RANGERS' players have been advised that they can leave the club for free if it becomes a "newco" despite administrators Duff & Phelps telling them their contracts would transfer automatically.

Allan McGregor, Steven Naismith, Steven Davis and other players were repeatedly told their existing contracts would transfer to the "newco" proposed by Bill Miller, who was yesterday given preferred bidder status. However, that is contrary to what they have been told by their union, PFA Scotland, who are adamant the separation of Rangers into "old" and "new" entities would mean the contracts are no longer binding so, if they chose, the players could leave without a transfer fee.

Herald Sport understands some players are unhappy they have not been properly informed about Miller's plans and the union is angry that its members have been given contradictory advice about their contractual status.

A dispute would cause enormous problems – especially if the 12-month transfer embargo is not lifted after appeal – and Miller is expected to talk to the players soon in attempt to secure their support. It is understood he has been aware of the difference of opinion for some time, but both sides have insisted their position is the correct one.

The transfer of the players' registrations is a condition of Miller's bid and it could blow up into a massive issue if one player, or more, decided to exploit his perceived right to leave without a fee. Those who had clauses inserted in their contracts allowing them to leave for reduced fees may also seek to negotiate those terms, and could agree to have them removed in return for reimbursement of the money they lost accepting pay cuts.

Miller and Duff & Phelps have repeatedly stressed that the £11.2m takeover bid does not involve liquidation but the authorities will effectively treat it that way, which could bring accompanying penalties for competing as a new club. Rangers will not be eligible to play in Europe for the next three seasons. On Monday the Scottish Premier League will consider what sanctions, if any, to impose on clubs that go into administration or try to enter the league as a "newco". As things stand any proposed punishments would not take effect until the day after the end of this season, so if Miller got his "newco" started before then it could be voted into the SPL over the summer without punishment.

The American is reported to be "comfortable" with the football sanctions a "newco" Rangers would suffer, though that may depend on whether or not he believes the current SFA transfer embargo will be lifted. The SPL could also impose further penalties if the club are found guilty of making undisclosed payments via Employee Benefit Trusts. An investigation into those claims is in its early stages.

The SPL issued a statement: "The Scottish Premier League notes preferred bidder status has been granted to Bill Miller. The SPL will now continue discussions with Mr Miller and his team. No further comment will be made at this time."

The SFA said: "It is our intention to enter into detailed discussions with Mr Miller to clarify his position and to establish his strategy to ensure a sustainable future for the club."

The Blue Knights, meanwhile, issued a statement in which they warned about the consequences of three years without European football. "We believe the complexities of a 'newco' process should not be underestimated and the likely loss of European football may carry longer term financial consequences to Rangers Football Club and its many supporters. Under our CVA [Company Voluntary Arrangement] proposed transaction, these issues could have been addressed more easily."