Pyrrhic victories, States Rights, & Samson

[scottish]

Today’s court verdict and the issuing of a proposal for a CVA can best be summed up by these three historical allusions. As most will be aware, a Pyrrhic victory is one won at such great cost that the ‘winner’ is left unable to fight again. That, I think, sums up Dumb & Dumber’s “achievement” in finally issuing a CVA, just at the moment they face investigation by their own professional body. As a document it makes no sense whatsoever. It doesn’t even tell Rangers’ creditors how much they will receive in the £ as this is dependent on them winning a court case against lawyers Collyer Bristow for £25M, a case which may never go ahead and if it does may see David Grier of D&P called to the stand to testify for the defence. A case which, should it actually go ahead, may be lost. A case which, even if won, offers no guarantee that the amount sought will be the amount determined by the court. A case which may not be determined for months to come.

Yet that is the largest substantive part of the cash on offer - a ‘mibbes aye, mibbes naw’ sum of money. I note that Dumb & Dumber will not be waiting until this is determined before taking their own fees. No, this will come out of the £8.5M allegedly available through Charles Green and his consortium. Close Brothers are preferred creditors for their work on the Ibrox big screens so at least half of that money will be accounted for before creditors see a penny. And once that half is deducted, a penny for every pound owed is all they might see.

Then there is the delicious irony that Rangers are including every penny of transfer money owed to them so that they can pay out a derisory sum in return to clubs they owe money to. I’m not so sure this will play well with Hearts and Rapid Vienna, the two biggest creditors in this category.

But the debts owed here pale into insignificance compared to Ticketus and HMRC. The weirdness of the Ticketus situation has yet to be fully explained. Why did they offer no protest when their contact was torn up by D&D? How come they are having two bites at the cherry by pursuing Craigy Boy in the courts and are also a creditor here? Surely either Rangers owe them the money or Craig Whyte does? Not both. And can anyone say with certainty that Craig Whyte is not the legal owner of Ibrox and Murray Park? That would make him a preferred creditor and reduce still further the amount available.

As for the taxman it is laughable to suggest HMRC will accept this proposal. Forget the tax cases wee and big. They are owed £14M for unpaid PAYE, NIC & VAT for 2011-12 alone. Should they be foolish enough to accept this then the floodgates will open for anyone else keen to pull a fast one with taxpayers money. They will be well aware of this. This CVA stands absolutely no chance of success.

Which, if the Daily Record is to be believed (I know, I know) might actually be what Charles Green wants. The Record alleges that Green has sent out a brochure to prospective investors claiming that in the event of a CVA failure then Rangers assets will be offloaded to his consortium for just £5.5M to set up a newco. To get Ibrox, Murray Park and all that comes with it, players included, at that price is fantastic value. In the transfer market it would buy Eden Hazard’s standing leg. Christ, it’s less than half a Tore Andre Flo! This document also promises investors they will at least double their cash via a stock market flotation. How that works, I have no idea. Someone will have to stand guarantor. Who? And how does that idea sit with Green’s insistence that no individual will own more than 15% of Rangers? Most importantly, how can this square with obtaining the best return for creditors? Surely in the event of a CVA failure the next step is liquidation and an asset sale on the open market not newco and everything handed over to Green at a pre-arranged price ?

No, this is going nowhere fast. Especially now that Rangers have ‘won’ another Pyrrhic victory in the Court of Session. First, let’s consider the consequences. Does today’s decision mean the transfer embargo has been lifted? No. Does it mean that even if it were lifted soon that Rangers could start signing players? No, not while they remain in administration. And even if it did, Green has pledged to slash the wage bill by almost 50%. Did Rangers claim that the SFA decision to brand them as having brought the game into disrepute was incorrect? No. Did they even use the special Craig Whyte’s a big boy who did it an ran away defence they tried to use at the SFA appeal? No. Did they appeal against the fines imposed on them? No. For the first time - and I’m not really surprised this has gone unnoticed by the press - they implicitly accepted their guilt by not contesting the SFA verdict.

The judge essentially handed down a ‘States Rights’ verdict. To those unfamiliar with the term, this is used in the USA where there is a conflict between state and federal laws (the more confusing terms loose constructionist and strict constructionist can also be applied but this is easier to understand). Essentially, those in favour of ‘States Rights’ argue that unless something is specifically written down in federal law or in the constitution then it does not and can not override decisions taken at state level. It was used for a century or more by racists, Klansmen and all sorts of unsavoury unreconstructed Confederate types. Not that I’m comparing Rangers with white supremacists you understand. Heaven forfend. But that’s the decision that was made today. The option open to the initial SFA tribunal didn’t say specifically they COULD do this, therefore the Judge said couldn’t. Even though the SFA thought they had themselves covered by a catch-all clause which gave absolute discretion to their panel to issue any punishment they saw fit.

It’s strange that an interpretation of the law which is normally used to prevent big government from overriding more local bodies has been used to interfere with the internal workings of a sporting association. But there you go.

Now, the judge only said the SFA didn’t have the power to issue this particular sanction. It wasn’t struck down by the court. It has been referred back to the SFA. And herein lies a dilemma. For by going to court in the first place, Rangers have breached the rules which govern football not just in Scotland but worldwide. At long last UEFA and FIFA will become involved in what was until now an essentially parochial affair. FIFA had already insisted the SFA rein in Rangers’ civil action but of course the SFA were powerless to do so without further sanction. Dumb & Dumber claimed to be unaware that recourse to the Court of Session was in breach of any FIFA rules but their lawyers certainly wouldn’t have been and this appalling pair sanctioned the action knowing what the potential consequences might be. They had the chance today to withdraw their action and defuse the situation but refused to do so. It’s a tricky situation for the SFA. Do they refer the matter back as the court ordered and thus incur the wrath of FIFA? In theory they could implement another sanction such as suspension for a period. They can’t just fine Rangers as they are on record as saying that wasn’t a sufficient penalty. They are also on record as saying that suspension or expulsion was too severe yet at the same time said only match fixing was worse than Rangers offences. They would have to re-examine the matter with the smart money being on a one-year suspension as an option. Thus Rangers’ situation would be worse rather than better as result of going to court and the Green bid would probably be withdrawn overnight. The SFA may even have to take further action against Rangers for going to court in the first place. Yet accepting the court verdict is also fraught with peril for the SFA as they would then be the ones in breach of FIFA statutes.

It couldn’t be more serious for Scottish football as a whole. We are now in a Sion situation with one club defying the national and international governing bodies. That ended in defeat for Sion as this will for Rangers. Unless, that is, the whole of Scottish football suffers alongside them. It’s that serious. FIFA can expel the SFA from membership, forcing the withdrawal of the national team from all international competitions (no bad thing a cynic might add, given last weekend’s result), our clubs could be banned from Europe and no players from any other jurisdiction allowed to sign for Scottish clubs.

These are matters which must weigh heavily on the minds of SPL clubs - particularly the five clubs scheduled to enter Europe next season - when they meet tomorrow. Thus far, Rangers have shown nothing but contempt for the SFA, SPL, other clubs and the game in general. They gained an unfair advantage over every other club in the league by buying players and extending contracts through cash which should have been paid to HMRC. They refused to accept the decision of an independent panel and launched a campaign to publicly identify the anonymous panel members who were then subject to threats from Rangers supporters. They have threatened other clubs that they would ‘remember’ who kicked them when they were down. They have marched, not on Craig Whyte’s castle or David Murray’s plush Edinburgh home, but on Hampden Park. A supine SPL has done everything it can to keep them within the fold, delaying taking action on their investigation into dual contracts, even though the evidence has been laid bare not just on blogs like Rangerstaxcase but also on the BBC.

It is fast reaching the point where it is Rangers or Scottish football that will survive and the Ibrox attitude seems to be like that of Samson, bringing down the temple and all within it alongside them. Ironically, that tale is from the Book of Judges.

[Gorgiewave]

Is there any precedent except Colombia for starting a parallel FA? I know that is not an attractive option and has caused trouble in darts and chess, not to mention the farce in boxing, but I think the idea of a completely fresh start, with the SFA being dissolved, is worth exploring. Campbell Ogilvie's continued presence at the SFA is in itself an unbelievable state of affairs which would not be accepted in a serious country.

The fixtures come out on 18 June. Even if they are drawn up by plugging the teams into a computer programme, they will surely need to know their cast before that.

[BMCCOLL]

The SPL will now need to tread very carefully. Surely the SFA still has the sanction to expel those clubs that play against a suspended club ie Rangers, if blah blah blah. The SPL are hell bent in keeping them in the fold no matter what, so will we see next season's First Division clubs vying for Champions League and Europa League spots?

[scottish]

Just reading some more about the CVA and it takes my breath away. Britain's foremost football finance writer David Conn has admitted that even he has had to read between the lines before discovering that Green is paying the same amount as Craigy to buy Rangers - a whole £1 - with the other £8.3M a loan to be repaid with interest over the next eight years. He says "I've never seen a football club taken over with a loan (£8.3m here), which the owners then get repaid, out of the club, later."

Then, Jim Delahunt, hardly the voice of rampant anti-Rangers militancy, sent this tweet to Britney "Suspect this all going to end in tears. SFA cant lose this one or game is finished. Carnage to follow." And earlier "If SFA don't come down hard the game's a bogey."

Two more interesting observations on the CVA. Firstly, Rangers have to play in all existing domestic competitions or the CVA is withdrawn and Green gets the lot for £5.5M without the assets being put on the open market. In other words any Scottish Cup suspension or removal from the SPL voids the agreement, thus creating a conflict of interest for some creditors, notably clubs owed money.

Secondly, and most astonishing of all, they STILL haven't paid any PAYE, NIC or VAT even AFTER they were placed in administration, thus increasing the amount owed to HMRC by around another £4M!!!!!

How on earth have they got away with this one? I assumed that whatever other shenanigans Dumb & Dumber were getting up to that at least they had started to pay tax from the day they became responsible for running the club.

Why isn't HMRC back in court demanding the removal of these con men?

[BMCCOLL]

If they get out of this intact, the aprons must have been made by elves, with a fair sprinkling of fairy dust!!!

[scottish]

Having watched Newsnicht I see there are 46 - or is it 47 - TBDs in the document. That's almost fifty claims these clowns from Duff & Phelps don't know the value of after over three months. The big tax case I can accept but the rest? One TBD in particular is interesting. It's from Rangers FC (Group) whose chief, maybe sole, claimant is a certain C Whyte Esq. It'll be interesting to see what his claim turns out to be.

[BMCCOLL]

Ok, which sanctions will the SFA hand out?

I'd say a Scottish Cup ban and a suspension until the start of the season will be the sell-out verdict. Any other proposals?

[scottish]

I suppose there's a possibility that a cup ban could extend over more than one season but given the SFA's history of enforcing replays or throwing out clubs for minor offences it would IMHO need to be a five-year ban to be effective. As the Judge in the CoS said that ONLY sanctions specifically laid down in the rule book can be applied, Rangers may go straight back to court if that happened, seeing as the only sanction specified regarding the Scottish Cup is ejection with no actual time limit mentioned. They could argue it meant for one year only.

In fact the CoS decision is a lawyer's dream. The specified sanctions - other than the fine, which has a maximum number put on it and termination of SFA membership- are vague. Ejection from the Scottish Cup and suspension or expulsion from the SFA don't specify time limits. Sine Die or a few weeks? It is also bound to have repercussions further down the line and we may well end up with specific tariffs for offences, allowing panels no leeway at all and rendering them ineffective other than on points of rulebook interpretation.

However if Rangers show any sense (and this is something they have failed to do at any stage since going into administration) they will NOT contest whatever decision the appellate tribunal comes up with. The very fact that they face the genuine threat of suspension from the game is down to their continuing arrogant WATP mentality. The over-18 signing ban on a club with over forty players on its books, losing over £1M per month thanks to its (tax-free) wage bill and whose prospective new owner wants to cut £11M per annum from that bill, should have been accepted by them, certainly after having lost the appeal.

I don't think there will be a 'sell-out' verdict though. If there is one thing the process taught us it is that both the original panel and the appeals body were genuinely independent in reaching their conclusions and verdicts. The choice now is between going for a verdict the original panel thought was too light and one they considered too heavy. The difference is that the first was regarded as definitely too light while the second was too heavy only if they could apply a sanction of their own. The CoS has prevented this from happening.

I'm of the view that they can only go up the way and that a one-year suspension is the logical outcome. Anything less and it starts to impact on other clubs unfairly.