Administration) were effectively getting two months of players for the price of one. In effect Allan McGregor for example, was paid his January wage using his December tax. But no instead Mr Donohue omitted this part of the story from the nation and went on an attack of the HMRC for having the audacity to expose this practice and stop it before it went any further.   

                                   Brian Donohue                Margaret Curran

This morning Shadow Scottish Secretary Margaret Curran was on BBC Radio 5 Live putting forward the view that HMRC should act with leniency towards Rangers (In Administration) and confirmed that she had in fact written to the Treasury, urging it to act "in a reasonable way" with the club. There was no mention of Rangers (in Administration) having to act in a reasonable way or condemnation of the unreasonable, corporate policy of deliberate tax avoidance. As the Member of Parliament for Glasgow East Margaret Curran has a challenging constituency to look after with high levels of unemployment, poverty and health issues. It’s an interesting parallel to view the needs of that particular constituency against the clamour to protect of a company who have deliberated withheld the money from the public purse. How would the people of her constituency like to see £9 million being spent I wonder?     

I mentioned in a previous blog the justified outcry of previous companies acting with blatant disregard for other peoples monies such as Farepak and the governance of Rangers (in Administration) should be receiving the same level of public condemnation from our elected members over the money that has been deliberately withheld from the public purse. Forget the individuals involved Murray or Whyte; it doesn’t matter if these characters disappear from view, Rangers (in Administration) as a company should be punished and there should be real public lobbying to have any tainted titles removed from them.

So how many MP's hold this view? Why not canvas your own MP on the subject? If you own a business this could be the boost your company needs to see you through these austere times. To assist you I have below drafted out a letter that can be copy and pasted.

 Template Letter

Dear (Insert name of MP)

I am writing to ask for your assistance in a matter I am contemplating for the benefit of my company which I feel with give me the edge over my competitors.

Firstly a bit of background, I am a company with a turnover of circa £ (Insert amount) but unfortunately my costs are circa £ (insert larger amount) so as you can see I am currently trading out with my means.

I have been using an employee benefit scheme for the best part of 10 years which has allowed me to employ highly skilled people on salaries which I could never afford and this has brought untold gains to my company. Unfortunately the tax man has caught up with me and I have been hit with a bill for £ (Insert Amount).

I have come up with a plan to get me out of all this though, it involves not paying any PAYE tax or making any VAT bills for the foreseeable future. I will deduct the tax from my employees and receive VAT payments from customers but will not hand them over to the HMRC. This could save me £ (insert Amount) per year.

Here is where I need your help, could you please write to HMRC and ask them to go easy on me should they ever come calling for their money as I will have no means of paying any of it back. It would be great to receive your assistance as it would help sway the public’s opinion of this wrong doing in my favour and cast HMRC as acting unreasonably. This would buy me some time to slip out the country un-noticed.

Yours sincerely

(Insert Name)

Its Not Life. It’s Only 3 Years for Bad Behaviour

We have all been exposed now to the blackmail from the media that Football would come to an end if a Rangers 2012 NEWCO was to start its new life in a Scottish Third Division, some of us will have heard Rangers supporters desperately grasping at straws stating that Celtic need Rangers. I say lets dare to dream, lets try it out because we have been told for years that Scottish Football was dying anyway, so what’s to lose? This might be the chance to change it for the better.

The logic trotted out by those who are spreading the propaganda is that without Rangers in the SPL there would be decreased TV Money; gates would be down, Celtic would win the League for the next three or four years and have direct access into the Champions League qualifier. Some of this is true, some of it might be detrimental, however is it all going to signal the death knell for Scottish football? As a result should we introduce a cap on the punishment for systematic, premeditated cheating and fiscal recklessness? By using this argument the blame is being shifted on to those clubs who have managed their affairs and are living within their means. You surely can’t kill Scottish Football by not agreeing to this?

Let there be no doubt this is coming, if the current figures being quoted are correct, then irrespective of any tax case judgement Rangers are heading towards insolvency. The assets Rangers have are dwindling; their top playing asset went for £5million, how much would you get in a fire sale for the rest of the squad? A large percentage of four years of future ticket sales have been removed. A company with a current estimated hole of £35-40 million which may rise to double that in the event of the tax case going against them is not going to be able to trade its way out of Administration – forget it, it’s not going to happen. Could they even prove that they are solvent just now? There are only so many years in advance you can sell the season tickets. Craig Whyte has stated this money has been securitised against one of his other companies. £24 million is an awful big asset to securitize and how much per annum is the club paying on top of this in interest charges?  

The stadium is the most valuable asset for a Newco to get a hold of, without the stadium they have nowhere to play and maintain their fan base and it’s interesting to note that the one place where Mr Whyte seems to have invested in is the stadium, £4 million if he is to be believed! It would appear that the most valuable asset is being protected. Whoever gets the stadium has the new club as any other applicant with a Newco related to Rangers would not succeed without it. Good business for a £1 you have to admit and whether or not Mr Whyte intends to continue with Rangers beyond that point remains to be seen however he would be in a tasty bargaining position if he doesn’t.

For many years in the early Nineties Celtic were no better placed than say Dundee United or Motherwell, we gave no challenge to Rangers at the time and were finishing out with the top three positions in the league. This break up of the “Big Two’s” cartel of dominance in the league wasn’t bemoaned as the end of football as we knew it, the media revelled in the Rangers charge to title after title beating nearest challengers Aberdeen or Motherwell and gaining straight entry into the Champions League which brought them untold riches. They out spent every other club in the league, including themselves it now transpires. All we could do was sit back and spectate from afar as the dismal board provided scant funds that lead to some of the most unworthy players pulling on the hoops. Crowds at Parkhead were an all time low and it was a few years before 20,000 people returned to join the hard core followers.

But you know what? it was all our own fault, or at least the clubs own fault, we had got ourselves into that mess through fiscal mismanagement and we were suffering the consequences for years to come.  We can look back at that time in our history when the tide changed and the Rebels won and pinpoint it as the starting point of our recovery. We all chipped in with time, money and sacrifice but the most important thing is that we the fans done it all ourselves and I of course here include Fergus as a fan – we had no bail outs from outside agencies; we had no bills waivered, left no bills un-paid and certainly no bending of the rules. We never asked or expected it.

Why the clamour now to bestow such privileges and unwarranted discretion on a Newco Entity? There are no precedents for this event, people will conveniently say there are but never before have a club in the SPL went into liquidation, folded and re-emerged as a Newco, it’s a new case but one which will set a precedent for the future. The SFA have a say in what happens in the SPL decision, they must issue any new club with a licence prior to it gaining entry. Given what has occurred, surely the SFA would have to be stricter with their licensing – imagine the applicant was one Mr Craig Whyte – fit and proper person? Upon issuing a new licence the Newco should start at the bottom of the league structure, the Scottish Division 3.

The clause stating that Rangers are the exception to the rule as this would be the death of Scottish Football does not appear to have been included in the statute. Where it has been included is within the Television Deal for the SPL negotiated by Mr Doncaster recently for £80 million on the back of increased viewing figures commencing next season for 5 years. The amount each year is divided up on a sliding scale from 1^st to 12^th weighted heavily in favour of the top two finishers. But how did they end up in the bargaining position where there had to be a clause guaranteeing four Old firm games a season? The deal was an improvement on the previous deal but how much money would have been removed from the deal to leave Sky with that risk instead of eliminating it for them? The deal might have been negotiated down slightly on a risk analysis at that time by Sky to cover that eventuality but it would have been the deal that complied with the SPL rules. Don’t be brainwashed into thinking there would be no deal without Rangers, there would be, the only problem is that the SPL’s negotiating position would be weakened now if they went back to Sky as the risk would have been realised.

The contract then not only safeguards Rangers from relegation but surely it also means it guarantees them a top six place as this is the only way you get to play four times? How do the other clubs really feel about that, how would a Kilmarnock in sixth place enjoy stepping aside for a Bill Struth Utd that finished in 7^th place? How would Dunfermline feel to be relegated while a new entity takes their place? How would a Dundee United feel if Bill Struth Utd was able to poach away their best striker on a pre-contract because it could afford to pay more wages having walked away from £70 million of debt?. How would the Celtic fans and the board feel when they were being gazumped by Bill Struth Utd when both chasing the same player because they are starting from a position of strength.   

Rather than just amending the rules for one club by planting the fear of no TV money into the mind of other SPL clubs why are the SPL not having discussions with Sky in the background to see what the fall back position is with an amended deal? At this point the remaining clubs could be canvassed with a proposed new deal and maybe even out of the kindness of Celtic’s heart they would agree to a more amicable split of the allocation to lessen the blow. Is this happening behind the scenes? If not, then why not? because it’s not going to come as a surprise.

Lets be realistic, its not life without Rangers it would only be 3 years before they worked their way back up through the divisions; spreading their wealth amongst the likes of Stranraer and Albion Rovers on the way, what a boost that would be to these leagues. And Rangers fans should look on the bright side they would be able to dust down the song book every week as there would be no TV coverage of their games to expose it!

I took a look at the average attendances of the clubs in the SPL and calculated the loss of income through their gates by losing out on a visit from the ogres as we are always told these pay days keep the other clubs going right? Instead of just printing the figures I thought I would present it in the form of how many additional fans per game a season would each club have to attract to offset the loss;

Club	Additional Number of fans required to be attracted per game
Celtic	972
Motherwell	509
Aberdeen	293
St Johnstone	280
Dundee Utd	259
Kilmarnock	219
Hearts	138
Inverness	131
St Mirren	95
Hibernian	89

As you can see, apart from Celtic the biggest losers would be Motherwell who may well struggle to attract an additional 500 fans per week but the rest of the teams, given the added attraction of an additional euro spot to fight for and a second place would surely be able to entice those numbers back to their ground or at least a large percentage of those numbers.

We live in austere times, the country and those who rule over us are cutting their cloth, cutting spending, freezing wages and learning to live with a lot less money so why should the SPL not be any different? Life is tough, you need to adapt to change and make the most of limited resources and for the SPL this means 3 years of a potential reduced TV deal. The alternative is to give a free pass to cheating and systematic mismanagement of finances in order to gain advantage over your competitors and opens the door to others to do the same thing.   

3 Years for Bad Behaviour? Not bad because It SHOULD be a life sentence.