What does administration mean for Glasgow Rangers?

By Stoffy18 / Roar Guru

The Glasgow Rangers’ hopes of a 54th league title have been slashed as the club prepares to go into administration as a result of unpaid debt.

The UK Government, more precisely Her Majesty’s Revenue and Customs (HMRC), are owed around £78 million. Club chairman Craig Whyte admits “there was no realistic or practical alternative” to administration.

The HRMC have built their case around the methods in which the Rangers formerly paid their players. They allege the Scottish side used certain methods of payment to evade tax.

So what does this all mean? What is “administration” in sport and what can be expected?

Firstly, administration is the preferred alternative to liquidation. It is a legal process that acts as a safeguard for clubs battling to repay debt.

Administration ensures that assets are not sold off in the repayment process. The aim is simple: to restructure a club’s finances so that it can continue to operate without the threat of liquidation.

The HMRC will favour an administration as the likelihood of reimbursement is greater than with liquidation.
However, administration is not a luxury that goes without sacrifice.

The Scottish Premier League league rules state the following: “Where the Insolvency Event occurs during the season, points deduction shall apply immediately”.

Rangers will be deducted 10 League Points as payment for administration. On the current table, Rangers sit four points behind bitter rivals Celtic. Administration will widen that gap to 14 points.

The long term affects threaten the sustainability of the club more so than the loss of points. Players are imperilled by possibility of redundancy and participation in Europe, if achieved, is not assured.

Initially, players’ contracts remain valid, but the administrator will assess the situation and determine whether they can be honoured in future.

If the Rangers wish to feature in European competition, they will need to be issued a licence by the SFA (Scottish Football Association). For that to happen, they will need to convince the SFA that they have reinstated stable management.

Failure to separate themselves from the administration by March, will result in the side not be given a licence.

Furthermore, if they exit the administration before March but as a different entity, they will be required to apply for a new licence. If so, there is no guarantee they will receive it.

While the situation is not ideal for the Rangers and their fans, the process may allow the prestigious Scottish club to salvage some credibility.

The Crowd Says:

2012-02-16T00:33:12+00:00

gawa

Guest


Thanks for calling me a bastard - oh the hurt lol. I feel more sympathy for the businesses and clubs owed money by Rangers, they will be worse of because of the financial mismanagement of the so called financial experts.

2012-02-15T09:35:30+00:00

Simmo

Guest


hey now Tims understand the full consequences of Rangers trouble. The joy is for show and in full keeping with the clubs' off-field relationship. But the full extent of their relationship is symbiotic. They're called the Old Firm precisely because they are able to generate so much income by playing against each other and feeding off their deep rivalry. Without Rangers, Celtic loses a part of itself. And the same would be true for the Huns if Celtic was in their position. Like other major clubs that have been in dire financial situations there will be a way out. It may be a legal and financial mess but football clubs are football clubs because of people like us. The fans. You can't put a fanbase into administration. Can't sell us off to other clubs. As long as their are union jack waving lunatics in West Scotland and Northern Ireland there will be a Rangers FC. It will have a new ownership and maybe a new legal identity but the bastards will never die. And that's a good thing. I guess.

2012-02-15T08:58:07+00:00

Matt F

Guest


It's not saying that they're no longer making any money, the vast majority of clubs operate at a loss, some of them much more then Rangers. It's simply there as a deterrant so that clubs can't spend too much, go into admin to sort themselves out, and emerge without consequence. Rangers, like Leeds or Portsmouth or any club in a similar situation, knew the rules only have themselves to blame.

2012-02-15T08:51:51+00:00

Matt F

Guest


Ah yes I see my error. I found an article with Platini saying that they'll do whatever they can to give Cardiff an UEFA Cup spot if the FA declined to give them one. Had I checked the date of the article I would have realised that it was written before the final and not after.....

2012-02-15T08:35:05+00:00

gawa

Guest


I have to laugh at all the gloating Celtic fans, yeah of course you guys would flourish without the other half of the Old Firm double act - please note extreme sarcasm in that last sentance. The very notion that this is the end of a famous 140 year old institution is also very wide of the mark. Sure there will be some lean times ahead but I firmly believe Rangers will survive and emerge a stronger club with the huge support being vital in this rebirth. Also seems that there are many many clubs south of the border in England watching this unfold because other reports over the last year have claimed the tax avoidance system in question has been used by many other businesses, not only football clubs.

2012-02-15T07:53:37+00:00

The Cattery

Roar Guru


Rangers must not be lost - full stop.

2012-02-15T07:34:58+00:00

BrisbaneBhoy

Guest


What does it mean? If Rangers go under then there will be no more being guilty by association :) I for one don't think it will affect Celtic all that much. Yes it will affect Scottish football, but Scottish football is already in a mess and needs revamp sooner rather then later (regardless as to what happens to Rangers). Back to Celtic, Celtic doesn't make all that much from TV revenue, so any change to this would be minimal. Sponsorship wise, yes Celtic will most likely lose out on some coin here, but the name Celtic is far to big and far reaching for it to lose out to much. As for title challengers. Yes in the now/near future the SPL will become a monopoly, but it wouldn't be too long for (a) Celtic become slightly weaker and (b) another club or two improve enough to start challenging (with the real possible hope of European football there could be new investment etc for the likes of Hibs, Dundee Utd, Falkirk etc). Celtic will never be a power they once were in terms of European football (with or without Rangers), it's just an unfortunate thing thanks to the way TV money is in European football at the minute (with the gap only going to become bigger). So all this talk that Celtic needs Rangers or vice-versa isn't true. Yes there is more pulling power with the two, but one can and will survive without the other if they are run properly. Something Celtic has been doing since the Fergus McCann days onwards. The Gers only have themselves to blame for (1) spending well beyond their means and (2) trying to cheat the the taxman with the way they went about paying the players wages etc. If this becomes the end of Rangers as we know them, I for one won't lose any sleep. Rangers will live on in some way or another be it like in the form of AFC Wimbledon, Airdrie Utd etc, etc, starting all over again in Div 3 or whatnot. The rivalry will live on, just not with as many matches for the time being. As for the talk of the Old Firm joining the EPL or the forming of the Atlantic League etc, who knows what the future will bring. The Atlantic League would be the most likely as I can't see them ever being allowed to join The EPL (unless Sky TV demands it when TV deal is negotiated or something along these lines) as all the clubs in England know how big and powerful the Old Firm would be with the sort of money they make over the border. A few years ago the Old Firm were invite to join the Championship and the English FA Cup, on the conditions of they would not be allowed to promote to the EPL regardless where they finish in the league. Also if they won the FA Cup they could not claim the European spot. With that they declined the offer to join the Championship.

AUTHOR

2012-02-15T06:46:48+00:00

Stoffy18

Roar Guru


Thanks for sharing that article HP, very interesting to read.

2012-02-15T05:34:53+00:00

clipper

Guest


I find it quite cruel to deduct the 10 points off a club for going into administration. It's like saying "you're not making money now, we're going to ensure you make even less of it in the future", Leeds being the classic example, being bundled down the 3rd tier for the first time in their history. Of course this won't be the fate of Rangers, but most of the time this happens it's with struggling clubs near the bottom of their division.

2012-02-15T05:12:40+00:00

HardcorePrawn

Guest


Matt F, The losing FA Cup finalist will usually only get a spot in the UEFA Cup/Euro League if the winning team also qualifies for the Champions League via League position, hence Stoke City's qualification despite being beaten in the FA Cup final by Man City, who finished 3rd in the League and took the last automatic qualification spot for the CL. Portsmouth beat Cardiff in the 2008 FA Cup final and, having not qualified for Europe by any other means, therefore qualified for the UEFA Cup as a result; apparently, according to wikipedia, so it could be wrong: "Although Cardiff City are considered a Welsh club and only hold associate membership with the Football Association, should they have won the 2008 FA Cup they would have been allowed to compete in the 2008–09 UEFA Cup." You're right about Wellington though, as a team based in Oceania they aren't allowed to compete in the ACL, unless New Zealand apply to join Asia the Phoenix are stuck between a rock and a hard place. Still preferable to being in Rangers' predicament at this current time though.

2012-02-15T04:17:55+00:00

Matt F

Roar Guru


I've heard that if Cardiff win the League Cup final then the European spot that normally goes with it will be given to the highest EPL team outside of the automatic European spots. If Liverpool win then it will go to them, assuming they dont pull off a miraculous revival and make 4th. I know they weren't allowed into the UEFA Cup despite making the FA Cup final in 2008 but the rule may have changed. I'm not 100% sure if they or Swansea (or Wrexham) can qualify through EPL ladder positions, though it would be strange if they were allowed one method and not the other. It's always seemed very strange to me that Cardiff weren't allowed into Europe but they allow sides like Derry City (based in Northern Ireland but play in the Republic of ireland league) and Monaco to play in Europe. I know that Wellington aren't allowed in the ACL but then again they're not just based in another country, but one which belongs to another confederation.

2012-02-15T03:31:17+00:00

HardcorePrawn

Guest


I've always wondered what would happen if, should the Auld Firm get a free pass to the Premier League, they were then relegated. Would the clubs and their fans still want to play in England if it meant fixtures against Millwall and Barnsley (no offence intended to fans of either club, especially Millwall!), and not the giants of the Premier League? Or would they simply apply to re-join the SPL instead? As for Cardiff and Swansea, I may be wrong, but I think that they're still eligible to compete in Europe should they win the right to do so in the English League (or either of the Cup competitions). I can remember the rules being changed some years ago as the 2 teams would regularly get into the European Cup Winners Cup by dint of winning the Welsh Cup, hardly surprising given that they (and Wrexham) were in a minority of professional teams competing. There are other examples of Welsh teams competing in England too: Merthyr Town, Newport County, & Colwyn Bay; and there's the one example that the advocates of Celtic and Rangers move to England always cite: Berwick Rangers, an English team in Scotland's Third Division.

2012-02-15T02:37:28+00:00

Matt F

Roar Guru


I agree with you HP. Over the last 10-20 years the financial gap between the SPL and the leagues in England, Spain, Italy etc. gets bigger and bigger. Whereas Celtic/Rangers used to make the champions league group stages fairly regularly and get out of them a few times, they seem to struggle just to get in now. The gap will continue to get grow anyway, but take out one of the Old Firm and it will get much worse, and quicker.

2012-02-15T02:31:26+00:00

Matt F

Roar Guru


Celtic and/or Rangers will never be allowed into the EPL, at least not for the forseeable future. The last time that it was seriously proposed it was rejected by the clubs as "neither desirable or viable." You'd either have to extend it to 22 teams, relegate 5 teams from the EPL at once, or only let in 1 team from the championship. No English club, even if it is purely out of self interest, will allow that. Their only chance would be to join the lower divisions of the Football League (championship or below) and try to gain promotion, like Swansea and Cardiff, though I can't see Celtic or Rangers wanting that, or even the teams in the Football League. There's also the FIFA rule that teams like Cardiff/Swansea, or Wellington in the A-League, who are based in one country but play in a different countries league, are inelligible for continental competition. Celtic/Rangers would have to sacrifice European football for English football.

2012-02-15T02:24:14+00:00

HardcorePrawn

Guest


I think it would be terrible for Celtic too, currently they get huge quantities of TV cash on the basis of their regular matches against Rangers. Should they go out of business I can't see the TV networks really wanting to continue paying Celtic the big money (by SPL standards) for coverage when their biggest games are likely to be against Hibs, Hearts, Motherwell etc. Additionally, take the only other strong team out of the league and suddenly Celtic are going to struggle to get decent quality opposition and game-time. The Scottish teams already struggle when they come up against European sides, imagine how Celtic (and the rest of the SPL for that matter) will look after a few years without Rangers giving them a decent run-out 4 times a year. There's a good write up regarding how their collapse could affect the rest of Scottish football here: http://www.guardian.co.uk/football/blog/2012/feb/10/rangers-financial-meltdown-spl However, should Rangers go under, a potential upside would be if their hoards of fans adopted their local teams instead, a huge influx of former Rangers fans going to watch Hearts, Dundee etc. is sure to help these clubs financially.

AUTHOR

2012-02-15T01:11:37+00:00

Stoffy18

Roar Guru


There is no question where your allegiance lies Simmo ;) However, as a celtic fan, surely this remarkable rivalry is what fans live for? You need Rangers to survive as a club for the SPL to survive.. Celtic will go unchalleneged throughout the year and although you may say thats fantastic news, it's terrible for football. If the Rangers do fold, Celtic may look at a move to the premierleague, who knows?

2012-02-15T00:06:08+00:00

Simmo

Guest


What does it mean? It means we're doing the conga when Rangers die: http://www.youtube.com/watch?v=uJOASGVxvQY http://www.youtube.com/watch?v=ktOZTTeo_Z0&feature=related

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