Restructuring Scottish Football

It was interesting to note the publication [] regarding the recent plans of the Scottish football authorities with the view to re-structuring the game in Scotland. The implications, of course, are many and capable of creating new dynamics regarding the application of the rules and the effect that such application could have on individual clubs.

One important development relates to the proposition of NewCo Rangers to participate in the first division in Scotland. This may create several ramifications for the application of the rules, as well as the creation of several legal interests belonging to different clubs.

One important point under analysis relates to the vacant spot in the SPL. Rangers FC will no longer be able to participate in the SPL and the vacant spot would have to be occupied, probably, by another club from division one. This is because the intention of the regulator is to give emphasis on promotion and relegation in terms of sporting rights won in the field of play, although the 'silence' of Scottish rules on the point, may create a series of legal arguments in favour of the club who wish to remain in the SPL, despite its relegation.

Another interesting consideration relates to the rights of membership given to new clubs wishing to enter competitions in Scotland. People need to appreciate that the proposition for the NewCo to enter division one, does not give rise to a straight swap between the Oldco and Newco. Oldco will cease to exist and it will never be able to resurrect itself and trade under the same name, or the same VAT number. It is this extinction that creates controversy as we are looking at a new entity attempting to enter division one, despite the fact that precedence suggests that each new club joining the competitions of the SFA, must start from the bottom. The argument here, therefore, is that the spot that will be vacated in division one, may well be kept for a club from division two and not for a new club who has not won the sporting right to be in division one.

One may attempt to explain why the SFA is willing to accept a NewCo into division one. The argument is simple and it was analysed in this blog a few months ago []. The argument, however does not necessarily meet with the agreement of every fan in Scotland. It is arguable that Scottish football needs a new Rangers football club in its top flight. The statistics in the previous post above indicate that there is a valid argument. I am not convinced, however, that the right decision is going to be made here. If Scottish football needs Rangers, purely on economic terms, then it should allow Rangers in the SPL and not in division one. Voting rights, however, may deny such participation in the SPL, in which case, the alternative to allow new Rangers into division one, does not really allow us to conclude that such economic benefits will be achieved. The majority of the players would not want to play in division one and broadcasting rights, along with sponsorship rights, would be severely affected. The decision to allow new Rangers into division one is rather a 'King Salomon's decision' than a decision which follows the regulatory framework. I hope you could identify the inconsistency in the argument to allow NewCo into division one.

Finally, it has also been reported that acceptance of new Rangers into division one, would have to be accompanied by an acknowledgment that the new club will accept the 'sins' of the old club. With respect, this cannot be right. I am not offering advice to Rangers here, but from a lawyer's point of view, such acceptance would probably create the beginning of the end for new Rangers. If new Rangers were to accept debts and liabilities of the old company, such decision would probably trigger a series of claims against the new company, with the result to make the life span of the new company, extremely short. I would be surprised and perplexed if new Rangers were to accept such proposition. Even if an agreement is signed between other clubs and the SFA that no claims could be brought forward, this would not be enough to stop claims from other third parties. The result would be catastrophic for Scottish football, as it would highly likely create further sporting uncertainty regarding the competition.

It follows, therefore, that any decision regarding the present situation in Scottish football, must consider the benefit of Scottish football as a whole and must ensure that any 'collateral damage' is avoided. The authorities need to take into consideration the fact that fans pay attention to the integrity of the competition, whose survival depends solely on the fans' ability to buy the product. Given the serious economic climate that Europe is currently facing, the last thing football authorities need is the fans' departure from the game.

Dr. Gregory Ioannidis

29 June 2012


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