Rangers administrator said a fan offer for the club would be ‘akin to breeding cats’
A Rangers administrator said attempts by fans to get involved in the purchase of Rangers “were akin to cat breeding” and called a fan representative “c * ck”.
David Whitehouse of Duff and Phelps spoke out as the club’s business liquidators accused him of not considering Ibrox or the Murray Park training ground purchased by a fan trust.
He said it was “not reasonable judgment” to dismantle the club and sell Ibrox, Murray Park training ground and other properties, believing it to be more worthwhile to sell it as complete entity.
Mr Whitehouse and Paul Clark, who were co-directors of the Rangers appointed by Craig Whyte when the club he owned financially imploded in 2012, are being sued for £ 56.8million by oldco Rangers liquidators BDO, who say their flawed cost-cutting strategy has cost creditors millions. management of the club’s financial implosion.
Documents in the case have revealed that although the Rangers’ assets were purchased by the Charles Green Sevco consortium for £ 5.5million, an independent assessment of the fair value of the company on the day of the purchase was valued at £ 27.2million.
The action comes nine years after the Rangers’ company controlled by Craig Whyte went into administration and then liquidation, leaving thousands of unsecured creditors out of pocket, including more than 6,000 loyal fans who bought for 7, £ 7 million in debenture seats at Ibrox.
BDO suggests that a normally competent administrator acting with due diligence would have sought out a sale and leaseback of the Rangers property and sought advice if he accepted bids below the club’s break-up value in order to get the best possible value for money for creditors.
But Mr Whitehouse says the strategy could be summed up in a comment he made at the time he said: “We have to make sure that we have a mix of players who are able to perform well on the pitch but also who can perform well on the pitch. maintain. a company capable of attracting an investor. ”
Mr Whitehouse said that while he viewed the fans as “passionate” they had been “very disruptive at times”.
He knew fans had a support process in place that had 11,500 support offers, but that didn’t represent cash offers.
Asked if the directors were considering a sale and lease with the participation of a group of fans, he said: “I don’t think we would have considered it. And we would not have considered that it was a viable proposition to debate. ”
He wondered how fans would have gone about crystallizing this into a formal constitution, which would have produced an offer to buy Ibrox.
Kenny McBrearty QC for BDO questioned Mr. Whitehouse’s attitude towards any fan involvement in the purchase of Rangers, saying he called a fan rep a “c * ck”.
“Can you say that this reflects a flippant and dismissive approach from the fan representatives, do you agree with that,” he asked.
Mr Whitehouse said: “It was at a time when there was a lot of frustration in our minds, I think, about the level of influence fans had over a process. In my opinion, that influence, although well-meaning, was not a positive character.
Mr Whitehouse, managing director of Duff and Phelps and an insolvency specialist, said there had been tensions over how fans could finance the fundraiser.
“I remember a conversation for example where they were collecting buckets outside of Ibrox and I said what if you raised some money, who would that investment belong to. are all watched without any response, “he mentioned.
Mr McBrearty said: ‘What I am suggesting is that at the time no consideration was given to the prospect of, say, selling Ibrox or Murray Park to a fan trust, are you agree or not.
Mr Whitehouse said: “I disagree. I think the fans were very well intentioned, but uncoordinated and lacking a central focus.”
He said they had a “disruptive influence” which was the Blue Knights consortium which was led by former manager Paul Murray and included auto mogul Douglas Park, now club president and former owner of Sale Sharks, Brian Kennedy and the support of director of Rangers, then second highest shareholder Dave King.
He said they had said they were going to acquire the club and that he didn’t think an offer from fans “would ever be a realistic prospect.”
He added: “I don’t think there was ever any discussion of selling Ibrox to fans.
“There have been discussions about fans, investing in deals or supporting deals. But I don’t think there has ever been any specific discussion around fans, the acquisition of Ibrox, for example, and this is not a discussion that we would have encouraged because we were aware of their coordination difficulties and the very, very clear and obvious challenges that would have arisen had they attempted to put together such an offer. ”
Mr McBrearty suggested that by reaching this point of view he had underestimated the potential of the fans and that in the face of the prospect of losing their club it was “perfectly doable” that they would have found enough money and found sufficient organization to purchase Ibrox.
Mr Whitehouse said: “They certainly didn’t think there was a prospect of them losing the club as they were reassured by the Blue Knights that they would ultimately be successful in their attempt to acquire the club.
He added: “I think we saw an email earlier in this evidence in which some kind of support process had been put in place, and they had 11,500 support offers, but no support offers. in cash, well, how would they have actually done it – crystallizing that into a formal constitution, in which let’s say they produced £ 5million to acquire Ibrox, what would have happened to the rents, who would have had what shares, what would have happened when the people died.
“It was miles from any type of concept that would have been deliverable and trying to encourage the idea would have just further destabilized the bidding process.”
He said they never reached the position where they believed there was value in breaking up the club for sale.
“If you tell me that under the circumstances of the club’s closure, the total bit value for brand and inheritance would have been greater than what these bidders had on the table when the appeal process was concluded. ‘offers, I find it quite a leap of faith, and I don’t think it was a reasonable judgment that an insolvency practitioner would have made at that time. ”
After the takeover of the Sevco consortium, the Rangers Supporters Trust (RST) launched a campaign to allow fans to buy a stake in the Ibrox club.
Club 1872, a group formed in May 2016 by the merger of two projects of partisan shareholders; Rangers First and RST aimed to encourage fan representation at the club.
The group is now the club’s sixth shareholder with 5.02% of the capital.
Mr McBrearty said: “There may have been bidders who were willing to live with the idea of restructuring the club and paying rent rather than owning a stadium.”
The former Rangers administrator replied: “In my career, which is unfortunately quite long now, I have never experienced a situation so widely marketed and so conspicuously available for sale globally. So, to speculate, there may have been others. bidders who would have presented themselves on a different basis is hindsight. ”
BDO QC said: “It’s one thing to say that something is being marketed widely. But the point is you were the trustees and you should have taken control of it. You should have gotten specialist real estate advice, you should have realized.that sale and leaseback was a possibility, and therefore you should have put, to those who were interested in the club, the possibility that you could part with the inherited property and not sell what was left. It was a matter in your control, not just for the people in the market to come to you and make a suggestion.
Mr Whitehouse said: “Well, I’m the accusation. We weren’t just waiting for the market people to come to us, we were proactively marketing the business, and my judgment or our judgment was that we did. marketed in the most appropriate manner and taking into account the comments of the bidders and understanding how they wanted to maintain the fabric of the club as a single entity. ”
Earlier in the case, Mark Dingwall, editor of the fanzine Follow Follow and who at the time was a spokesperson for the Rangers Supporters Trust, said fans would have been keen to bid on all of the activities and of the company’s assets if the opportunity was available.
He said in his statement to the hearing: “I have to say that some of us who may have been involved for a bit longer have taken a more thoughtful view that buying the club is not that the start of your problem.
“Indeed, in order for the Rangers to compete at the level they have competed at for the past 20 years under Sir David Mruray’s reign, the ability to pay salaries is your biggest cost.
“For arguing that Rangers really needed someone to be able to put in £ 5million a year on top of what was being generated from season ticket sales and normal business activities.
“So if you wanted the club to go back to what it was when it was nine in a row under Sir David, there was always for me this fundraising need that had to be filled by someone like Dougie Park. , Brian Kennedy or David King.
“So what was probably needed was for the RST to establish some sort of partnership with these guys. But what we’ve always said is that all the evidence from other football clubs is pointing to you. that with the size of our support we should be able to raise between £ 10m and £ 15m from the fans.