Administration is an established procedure, yet few firms wait three weeks to feel the impact of redundancies and cost-cutting measures. The game is always able to assert its distinction. "We will be making the decision," said David Whitehouse, of Duff & Phelps, at Ibrox on Saturday, but still the players and staff are waiting.
When Motherwell moved into administration in 2002, 19 players were made redundant within one week. At Dundee, 18 months ago, the decision was made on the first day. Three weeks on from Rangers moving into administration, the expectation is that players and staff will be released today. The delay is a reflection of the idiosyncratic nature of insolvency events in football, although the case of Rangers seems uncommon even by those standards.
When administrators are appointed, they have two obligations: to reduce costs so that the business moves back into a viable state, and to maximise the return for creditors. Unlike other businesses, the revenue and outgoings are restricted – usually to match-day revenues and player salaries, since most other commercial income is received in stages, and other costs are minimal in comparison to the wage bill – so there is less room for manoeuvre. That is why redundancies usually take place swiftly.
"Every football club is different, with different circumstances, but I did redundancies quickly, because I had to cut the wage bills right away, and I wanted to take away the uncertainty of people not knowing if they have a job or not," says one financial expert with experience of administrations in football.
"Although it's brutal, in some ways it's fairer, easier and commercially better. The main thing is cutting costs, because if you don't do that then you won't have a team at all. Season tickets are already sold, plus you've got all the costs going out. Unless you've got a pot of gold or somebody's guaranteed you money to carry on, you've got to cash flow £1 in for every £1 out. That's why I don't understand why they've not made the cuts quicker."
The administrators at Rangers are trying to strike a balance between reducing costs by £1m a month and keeping a viable team on the pitch. Although results are not their concern, there is a fear that an even more diminished Rangers side would suffer poor form and supporters would eventually stop turning up in numbers. A weakened squad is also less attractive to new owners. Clark and Whitehouse have faced the additional challenge of trying to make sense of the club's tangled finances, and are seeking to reclaim £3.6m from an account held by Collyer Bristow, the law firm Craig Whyte used during the takeover last year. Yet that money would not be used to prop up the wage bill.
"Funds like that can help you in your exit route, making a dividend payment to creditors or keeping the club going longer," says the financial expert. "But you would still trim. You have a duty to maximise your assets and minimise your outgoings. The uncertainty [among the players] is proven to be negative. I don't think there's any coincidence that there's been two home defeats. Normally in an administration, you get a siege mentality, and teams end up doing better on the field."
The emotion around football, the passion and obsessive nature of the fans, is unsettling for administrators. They are used to carrying out their work in less high-profile circumstances. Even the finances in the game are unorthodox. Cutting the wage bill is the obvious route to reducing costs, but that in turn affects the viability of the business, which needs to have enough potential to interest buyers.
"The product the administrators are selling is the club and at the heart of that is the team," says Neil Patey, a partner with Ernst and Young.
"If you slash and burn too much, that would be detrimental to the value. As a buyer you want to make sure it's not loss-making, but you don't want the squad to be so depleted that you've got to go out and buy players."
The route out of administration is also more complicated for football clubs. The game's authorities demand that an attempt is made to agree a Company Voluntary Arrangement with creditors that allows the business to emerge intact.
Yet CVAs are not common, and in many cases there is little likelihood of a 75% majority vote being reached among creditors, particularly if Her Majesty's Revenue and Customs are involved, since they don't tend to accept anything other than 100% of tax owed.
If a CVA isn't agreed, then the assets can be transferred to a new company. In other industries, this is commonplace, but in football the newco requires a place in the league, and so has to apply for entry or ask for the registration that the old company held to be reassigned, but the administrators have no power over the registration. This is what happened to Leeds United in 2007. A CVA was agreed with the creditors, but a 28-day cooling off period follows the creditors' vote and, at the last minute, HMRC changed their position and blocked the CVA. The assets were then sold to a newco Leeds United set up by Ken Bates, and the Football League granted the club its place in the competition.
"The CVA is the only insolvency mechanism we've got that preserves the legal entity," says Richard Fleming, head of restructuring at KPMG, who was the administrator at Leeds United. "If it fails, the sale to a newco becomes the only viable option. So then they have the concept of granting the newco the share to play in the competition.
"It is a new legal entity, but in reality from one day to the next the club was playing football at the same ground in the same competition."
