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With the taxman challenging English football's Administration rules, Rangers' Administration should serve as a warning as to what can happen if they win.
HMRC is awaiting an outcome to their challenge to the Premier and Football League's rules protecting 'football creditors' when clubs enter Administration. In Scotland, no such rule exists and the shockwaves from a club the size of Rangers collapsing are still being uncovered.
Such is the size of the big two in Scotland, their names are the only ones specifically written into the SPL TV contract. If either ceased to exist in the SPL, the TV deal would be void. Rangers also owe a string of clubs, not only in Scotland but around Europe, millions of pounds. Dunfermline, who attracted just 2,300 to their home game prior to Rangers' visit last Saturday, are owed £80,000 in ticket sales. Dundee Utd are owed £100,000 for a recent cup match at Ibrox and are threatening to ban Rangers fans from their forthcoming home game. Hearts, who have the financial clout of a reasonable League One side and their own tax problems, say they don't expect to receive the £800,000 outstanding from the £1.2million sale of defender Lee Wallace.
In England, these sums would be guaranteed. At the moment.
Rangers seem unlikely to survive the current crisis as the same club, leaving the SPL with tough decisions to make. They face a bill of up to £75million from the taxman should they lose the current case brought against the club over an assortment of tax avoidance schemes used over the last few years. They also owe £9million in tax since the takeover of the club last May, a situation that would have brought an instant transfer ban in England. Makes you wonder how they were allowed sign a player on £7,500 a week just four days ago.
Without Rangers the SPL would see their TV deal scrapped, with strong doubts as to the value of a future deal, while any reformed club playing at Ibrox would face the prospect of dropping down the leagues. The prospect of thousands of Rangers fans descending on part time clubs in 2,000 capacity grounds would be a nightmare for the Police, who would likely pressure the SPL to retain the club. Other SPL sides are also heavily reliant on the two Glasgow giants. Dunfermline would earn around £300,000 extra combined from their four home matches with the Old Firm compared with any other visitors.
It seems almost inevitable that the rules will be rewritten. And it seems almost inevitable that Portsmouth will see the rules rewritten in England as well.
Pompey's second Administration in two years comes with the club believed to have debts of £50million. They still owe £16million to their existing CVA, £27million to their most recent, and previous, owners, and the £1.2million owed to the taxman that was due to be heard in court on Monday. Before their drop into Administration, the Administrator of Convers Sport Initiatives - the club's owners where their funding was previously coming from - told the club's Supporters Trust that they needed to guarantee £100million to buy the club.
That figure will be lower now, but would it be low enough for the club to survive? The Trust are exploring 'plan B' options of reforming the club at a lower level but, like Rangers, the Police would be reluctant to see thousands of fans at ill-prepared grounds used to gates of 200. League Two sides would probably readily accept the income of a large travelling support, but what of the Conference sides that play by the rules only to be denied a League place by a club's sheer size.
"Too big to fail" is a phrase that could be used here. When Telford went bust in 2004 a precedent was set where the reformed club was deemed too large to start at the foot of the semi-pro pyramid two divisions below their eventual starting spot. Aldershot had to restart those two divisions lower when they went under in 1992.
Portsmouth seem likely to slip into League One in the summer anyway, if they survive that long. The ten point penalty for entering Administration would put them just one point clear of the foot of the Championship table with form that is below that of most of their relegation rivals. The expectation is that any buyer would have to honour their existing CVA as well as the £17million debt supposedly secured on Fratton Park. That's a total of £33million without any further agreement over current debts.
What is a League One side worth thesedays?
