In the midst of negotiations to purchase the club, buyers are suddenly faced with the stark consequences of Craig Whyte's destructive spell as owner. That has forced them to reconsider the terms of their offers while waiting the result of an appeal, but it also spreads further doubt. If that was the outcome of the SFA's disciplinary procedures, what else might the club face?
The contents of the Scottish Premier League's financial fair play resolution have been published, with the vote to ratify them on April 30, and the penalties would affect Rangers if they fail to exit administration before the start of next season or if a newco is established and applies for the old Rangers' share in the league. But the SPL is also investigating Hugh Adam's allegations that there were undisclosed payments to players dating back to 1998, which would result in further punitive actions if found guilty.
The two buyers – the Blue Knights and Bill Miller – are trying to ascertain what punishments the club might face from that inquiry. The penalties of the SFA are only one of the repercussions from the ruinous ownership of Whyte and Sir David Murray.
"When a buyer is making a bid for a company, they like as much certainty as possible. If a surprise is thrown at you, it just slows everything down," says Neil Patey, football finance expert with Ernst & Young. "It makes them worried that there might be other surprises, but also what does it mean for their price? They might have to rework it to take into account what has happened."
Privately, individuals at the SFA were taken aback by the severity of the independent judicial panel's decision, while Duff & Phelps, Rangers' administrators, were caught wrong-footed. A punishment was expected for the club, as well as for Whyte, but being unable to register any new players for 12 months directly affects the new owner's ability to rebuild Rangers. It also sets a precedent for any future punishments.
"If I was a bidder, I would be particularly concerned at the signal this sends out, especially with respect to future disciplinary cases," says David Hillier, Professor of Finance at Strathclyde University. "The signal was that the Scottish football authorities are not going to be lenient, so before I would put a bid in place, I would want clarification. Because they have a massive fanbase, Rangers could survive most things, but the bidders will be looking at the maximum potential punishment and forming a business plan around the worst-case scenario.
"If the SPL are similarly as tough, that could put Rangers over the edge. There needs to be some pragmatism here. Rangers need to be punished, but it should be one single punishment, however severe, because this death by a thousand cuts is lethal to them."
If the Knights were to win control and attempt to agree a Company Voluntary Arrangement with creditors, it is likely to involve future payments, for up to five years, based on revenue streams, as well as transfer revenues and the funds raised by a share issue. So the creditors, too, may be wary of the extent of the punishment being served on the club by the football authorities.
"The creditors will want to know, if they're signing up for a CVA with additional future payments, that those payments are deliverable," says Patey. "That's a judgment call, so if those payments are aggressive, it could alter the CVA agreement. It would be at the fringes; it wouldn't have a massive impact, but they would consider it."
Both the Knights or Miller will, however, welcome one aspect of the embargo, which would be the removal of any pressure from the fans for immediate investment in the playing squad. Both potential owners have stressed that the club must be run on a sustainable financial basis, but supporters would still quickly clamour for reinforcements.
The developments of Monday will, at the very least, set back Rangers' progress out of administration by seven days, since the SFA will hear the appeal at the beginning of next week. Even time is valuable at Ibrox, though, since the wage cuts agreed by the players end on May 31, leaving the club facing a hike in running costs that it cannot afford.
Negotiating a path through all of the complexities is awkward, not least because Whyte remains the major shareholder and so must agree to pass on his stake. He also remains a secured creditor, having effectively bought the floating charge that Lloyds Bank held on the club when he paid off Rangers' debt of £18m last May, although he used funds from Ticketus. As a secured creditor, Whyte would need to be paid first and in full in a CVA and also sign off on the CVA.
"There are two questions: is the floating charge valid, and the administrators have indicated they believe it might not be, and if it is valid, how much is he owed?" asks Patey. "There's probably an argument that the £18m was the club's money, because it was raised on the sale of future season tickets, and so therefore he's not owed anything. Under a normal corporate situation, take away the football element, this would lend itself to liquidation, There are too many legal and financial challenges to a CVA, but in the football environment it becomes emotional."