SCOTTISH football chief Neil Doncaster said that the way administrators handled cutting costs when Rangers went into financial meltdown was “different from the usual practice”.
The chief executive of the Scottish Professional Football League questioned the transparency of the administrators of the collapsed business Paul Clark and David Whitehouse of Duff and Phelps and said he expected them to have sold or at least tried to sell any players of value after the club financially imploded nine years ago.
He said the usual practice in an administration was to cut the contracts of players who have no transfer value “to save on expenditure” in the first 14 days.
Mr Doncaster spoke as the liquidators of Rangers oldco BDO sue Mr Clark and Mr Whitehouse for £56.8m claiming a seriously flawed strategy in raising money for the thousands owed millions after the business fell into administration under the ownership of controversial owner Craig Whyte.
The action comes nine years after the Rangers business fell into administration and then liquidation leaving thousands of unsecured creditors out of pocket, including more than 6000 loyal fans who bought £7.7m worth of debenture seats at Ibrox. It was eventually sold to the Charles Green-fronted Sevco consortium for £5.5m.
Mr Doncaster told Lord Tyre that during an early meeting with the administrators there was an “unusual situation” as they confirmed they did not intend to make any players redundant.
He said it had been possible to apply to the world football governing body FIFA for a club which was insolvent to be permitted to move on players outside of official transfer windows if the alternative was a breach of contract.
He said it was also common for clubs to contract to sell a player to another club where the ‘sale’ does not conclude until the transfer window reopens.
“So, the usual practice, in an administration, is termination of the contracts of players who have no transfer value in order to save on expenditure, in the first 14 days, and a mixture, outside of a transfer window, of sales with deferred registrations, FIFA-authorised exceptional sales and/or waiting until the next transfer window and selling players at their value in the transfer market.
“In contrast, what happened at Rangers was different from the usual practices of an administration.”
He gave as an example, the failure to sell Steven Naismith.
Mr Doncaster said that he was “surprised” that having been offered money for striker Steven Naismith that the administrators did not sell him, “especially because in the circumstances where a sale of the business and assets of the company was pursued, there was always a risk that [the player] would not generate any return at all because he would have been free to refuse a transfer of his employment contract to a Newco.
“I accept, however that it was open to Steven Naismith to refuse a transfer to another club, such as West Brom. But I would have been surprised had he not wanted to go to West Brom, a team that were playing in the English Premier League.”
Everton ended up signing Naismith in July, 2012, after he rejected a contract transfer from the oldco to the newco
The 25-year-old moved on a free transfer
Earlier in the action, evidence provided in the case showed that while the business and Rangers assets such as Ibrox, the Murray Park trainin.g facility, trademarks and the players were bought out of liquidation by Charles Green’s Sevco for £5.5m, a fair value assessment to the group carried out on the day of the buyout was put at nearly five times that – £27.2m.
While just ten of the star players including striker Steven Naismith, goalkeeper Allan McGregor, midfielder Steven Davis, and defender Steven Whittaker were valued at £21.35m after the club went into insolvency – they ended up being bought for just £2.75m as part of Sevco’s £5.5m purchase.
And the price of the Rangers brand, including valuable trademarks used in all the club’s merchandising was snapped up for nothing – while the assessment put their value at £16m.
Mr Doncaster told the Court of Session that they had been “wholly in the dark” about the ability of the administrators to control Craig Whyte’s majority shareholding in the company.
He said: “In previous and subsequent administrations in professional football, the adminstrators have, subject to confidentiality terms, been wholly transparent with the SPL over their intentions as regards their intended method of exiting insolvency and the potential investors who might acquire control of the relevant club post-insolvency.”
He said there was “little insight” over the process of identifying any future purchasers.
Mr Doncaster contrasted that to the approach of Bryan Jackson, who was the adminstrator of Hearts during its financial implosion eight years ago.
“That was a very open, transparent process that enabled us to work with him in various respects throughout the administration.
“It’s certainly helpful to the administrators to be transparent with leagues and that’s been my experience that that’s happened.”