We Don’t Talk About Newco
Dumbarton have had a tough time of it lately. One of two League One clubs to go into administration during the 2024/25 season, Inverness Caledonian Thistle being the other, the points deduction that was triggered by that event was ultimately only part of the reason they were relegated to League Two.
However, the fact that there will be a Dumbarton to take part in League Two in the 2025/26 season at all is surely some cause for celebration, no?
Well…
Dumbarton have taken the other route out of administration. The newco route. And that opens up a big ol’ can of worms that we’ve seen before.
For those that aren’t up on their legalities, one of two things will happen when you enter administration. Option one, the administrators are able to make the company a going concern. That’s usually done by cutting costs and getting agreements with creditors to pay off some of the debt – this is where the Company Voluntary Arrangement comes in. They usually need to find a new owner to sell it on to at the same time, and assuming both of those are achieved then they’re able to exit administration.
This is what Hearts did in 2013/14. After the mess left behind by Vladimir Romanov, administration let them cut ties with him, pay off less than 10% of the debt that the club owed through a CVA, and then the Ann Budge backed fan ownership took over. It’s a lot more complicated than that as there were creditors of the parent company in Lithuania that had to be dealt with as well which cause quite a few delays, but ultimately Hearts did emerge from administration eventually. They have the forms to prove it (the AM21 form if you want to know), and the company incorporated in 1905 is still the one that Hearts operate through today.
Just to clarify how that works, in the early days of Scottish football, clubs just ran as committees. It wasn’t until near the turn of the century that they started incorporating into companies. Celtic did it in 1897, for example, and if you look them up on Companies House you can see that company is still the same one that is running today.
For those of you who know the name “Pacific Shelf 595” by the way, that’s actually a subsidiary of Celtic ie. it’s a smaller company owned by the bigger company of Celtic. It’s mostly used to keep the old private company name, “The Celtic Football and Athletic Company Limited”, going that Celtic used until they became a Public Limited Company after the Fergus McCann takeover. They keep some of the assets under that company as well, but ultimately it’s the Celtic incorporated back in 1897 that controls everything.
So for all Hearts have been running as a football club since 1874, they’ve only been incorporated as a company since 1905. We’ll come back to this point later.
Hearts aren’t the only club to have gone into and back out of administration in this manner. Dundee have done it more than once in the last twenty five years as have Livingston. Motherwell and Dunfermline Athletic did it earlier this century as well. Inverness Caledonian Thistle are also in the process of exiting administration in this manner, with the CVA being approved by creditors earlier this month.
Ultimately the point here is that taking this option keeps the original company going. There is no new company (often shortened to newco), it’s still the same company. The key to doing that is that you have to get the creditors to agree to it through the CVA. If you can’t do that, and remember you owe them money so that seems only fair that they get to decide if you pay them back enough to keep going or not, then the only other option is liquidation and ultimately dissolution.
This is what happened to Rangers in 2012. The proposed CVA failed as HMRC voted against it, and being the overwhelming creditor in terms of money owed it meant the whole thing collapsed even though the other creditors were willing to accept the small percentage they were owed. That meant that the Rangers company that had been incorporated way back in 1899 then had no option but to be liquidated, and the process of winding up that company took until October 2024 to finally settle – a full twelve years since the process had started.
It’s also possible that you can agree the CVA with the creditors, but still can’t find a buyer. Then the same thing can happen and the Creditors Voluntary Liquidation comes into effect. The assets get sold off, they get their share of the sale, and the company folds. Ultimately that’s the point in these scenarios, the company is finished. Dissolution is the end.
Now, as you all know, the past thirteen years has seen the argument over whether or not the company being finished also means the club is finished. A lot of that stems from several things. One, previous history in Scottish football. We’ll come back to that one. Two, the protests of Rangers fans themselves while they were in administration – saying no to newco and giving liquidation the red card – done because they believed at the time that it would be the end of the club. And three, the fact that back in 1899 the Rangers incorporation documents actually said the club was the entity that was incorporating and so club and company are one and the same. Most of the incorporation documents for other clubs say something similar.
However, what happened in 2012 was after the failed CVA vote, the Craig Whyte appointed administrators Duff and Phelps quickly sold everything under the banner of “the club and all its assets” for a very cut price value of £5.5m to a new Rangers company owned by Charles Green – created under the now infamous name of “Sevco Scotland” before later being named to match the company name emblazoned on the gates at Ibrox – and then carried on with the backing of the Scottish football governing bodies.
Well… almost. There was a very brief period at the start of the 2012/13 season where the new Rangers had to play their first game in the Ramsdens Cup under a conditional SFA membership and “borrowing” the playing squad from the old Rangers, all of whom were still registered against the old Rangers membership. The new Rangers didn’t acquire the full membership from the old Rangers until the following week. So technically there were two Rangerses for that relatively brief point in time.
Rangers were, of course, eligible to play in the Challenge Cup because they had been admitted into the fourth tier thanks to the fan pressure of the other clubs that didn’t want to just allow Rangers to effectively ditch over £100m of debt and carry on in the top flight.
And there’s the problem.
It is clearly not fair on other clubs if you can just rack up debt to achieve success, then stiff your creditors by creating a newco and transferring the club across to that to start again. Of course, critics would point out that even a CVA is stiffing creditors so how is that any different? Even though a CVA needs the creditors to agree, often they are left with no option but to agree because recovering some of the money you are owed is better than recovering none of it, right?
It is worth pointing out here that HMRC voted against the CVA for Rangers because they believed they could get more money from the liquidation process than was being offered in the CVA. Given that liquidation took over a decade, the majority of the assets were sold to “Sevco Scotland” at a very low price by Duff and Phelps prior to the liquidation process starting, and BDO made a lot of money from the process all of which reduced the available pot of money to the creditors, whether or not that was the right move is probably up for debate. Ultimately though, the opportunity was given to the creditors to allow Rangers to continue with business as usual and the creditors said no. So the football bodies also not allowing business as usual would be in keeping with this.
Others would point out that the clubs are indeed punished for these moves. Administration results in points being docked. Dumbarton will start the 2025/26 season on -5 points for their newco move, in addition to the 15 points they were deducted last season for entering administration. Hearts, Dundee, Livingston, Inverness CT, they’ve all had points docked for entering administration as well. Oldco Rangers were docked ten points in 2011/12, and as mentioned, Newco Rangers started the 2012/13 season in the fourth tier of Scottish football, effectively starting again as there was no Scottish football pyramid in place at that time.
This is where Dumbarton can probably consider themselves very lucky. The bottom of the Scottish football pyramid in 2012 was just what was then Division 3 of the SFL – the fourth tier. In 2025, the bottom of the Scottish football pyramid is the West of Scotland Football League Fourth Division – the tenth tier!
As such, Rangers were arguably punished more than Dumbarton as the Sons will be starting in the same league they would be in regardless of the newco change. But that has more to do with the fact that the SPFL board gave themselves the power to decide what to do about newcos rather than having the clubs vote like happened in the SPL and SFL days in 2012.
I’m sure many of us could guess what league Rangers would have been in had it not been for the fan power that forced the clubs to vote against a newco Rangers in the top flight or even in the second tier. Like Dumbarton today, they would be in the same league they would have been in with the oldco. Of course, Dumbarton aren’t as big a club as Rangers, so the outrage from fans is almost non-existent this time.
Hypothetically, Rangers are actually doubly protected by this now. Not only is the SPFL board now the decision maker in these scenarios, but the new Rangers company setup is different from how it was in 2012. The Oldco Rangers was the same one that the club incorporated in 1899. However, the Newco Rangers that bought everything in 2012 is a subsidiary of the main Rangers company – “Rangers International FC” – that everyone buys shares in now. It’s that company that the 49ers have invested in, not actually the club itself. It’s the reverse of the situation at Celtic, where it’s the club that own the subsidiaries.
That might not sound like it matters, the 49ers are still going to be investing money into the club, but theoretically they 49ers could spend well beyond their means, Rangers International could then go bust, and as part of their administration they could just sell the subsidiary “Rangers Football Club Ltd” to another company and thus the club would not be impacted in the slightest!
It’s more complicated than that because they’d fall foul of FFP in European competition, but domestically we don’t really have any rules to stop this. Indeed we appear to have rules that let the governing bodies almost sweep this under the carpet. That’s another point we’ll come back to later.
Critics would point out that all of this only punishes the club/newco going forward, when the real issue is what was gained from spending beyond their means in the first place. Rangers will still point to all the trophies that they won, 115 major honours up to 2012 with another three having been won since then, and recognise their importance in their history. A club that, until recently, claimed to be the most successful in the world wouldn’t expect anything else. Retaining that history as part of the club today, including those won in the early part of this century whilst racking up that debt to HMRC, is arguably worth a few seasons in the lower leagues.
If anything, this is one of the main reasons there’s even still an argument amongst fans about whether this stuff even matters today, thirteen years later. People note that Rangers spent more than they should have to achieve that success, to say nothing about the legality of the player registrations in doing so (which is a whole other argument that Lord Nimmo Smith ultimately ruled had no sporting advantage), and so that is what should have been dealt with. This is precisely why there should be on continuity.
But then, how can you prove Rangers wouldn’t have won everything they won regardless? They’re a huge club capable of winning anything in Scotland in any given season. Indeed, let’s move it away from Rangers. What would you say Dumbarton gained by spending beyond their means? Would winning the third division playoff in 2023/24 count? How would you address that now? You can’t strip them of promotion, the 2024/25 season has already been played, and they’ve already been relegated back to League Two anyway.
This whole thing only really became an issue in 2012 when it happened to one of the biggest clubs in the country. Rangers weren’t the first club/company in Scotland to go bust. Third Lanark went bust in 1967 and that was the end of them – although there is an amateur side that use the name and claim an historical link. But they don’t claim to be the same Third Lanark.
Gretna went bust in 2008, after their meteoric rise through the leagues funded by Brooks Mileson. I cringe when people call this a fairytale, because it really should be a cautionary tale for those that might try to do something similar. The minute Brooks became ill and couldn’t pay the bills that Gretna had which were well beyond their own means to fund, they were doomed. Nothing they did in those years grew the club in a meaningful way, a way that was sustainable once he was gone. Gretna 2008 now exist in the Lowland League, wearing that year in their name like a badge of dishonour as a warning that others should heed, and playing within their means given the fan base they have today. As it should be.
Ironically, Gretna joined the SFL in 2002 after Airdrieonians went bust. They tried to start again as Airdrie United but their application was unsuccessful and Gretna took the vacant spot instead. However, not to be perturbed, Airdrie United bought up a struggling Clydebank and moved them to Airdrie, therefore taking their place. It’s probably no coincidence that Airdrie were only allowed to use the old name from 2013 having not been allowed to do so before that point. Clydebank reformed as a Juniors side, and last season won the West of Scotland Premier and subsequently won the promotion playoff against the East of Scotland champions, Musselburgh Athletic (the South of Scotland champions, Lochar Thistle, weren’t eligible due to their licensing). As such, they will take part in the 2025/26 Lowland League along side Gretna 2008.
It begs the question though, whose history can Airdrie claim? They don’t want Clydebank’s, a team who had played in the Scottish Cup semi finals as recently as 1990. Even the new Clydebank don’t try to claim that, which might be for the best if you read up on what happened with them and East Stirling in the 1960s…
Airdrie don’t seem to be allowed to claim that of the Airdrieonians side formed in 1878 either though. Given they are playing under the same name now, and even have the same fans that followed the club up to 2002, is that a distinction without a difference? I remember Celtic beating Airdrie in the Scottish Cup final in 1995, as well as them losing to Rangers in the final of the same competition three years earlier. I know the difference between the two clubs because of what happened in 2002, but does that really matter?
That’s the thing with these debates. What actually makes a club? It’s not the pieces of paper that tell you legalities or finances or even SFA membership, it’s not the players and managers and coaches who will come and go, and it’s not the stadiums they play in. It could arguably be the board members, many of whom help put these clubs together and are there through the good times and the bad, but more than likely it’s the fans – often one and the same with board members anyway.
Take the example of Hibernian. They were founded in 1875, incorporated in 1903, and have been a going concern ever since. They haven’t been into administration, although they did have that really bad period where Wallace Mercer wanted to buy them. But in 1891, they effectively shutdown having missed the boat when the new Scottish Football League started and they subsequently struggled to play any friendlies as everyone else was busy. They didn’t reform again until 1892 and actually didn’t play until 1893 once they were able to play at Easter Road. But because it was a committee back then and not a fully fledged company, there was nothing to stop them doing that. It’s the same people involved, so of course it’s the same Hibernian. This is just accepted, and the Scottish Cup triumph of 1888 is included in their honours like everything else.
I once joked that if all the Rangers fans pointed at an inanimate carbon rod and called it Rangers, then it would be Rangers. But that’s pretty much the point. Celtic fans (and fans of other clubs) will never let Rangers forget when they went bust, but the rivalry between the fans still exists just as it did before the events of 2012. The fans haven’t changed one bit. It’s still Rangers people that have been involved before 2012 and after.
But the point still stands that clubs cannot be allowed to just spend spend spend and go practically unpunished if they live outside their means. But what can governing bodies really do? Fines are pointless given finances are the whole issue – you can’t pay creditors as it is! You can only retrospectively strip honours if they actually win something, and even that is contentious as noted earlier, and would only apply to the few who actually do. Perhaps more importantly, you can’t erase the memories of winning anyway. How do you undo Gretna’s Scottish Cup final appearance in 2006 or their season in top flight? If Rangers had been stripped of their titles, how do you erase the memories and feelings of all their triumphs at the time? It’s not like anyone can go back and say, erase the 2005 league finale and Helicopter Sunday!
If you look across to France then you’ll see the likes of Olympique Lyonnais being relegated to Ligue 2 after their financial issues. Perhaps we need to take a stronger view on these things and maybe the likes of Dumbarton are getting off lightly with their five point deduction this season on top of a fifteen point deduction last year that ultimately made no discernible difference as they finished sixteen points behind Annan Athletic anyway.
Then again, maybe we’re looking at it wrong and wondering how to punish the clubs when they do this kind of thing, rather than looking for ways to prevent it. The fit and proper tests that the governing bodies have in place have long been questioned. Would more stringent measures have stopped someone like Vladimir Romanov causing so many problems at Hearts? And what about a Scottish version of FFP? Would that have stopped someone like Brooks Mileson doing what he did with Gretna? Would more governance of our clubs have ensured Rangers didn’t misuse two different tax schemes under the leadership of David Murray or even not pay PAYE as they did under the leadership of Craig Whyte?
Going back to the starting point of this blog, there was a lot of wrangling over the ownership of Dumbarton. It was the directors that put them into administration, something the majority shareholders disagreed with and even insisted it was unnecessary and reckless as new investment was lined up. They also blamed the board of directors for the poor running the club overall. The administrators themselves noted that Dumbarton were actually owed a substantial amount of money, but it was dependant on land sale that hadn’t been completed. All this while they had a high wage bill, which the shareholders blamed on the directors.
Clubs really need to be protected from this kind of thing by football’s governing bodies. They’re supposed to be in place for the good of our game, for all our clubs, and yet they seem practically powerless. I’ve listed plenty of clubs that have suffered in the past twenty five years due to a failure to be run properly and live within their means. If the fans really are the true meaning of a club then they deserve better, and perhaps the fans deserve more power than they have because right now they are practically powerless. Fans are the life blood of football clubs after all, and there’s nowhere in Europe that’s more true than in Scotland. Many other countries have big TV deals to sustain their clubs, in Scotland it’s the income from the fans that’s the most important financing.
But when your only power is to withhold that financing, all you are really doing is harming the club you love and making the problem worse before you can make it better. Many people can’t do it, as in football the heart rules the head, and too many of those in positions of power in football know that and use it to their advantage.
So maybe we could go even further. Again, looking to the continent, the 50+1 ownership model of football clubs in Germany is something many of us envy. We have fan ownership in Scotland, and certainly there is a discussion to be had about the risk of heart ruling head when in that position – it has its cons as well as its pros! But so far, the clubs that have that strong fan ownership model in this country appear to be run in a better way. It should also be notes that the German way is not without flaws, you only have to look at RB Leipzig to see there are ways around it.
If you’ll excuse the irony here, I don’t want to be writing long blogs about finances and companies and ownership of football clubs. We’re frequently bemoaning the fact that money has ruined football. We’d all much rather be talking about great players, great games, great tournaments… and probably rubbish players, rubbish games and rubbish tournaments as well. Hey, even VAR and rule changes are at least related to the game itself, as much as we might loathe discussing those too! All of this off field stuff is such a distraction, and yet we all know it’s part and parcel of the game today. That ship has sailed, unfortunately.
If you want success, it’s going to cost, that is more true now than it even has been in today’s game. It’s why we’ve not had a league winner outside of Glasgow for forty years now. It’s why our clubs can’t compete with the clubs from the big leagues in Europe. You just have to find a way to get the most out of what you have. Push it too far, you get the consequences. But really, we don’t want anyone pushing it too far in the first place.