The prepack route for Rangers Newco FC


In the event of Rangers facing financial Armageddon after the resumption of their HMRC tax hearing a quick – very quick – recovery scenario is available to them.  At any point during next month’s hearing they may consider their position is no longer tenable and, unable to meet the tax bill, a new company could be formed which attempts a prepack administration.

A prepack offer from a new company, for example, Rangers Newco FC Ltd, would offer an administrator a deal for all assets of the club, including stadium and offer to meet outstanding player wages.  Deals like this seldom offer unsecured creditors much but even a small percentage might realise more cash than the administrator would gamble on raising in an unstructured sale.

In such circumstances, the administrator could accept as little as £4m for the unsecured creditors.

In normal business Rangers Newco FC Ltd would begin trading and this would be the end of the story but football is not normal business.  Rangers Newco FC would own a stadium and would employ some footballers but they would not be part of any league structure. They would need to apply for membership to the Scottish Football League or Scottish Premier League.

In this scenario, the death of Rangers Football Club would leave a vacancy in the SPL, presenting several financial, logistical and sporting challenges.  Without Rangers, the league would have to invalidate all this season’s results involving the club, one team would be without a game each weekend for the rest of the season, current TV contracts and sponsorship deals could be jeopardised, while future contracts would be worth a fraction of their current values.

Every team in the league would have to downsize and some would have to win fresh support from their bankers, which may or may not be forthcoming.

There is, of course, a resolution to this problem.

Rangers Newco FC Ltd could present an offer to the SPL.  The new company, with its stadium and thousands of potential supporters, could take the obligatory 10 point punishment for going into administration and adopt the place of Rangers FC, complete their fixtures and allow every other team in the league to fulfil commercial obligations.

If these events took place before Christmas, Rangers Newco FC could be debt-free and signing players in January to enhance their league challenge.

To force the deal through, Rangers Newco FC would require 10 of the remaining 11 SPL clubs to vote in their favour.  If any two clubs stand against them, they would have to apply for membership of the Scottish Football League, but, having researched this story for several days, I expect Rangers Newco FC Ltd would get enough support to pick-up the place of the defunct Rangers FC.

Any natural sympathies towards Rangers aside (which will not exist in all places), money talks and, apart from Celtic, this league is neck-deep in debt.  Celtic might be in a position to survive Rangers failing but it would cost our club tens of millions.

Crucially, if the other SPL clubs back Rangers Newco FC, they create a template for a snap recovery from their own troubles.  Instead of repaying your debts, simply get yourself into a safe league position, ditch the company, prepack and start again with a clean sheet.

This would create a clear incentive to stiff creditors.  While the banks will get wise and not offer unsecured facilities in future, HMRC and small traders are likely to become perennial fall guys.   Why would any mid-table team pay millions in tax, rates and policing bills, when they have a sporting incentive to ditch creditors without punitive penalty, freeing income streams to buy football bling in the next transfer window?

This would make a mockery of the Uefa predident Michele Platini’s Financial Fair Play initiative and make our league the poster-boy for Financial Doping.

Scottish football will be mortally wounded if it were to parachute a club straight into the upper echelons of the game while establishing a blueprint for the abandonment of creditors.

It is incumbent on all who care about the game, in Scotland and throughout the world, that we insist Scottish Premier League clubs do not allow a prepack company to phoenix into the shoes of a dead football club.

Celtic fans, as well as those from Aberdeen, Hibernian, Dundee United and St Johnstone, together with fans from Motherwell, who could become genuine championship contenders, and from those clubs who would avoid relegation if Rangers failed, must insist their club votes against any prepack company parachuting into the league.

The SFA executive must use whatever influence it can to prevent the name of Scottish football being brought into disrepute.  Politicians, who either have, or aspire to have, tax raising responsibilities, must register their abhorrence that a self-serving oligopoly should attempt to vote themselves an escape from paying tax.

Fifa and Uefa must explain to the Scottish FA that the days of shady financial deals in football are gone.

Watch the media coverage of these events carefully.  If and when the decision time comes, the case to acquiesce to Rangers Newco’s demands will be overwhelming.  Sincere ‘impartial’ observers will do their upmost to convince us all we must do whatever necessary to save Rangers for the good of the Scottish game.  Some voices will even tell you Celtic need Rangers Newco.  Whatever part of my club is dependent on Rangers I am willing to lose.

Rangers-HMRC tax hearing resumes next month, when there is also a two week international break.  The most important element of making a prepack offer succeed is to offer a fait accompli: ‘Here is a solution, you have no time and you have no alternative’.

Should Rangers go into administration, I believe this is a very, likely scenario. If you are a supporter of Celtic or any other club, make your views known.

Read issue 3 of CQN Magazine free online here or buy a print version at Magcloud.
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  1. Paul67



    On that note.




    Take part in survey (4 questions) to gather the views of as many supports from as many Scottish clubs as possible re. Rangers FC 2012 and direct entry back in to SPL if/when the exist Rangers FC experience a liquidation event that sees the death of Rangers FC 1873 to 2011.



    Please pass to friends/relatives/other football clubs supporters (we’re getting a bit top heavy with Celtic viewpoint and it be good to get more views from other supporters including Rangers supporters), websites via facebook, twitter, email, txt etc.



    Take the survey



    I will post another update tonight.

  2. Dontbrattbakkinanger says:


    27 October, 2011 at 11:51


    B/Kev – thanks for sharing that.


    I’m 2,779,003,942 which gives me an alternative to ’1967′ for my PIN.




    DBBIA, I normally use yir D.O.B when using you’re card, works a treat…… oh wait!







  3. The Honest Mistake (Sickened) on



    Funny thing is that there is at least one other club in the SPL that hasn’t paid it’s players due to lack of funds. Could they be the first to go down this route?


    Who would be our allies? Hibs? Aberdeen?

  4. saltires en sevilla on

    lennon’s passion says:


    27 October, 2011 at 11:56


    Jungle Jim says:


    27 October, 2011 at 10:48



    100% agree mate,no blind loyalty but sitting day after day slagging Celtic.Imagine going on a supporters bus doing it,you would get a wee slap.






    agree was saying somthing similar a few days ago



    a wee metaphorical ‘bat on the moof’ might shut up the constant carping that adds little or no value during games (not saying don’t have a view or say yer piece afterwards ..let off a bit of steam/vent… but pleeeezzz not during the game)



    nothing is ever perfect at Celts -we have ups and downs



    sure -we can see some players are less than what we expect – the board are making mistakes- lenny is learning – it’s raining , economy is in the myre ..



    the good news?



    we are still celts and should be behind the manager & team 100% when they are out on that pitch representing us







  5. Afternoon Paul,



    Massive dillema for these smaller clubs. I have close contact with Kimarnock through my work, and know that 2 years ago they were on the edge of financial meltdown. Had they been relegated that year it would have been curtains.



    So what do they do? Vote for the new Rankers? or hope they can increase gate receipts with new fans, or finishing higher up the league?



    Aberdeen also moving into a new stadium, could they afford not to have 2 gate receipts from an almost full stadium at least twice per year?



    I’d love not to have them around, unfortunately by the looks of it, we may be the only ones.

  6. the only way they should be allowed back in if this scenario takes place


    is 1 team promoted from every league the new huns elected to division 3




    promote huntly to the league


    huns can play in west of scotland league against pollock rob roy etc


    i know what one id want

  7. Paul67



    If the newco gets straight back into the SPL the game is up, finished , capoot l say good riddance.



    How can this be sport? one club can run itself into the ground and face no punishment.



    No it can not be aloud to happen.




  8. The Honest Mistake (Sickened) on

    Also credit to Rogue Leader who was the first to bring up the pre-pack route last year some time.

  9. LivornoBhoy-stands by Neil Lennon on

    Brilliant article.



    It will be an absolute scandal if they are allowed to get away with this.



    Scottish football will be exposed as irredeemably corrupt.



    Well done, Paul67, for setting the issue out so starkly.

  10. The Lizard King on




    “Celtic might be in a position to survive Rangers failing but it would cost our club tens of millions.”



    Could you explain that please?



    Surely without Rangers, Celtics probability of unlocking Champions League money increases enormously?


    TV money in Scotland is tiny, lets say it halved, one Euro game more than compensates.


    Would we lose the Nike sponsorship if Rangers don’t exist? Can’t see it.



    What is the Business Case for maintaining the “Old Firm” as I reckon Celtic are financially better off without Rangers, net.







  11. Paul67 – Crucially, if the other SPL clubs back Rangers Newco FC, they create a template for a snap recovery from their own troubles. Instead of repaying your debts, simply get yourself into a safe league position, ditch the company, prepack and start again with a clean sheet.



    You’ve got to love moral hazard. This would be the SPL’s own version of the bank bailouts, with similarly disastrous results.



    There is no such thing as “too big to fail”. There is only a choice between taking the pain now, or bailing out the improvident and taking much greater pain down the line.



    Watch the media coverage of these events carefully. If and when the decision time comes, the case to acquiesce to Rangers Newco’s demands will be overwhelming.



    It will be like ExtensionGate multiplied by 1690.



    Some voices will even tell you Celtic need Rangers Newco.



    They will. Curiously, I don’t remember the converse argument being made when Celtic faced its own financial Waterloo back in 1994. In fact, the Scottish media positively revelled in the thought of Celtic going bust, they were all set to dance on our grave.




  12. David Peter Deans on

    The fact that Rangers are in dire straits financially and could go out of business sooner rather than later seems to apeal to most Celtic fans. However the big picture is we need a strong Celtic and Rangers for football to survive in this country. We have to put aside what we all feel about Rangers for the sake of the game here. I for one would miss the old firm games and the excitement that they provide . Plus of course the banter that goes on between Celtic and Rangers fans.

  13. The Honest Mistake (Sickened) says:


    27 October, 2011 at 12:40



    Good point.



    If that club is in genuine difficulty it’s, directors ought to do everything in their power to delay a decision about taking such a course of action until they see what fate befalls the Foe Mailgn …




  14. Nuclear Bovril and a Half Munched Pie on

    Can’t see any of the turkey’s voting for xmas. The Jambos, for one, will be wholeheartedly behind it as its an avenue they may persue themselves shortly.



    Agree that the blanket media message will be ‘Your club will lose money, players or go bust too if Newco arent in the SPL’



    Do HMRC have any recourse to persue the debt if the prepack goes through or is it case closed?

  15. There is something staggeringly injust and corrupt about a newco. The government view on such tax aviodance would also be interesting especially given the shot across bows to EPL clubs. Avoiding paying 50 million tax surely is unthinkable to government in this climate. Political pressure should be mounted. That 50 million could ease a lot of lifes in NHS. :-/

  16. tommytwiststommyturns on

    “Whatever part of my club is dependent on Rangers I am willing to lose.”



    Amen to that!




  17. The Celtic Boycott becomes a most potent weapon, if only others believed that we believed in our own beliefs and courage.

  18. Big Swee walks on with Neil Lennon on

    MWD Survey completed.



    And if our board become complicit in allowing such a lifeline then I too will be out. No way should they benefit as a club or business having been found out. No way should they have been given a license to play in Europe. No way they should be allowed to step foot in the SPL unless as suggested they create a new team and work their way back in with promotion for a club from each league.



    How can you reward cheating and financial mis-management. Next we’ll have turkey’s voting for Christmas!

  19. The Honest Mistake (Sickened) on

    David Peter Deans 27 October, 2011 at 12:46:



    FFS, Did you not read the article?

  20. merseycelt dumps sadsally on




    It cant be true! Their only penalty would be to lose 10 points? By mid-November, Dan will have cost us at least twice that number!



    For a financial illiterate like myself, why did Leeds and Portsmouth have to downsize massively when faced with a similar scenario?



    Apart from the depressing message, an excellent summary of doomsday for scottish football!




  21. So, if I understand this right, then we’d be expecting the same sorry souls who voted for a ten tier league to save themselves by playing us and ‘them” against 85% of the fans opinion, to vote for their cash-cow to be slaughtered?



    Oh dear!

  22. I am Neil Lennon e El Juarez Bravo on




    I think you have got your analysis absolutely spot on. This is exactly how this situation will pan out.



    When it does, Celtic must resign from the SPL immediately anfd vow that they will not rejoin unless Rangers are forced to start again in the SFL. The clubs who voted in favour of the deal will then be hoist by their own petard. A league without Celtic is no more palatable to them than a league without Rangers.



    Messrs Desmond, Bankier and Lawwell, the future of fair play in Scottish football is in your hands. Do the right thing.

  23. The Honest Mistake (Sickened) on

    Nuclear Bovril and a Half Munched Pie 27 October, 2011 at 12:47:


    HMRC can tax the phoenix but not for anything like the amount they are set to lose through this action.

  24. The Battered Bunnet on

    “Whatever part of my club is dependent on Rangers I am willing to lose.”



    There’s the battleground Paul. A question for every club in the country, and every fan.



    Personally, a few seasons of Arraigngers in the SFL will do that league the world of good, and might provide a new humility to what remains of the club and its supporters.

  25. MWD, done.



    Honest Mistake, Hibs lost £900k last season and Aberdeen are not much behind them.



    Money talks – but so do football supporters. We need a call to action.



    angelfc67, yes, I have also looked down the list for support and cannot find a reliable source.



    Mickthetic, agree.



    LivornoBhoy, cheers.



    The Lizard King, Champions League money! I lost all aspiration for that a long time ago. It remains only a possibility, loss of commercial and ticket income is a certainty.



    Notwithstanding that, we must still vote no.



    philvisreturns, indeed.



    David Peter Deans, yes, I would miss the excitement, but Scotland would not miss the aftermath of these games.



    Voguepunter :-) thanks.

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