Scottish Football Association: The Rangers Football Club Already Making Trouble

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Scottish Football Association: The Rangers Football Club Already Making Trouble
Rangers Football Club Ltd

Less than a month into the new Scottish soccer season and the SFA’s newest member club is causing trouble.

Before I go on, you may consider the repeated use of “Rangers Football Club” and “The Rangers Football Club” unnecessary.

This is actually a necessary distinction to make as “Rangers Football Club” is the club formed in 1872, which is no longer a member of the SFA and will soon be liquidated.  

“The Rangers FC” is the new name of Sevco Scotland, a consortium fronted by former Sheffield United FC Chief Executive Charles Green, which purchased the assets of Rangers Football Club in June this year.

They are two separate, unrelated legal entities, one of which has purchased the real estate of the other.

A fiction has emerged amongst Rangers supporters that somehow the “club” and the “company” are separate and that The Rangers Football Club Ltd has purchased Rangers Football Club from Rangers plc.

This is emphatically not the case.

There is no legal distinction or difference between the club and the company. They are one and the same.

In 1872, Rangers Football Club was a club. That is, a group of individuals who have come together to form an association with members and are run by a committee.

A club’s members pay an annual subscription, and its members are personally liable for any debts incurred by the club.

Around the turn of the 20th century, most soccer clubs in the UK incorporated, partly to raise funds and partly to protect members from having to pay debts from their own pockets.

Incorporation means that the club sells shares in itself, and the new directors are not personally liable for any debts incurred.

So it was that in 1899 Rangers Football Club incorporated.

Investors bought shares in the club, which changed its legal status from a club to a private company limited by shares.

The new investors owned shares in Rangers Football Club, which was now called Rangers Football Club Ltd, the wording which to this day adorns the gates of Ibrox Stadium.

There was, and is, no separate company and club.

In the early 1980’s, Rangers Football Club Ltd was floated on the stock market.

This involved another change in legal status, from a private limited company to a public limited company.

In the UK, the names of public companies are not allowed to end in "Ltd,” or “Limited,” so Rangers Football Club Ltd became Rangers plc.

As a public company, a controlling interest in Rangers plc could be purchased by anyone with the cash to buy the necessary number of shares and a willing seller.

So it was that in 1988 a controlling interest in Rangers plc was purchased by David Murray and Rangers plc became part of Murray International Holdings.

Then in 2011, Murray’s shares in Rangers plc were purchased by  Wavetower, owned by Craig Whyte.

After completing the purchase, Wavetower adopted the name, “The Rangers FC Group Limited.”

Neither of these takeovers required a transfer of Rangers’ membership of the SFA to the new company who had bought Rangers plc.

Charles Green’s Sevco Scotland (now The Rangers Football Club Ltd) consortium did not buy Rangers plc, the legal entity formed in 1872.

They purchased Ibrox Stadium, the Murray Park training complex and a car park.

That is why Rangers’ SFA membership had to be transferred from Rangers Football Club to The Rangers Football Club.

You cannot "transfer" something from yourself to yourself!  

The Rangers FC did not qualify for SFA membership as they do not have the three years’ worth of audited accounts required, so in a quirky deal, the SFA agreed to transfer the membership of the now defunct Rangers FC to the company who purchased the assets and business of the old club.

As a condition of transferring the membership, The Rangers FC had to agree to pay all debts owed to Scottish soccer clubs by the now defunct Rangers FC.

This week, following rumblings of discontent over The Rangers FC signing several players beyond the price range of most SPL clubs, Green announced that The Rangers FC has paid all debts owed by the now defunct Rangers FC.

That it seemed, was that.

Until yesterday, when Dundee United FC released a statement that, contrary to Green’s announcement, they have still not received their full share of the gate money for the Scottish Cup tie played at Ibrox in February.

This statement has sparked a great deal of confusion, with Green claiming that the SPL had earlier agreed to pay the money to Dundee United, which the SPL deny.

The dispute hinges on a letter written by the SPL to Rangers FC on May 18, informing Rangers that their prize money from finishing in second place in season 2011-12 would be withheld and distributed to those clubs owed money by the now defunct club.

Green stated:

 “A letter from the SPL to the club—dated May 18, 2012—stated: ‘The board decided to accede to the application of Dundee United and accordingly, the sum will be withheld from the next sum payable by the SPL Limited to Rangers and the sum will be paid by the SPL Limited to Dundee United.’ Why the SPL have not paid Dundee United the outstanding sum as previously agreed is a question that they need to answer. We wrote to Dundee Utd on Monday explaining the SPL had previously confirmed they would pay it.”

Not strictly true. On May 18, The Rangers Football Club did not exist.

It was formed on May 29 (as Sevco Scotland) and did not buy the business and assets of Rangers Football Club until June 14.

So the SPL wrote to Rangers Football Club at a time when it was still a member of the SPL and clinging on to life by its fingertips.

Working on the assumption that Rangers Football Club would still be a member of the SPL this season, the SPL agreed that they would withhold prize money from Rangers Football Club and distribute it to its Scottish soccer creditors.

The SPL’s agreement, then, was with Rangers Football Club.

No such agreement was made with The Rangers Football Club, which is a different club, and has no right to the prize money won by Rangers FC last season.

Following protracted negotiations, The Rangers Football Club was granted Rangers FC’s membership of the SPL with several conditions, one of which was that The Rangers Football Club would pay any money owed by Rangers Football Club to other Scottish clubs.

Charles Green and The Rangers Football Club agreed to that condition but are now claiming that they should not have to pay money owed to Dundee United.

The Rangers Football Club appears to be in clear breach of the agreement by which they were granted membership of the SFA.

The SFA must now either act to ensure The Rangers Football Club keeps its agreement to pay Rangers FC’s Scottish soccer debt, or lose control of the situation altogether.

Whether there exists the will within the SFA to do so remains to be seen.

Breaking its own rules to admit The Rangers Football Club is turning out to be a major mistake by the Scottish Football Association.  

 

Follow Daniel O'Connell on twitter @DanielOConnel18

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