The Elephant in the Room

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A Guest blog by @heavidor:       

Given The Takeover Panel’s success in procuring a Court of Session order to compel Dave King to make an offer for all Rangers International Football Club Plc shares not owned by the Concert Party it would be impossible for King to remain a director unless he complies with that Order.

The co-option of Barry Scott to the board and the elevation of Alistair Johnston as a person with significant control could be construed as repositioning, however it will be whether King makes an offer of 20 pence per share to all the shareholders not included in the Concert Party or not that will determine what happens next and we shall know later this month.

(King resigning) is the correct thing to do and should have already occurred. Instead, Rangers financial reputation has been dragged through the mud by association.

Irrespective of whether King complies with the Court Order or not this story is far from over, and it will continue to hamper Rangers’ prospects until it is conclusively resolved. A King resignation as a director of RIFC would reduce the prospect of contaminating the club, its directors and advisors from the full effect of cold shouldering should he decline to make an offer.

That would mean that King, as distinct from RIFC, had financial pariah status and not the club. That is the correct thing to do and should have already occurred but, instead, Rangers’ financial reputation has been dragged through the mud by association with King.

What should not be underestimated is the reality of cold-shouldering, not for just the offending party, but for those involved in business with the offending party. The consequences are dire for the individual or organisation who falls foul of the rules, making it impossible to carry out normal business activities within the sphere of influence of The Panel, and the same consequences face those who shelter the cold shouldered.

It should be appreciated that there are members of the RIFC that are members of regulated financial professions who would be further prejudiced through association with a cold shouldered non-resident King.

Perhaps unfortunately for a large slug of the mainstream media and football authorities, financial pariah status pursuant to cold shouldering in the UK coming on top of criminal convictions in SA would be impossible to spin in any positive way or to maintain continued fit and proper status. I mean, we could have the SFA cold shouldered, couldn’t we? All said though, the cognitively dissonant will carry on regardless.

If King does the right thing by resigning from the board, it is still important to appreciate that the ‘4 Bear’ Concert Party as determined by The Panel will continue to exist irrespective of how Kings deals with the instruction to make an offer for the shares. This is the elephant in the room that remains.

The Concert Party via their shares and loans will retain the same level of control they currently have, and therefore remain compelled to abide by The Panel’s rules.

King’s resignation would not remove that impediment.

It doesn’t end there. By challenging the authority and insulting the intelligence of The Panel and the Court, King has ensured all large share transactions in RIFC will be scrutinised and questioned and could additionally determine, for example, that the Concert Party is increased to include Club 1872 and Barry Scott on the basis they are working in concert with King and/or other concert party members.

There are some who think that The Panel has been slow to respond and impose sanctions and that they are all bark and no bite. It would be wrong to think so. The reality is that King has moved the whole dispute into uncharted territory. There has been no precedent for such continued brazen and naïve flouting of Panel rules. Accordingly, The Panel has chosen to move at its own pace, dotting the ‘i’s and crossing the ‘t’s and I suggest they’re being methodical rather than indecisive in dealing with the estimable Mr King.

The true value of RIFC shares was a key point in the recent court case with all kinds of claims being made. Some think that the lack of significant arm’s-length trades makes it impossible to arrive at a correct price, and others say that the price paid to Mike Ashley in recent trades is the benchmark. In my opinion, neither is correct. Current and prospective shareholders have the financial figures in the accounts to work with, and can determine the real worth from there. On that basis it is clear to me the shares are not worth anything like the last alleged trading price on Jenkins. Rather it seems that the shares only have nominal value given the business has never declared a profit, continues to lose money and is reliant upon ongoing shareholder loans to stay in business.

Any subsequent share issue – even with King gone – could muddy the waters further; The Concert Party members may expose themselves to another Panel instruction to make another offer should any of its members acquire more shares without coming to an arrangement with The Panel beforehand.

To illustrate such an arrangement, Dermot Desmond got Panel permission to increase his shareholding above 29.9% the last time Celtic had a share issue. This is preferable to trying to hoodwink the financial authorities with tall tales.

It should be clear to all followers of RIFC’s financial travails that the status quo is unsustainable. So, the question is ‘what’s next’? The chairman’s statement that accompanied the annual accounts once more talked about loan to equity conversion without reference to the impact of the existence of a Concert Party amongst the RIFC Board of directors and providers of loans. This is remarkable any such conversion cannot take place without the permission of The Panel and/or without dragging the other directors and lenders in the quagmire with another possible offer for the shares not owned by the Concert Party.

.. the shares only have nominal value given the business has never declared a profit, continues to lose money and is reliant upon ongoing shareholder loans to stay in business

So, what should happen and what is required for RIFC to rid itself of this terrible yoke? The answers are pretty obvious; King should make an offer of 20 pence per share to all those shareholders not included in the Concert Party. He has said the shares are worth more than that and that no one would accept. If he’s correct he has nothing to worry about and he would create a clear path forward for Rangers. He would also resolve the dispute with The Panel, creating the conditions for a debt to equity conversion.

So, why might that not happen? Because if the shares are worth 27 pence as the directors have suggested that means the loan to equity conversion would have to be at the same price and, of course, if the shares not worth anything like that there would be a rush to accept 27 pence and the ball would be on the slates, so to speak.

It appears to me the board is stuck between a rock and a hard place, that King will resign, and that there will be no offer.

If this happens the position would be precarious. The current board doesn’t have the credibility, money or experience to take Rangers forward. Being a true blue should not be the defining characteristic of what’s required to make Rangers competitive but it appears to be the preferred qualification of most of their customers.

I believe Rangers need a need owner with a controlling shareholding and deep pockets to sort out this mess, and I have reason to believe this view is shared by some of those with influence.

That is not to say that a solution is imminent, but the reality check is at least a start.

1315 COMMENTS


  1. DarkbeforedawnJanuary 27, 2018 at 22:03
    ‘… in the minority for thinking its good that the Old Firm ‘
    ___________________________
    Quite  a long time ago DbD, someone on this blog  posted this entry from the Intellectual Property Register at this link     https://trademarks.ipo.gov.uk/ipo-tmcase/page/Results/1/UK0002181523B
    Trade mark numberUK0002181523B
    Status DEAD

    Display content without tabs
    Overview List of goods Names and addresses Publications
    Owner(s) name:Celtic F.C.Limited and The Rangers Football Club plcCeltic Park, Glasgow, G40 3RE, and, Ibrox Stadium, Glasgow, G51 2XD, Scotland, United KingdomCountry of IncorporationUnited Kingdom ”

    Note the word I have emphasised.

    There is no longer an ‘Old Firm’ except when referring to a time before the Liquidation of The Rangers Football Club plc.

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  2. jimbo January 27, 2018 at 22:48
    I’ve heard about a local rivalry which is very heated.  Bo’ness Utd. v Linlithgow Rose.
    ========================
    They certainly don’t like one another but I haven’t witnessed any trouble at the games, a few chants from rival fans, but nothing more than that.

    I attended a couple of their games, maybe four years ago, that were played back to back (a junior cup game and a likely league decider), there was 1,750 at the first game and around 1,600 at the second.  Most League 1 & 2 sides would bite your hand off for attendances like that.

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  3. HomunculusJanuary 27, 2018 at 22:54
    BOGS DOLLOX JANUARY 27, 2018 at 22:45 +++++++++++++++++++++++++++++++++++++++ Democracy is fine but sometimes there is more than one way to bribe a cat. ================================
    I’m sure you have a good point.
    For the life of me I can’t think what it is. 
    ++++++++++++++++++++++++++++++++++++
    You have constantly repeated on here that “the clubs will decide” which on the face of it sounds democratic.
    Is this the same democratic decision making where the Old Firm accrued so much power that the voting system wasn’t democratic?

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  4. EJ,  Never been to one but I am friendly with a man who was in the SJFA? (The Juniors part of the SFA).  He said there used to be quite a bit of police presence for a junior game.  Don’t know about crowd trouble to be honest.  I take your word for it obviously.

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  5. jimbo January 27, 2018 at 23:07
    EJ,  Never been to one but I am friendly with a man who was in the SJFA? (The Juniors part of the SFA).  He said there used to be quite a bit of police presence for a junior game.  Don’t know about crowd trouble to be honest.  I take your word for it obviously.
    =============================
    Crowds for all but the top sides in the Junior ranks have fallen over the last few years, but all credit to those teams that survive on a hand to mouth existence.  There is no need for a police presence at any game, barring the odd derby or big cup game that is likely to attract four figure crowds.

    I’ve been to a lot of junior games over the last few years and haven’t seen any trouble between fans, other than the odd distasteful chants from small groups of “buckie” boys.  There is generally much more trouble on the pitch.  Heaven knows how many red cards I’ve seen on my visits round the ground of the lower level clubs.

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  6. I realise I’m being a pain in the neck but not only is someone making a few bob being no good reason to bias the game towards the old firm* but also a “democratic” vote doesn’t make it right either.  If this was the case we’ve been wasting our time alll these years arguing the toss about the democratic treatment of the old and new Rangers in general.  Stewarty Milne and the other lickspittles don’t talk for me.
    * I have joined in with the avoidance of this terminology since 2012 but I can assure you that from where I’m sitting it bloody well looks like the old firm to me again!

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  7. JC, I previously made my point on the OC/NC debate and don’t believe this forum is the place for constantly revisiting the argument. 
    For the purposes of the subject I refer to Old Firm as the two big clubs in Glasgow – a term widely used in the MSM and between most Rangers and Celtic fans I know. I feel there has been so many years of hatred both sides that it’s nice to finally see a united front. That said I don’t want to see it going back to a stage where decisions are made solely for the benefit of two clubs above the greater good of the league. As someone who was brought up a Shire fan I actually like the idea of colt teams playing in the bottom rung, but it has to be an open house for any team which is why I think my idea of the top two clubs from the previous year taking those places. To be honest, to avoid the accusations of Old Firm bias I would personally prefer if it goes ahead that next season it be Celtic and Aberdeen (based on last seasons finish) that took these places. Hopefully Rangers finish second and take the place the following season, but I feel it would give the top two from the league a nice prize and also much needed revenue for the smaller teams. I would have loved to have seen the Shire come up against a Rangers or Celtic colt team when they were still playing in league 2. It would have been a glamour fixture not often witnessed 

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  8. ERNIE
    JANUARY 27, 2018 at 23:20

    I realise I’m being a pain in the neck but not only is someone making a few bob being no good reason to bias the game towards the old firm* but also a “democratic” vote doesn’t make it right either.  If this was the case we’ve been wasting our time alll these years arguing the toss about the democratic treatment of the old and new Rangers in general. 
    ====================================

    Democratically the SPL (as was) voted that the new club could not get into that league.

    Democratically the SFL (as was) voted that the new club could join that league, in the bottom division.

    Whilst I disagree with the SFL decision I fully support their right to make that decision.

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  9. EJ,  My friend was on disciplinary panels for the junior SFA.  The stories he could tell.  No names mentioned of course – as if I would know them anyway! – but very funny reasons (excuses) given.  I think fines of £10 were commonplace.

    Talking about money.  Shotts Bon Accord have a social club which during the 70s and 80s was packed out.  Not sure of the arrangements but the football club must have been pretty well off in that era. Like social clubs all over the country now they are dying in their feet.  I wonder how they survive nowadays (the football club) without that income stream.  Haven’t been to a match in years.

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  10. Would highlander and his fellow cohorts be advocating the return of the dirty Champions league money received for doing sweet FA, or is that ‘dirty money’ acceptable ?

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  11. Homunculus @ 21.27
    There really is a lot of anger on here about something that isn’t going to happen.

    i don’t think it’s fair to suggest the anger is solely related to the proposal per se.  Rather it has a lot to do with it’s origins, it’s stated purpose (the biggest sticking point for me for pretending it’s something it’s not), the particular avenue of presentation taken (apparently by two clubs with an historic affiliation going it alone) and the relative urgency with which it’s being brought to bear.  How many other proposals, particularly those from individual clubs as opposed to a united offering are heard in January to start in July?

    i think as a fan I have every right to be suspicious and, sorry, as a non old firm fan, every right to be particularly suspicious!  And the reason I’m using the OF tag is because this is exactly the crap the old cheeks were up to.  I’ve stated before I’m amazed Celtic in particular didn’t anticipate exactly this reaction TO THE ROUTE CHOSEN, not necessarily the proposal itself (which in itself is flawed).

    just on this btw was it ever confirmed if the vote was a majority in each division as someone proposed earlier?  Sorry if I missed it.

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  12. I have to say, I quite like Jimbo’s idea of the player loan pool; not involving ALL the available players but certainly a number. It could be run the the NFL draft system to spread the good younger players right through the game while retaining their ‘home’ club connection

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