The Bank, financial doping and moral hazard

Dundee United chairman Stephen Thompson’s comments to yesterdays’ Herald are worthy of attention.  During the summer, when United received a £1m bid from Rangers for David Goodwillie and Blackburn Rovers were hovering, Bank of Scotland, took an active part in the deliberations.  Thompson told the Herald, “The bank wanted me to take £1.2m for him, but I said no to that. I had to stand up against the bank.”

Thompson more than doubled the money on offer for Goodwillie, allowing him to shave over £2m off their bank debt, but this exchange took place only a few months after the same bank told former Rangers chairman, Alastair Johnston, to accept the bid for the club from Motherwell born thousandaire Craig Whyte or the bank would demand same-day repayment of Rangers borrowings.

Bank of Scotland, part of Lloyds Banking Group (LBG), are significantly exposed to Scottish football and required a taxpayer bail-out two years ago, so although their interference in the running of clubs could seem overbearing, we shouldn’t be surprised at it.  It’s business, and if you are employed at LBG with a responsibility to your taxpayer-shareholder, it’s necessary business.

Fortunately, Celtic are free from such interference, as are Rangers, thanks to their aforementioned benefactor, but if a liquidation event at a large club threatened income streams to the league I would be amazed if the Bank didn’t use the ‘Vote Newo FC  into the SPL or repay your borrowings immediately’ line.

Stephen Thompson, who sits on the SPL board, might not have a choice on whether or not to vote a Newco FC into the SPL ahead of 30 Scottish Football League clubs, but he and his fellow board members will be able to set the tariff on any exceptional league entry to what would become a financially privileged football franchise.

12 seasons of cumulative benefit from financial mis-dealings should result in 12 seasons of penury at whatever points rate the league calculate benefit was accrued.  For one scenario I have in mind, around 15 points per season sounds fair, with an expunging from the records of any trophies ‘won’ by Financial Doping.

This is measured, deliverable, is in the power of the SPL board to impose, and sets a minimum moral hazard to inhibit future mis-deeds.

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