Supporters of League One clubs are again feeling the effect of the football authorities relaxed views on administration and liquidation.
Clubs can shred all of their debts in exchange for a 15 point deduction while liquidation comes with an invite into the second tier for a newco or place in the bottom division where they can act like the oldco mounting new debt with the club owners kept a closely guarded secret. No audited accounts are required.
A few months after agreeing a CVA Dunfermline have been cherry picking the best players in League One raiding Ayr United, Stranraer and Airdrie United for new recruits.
While those clubs live within their means they must be wondering why they don’t burst the bank to hold onto players knowing that the worst footballing punishment is a 15 point deduction.
Last season Michael Moffat scored 27 goals for Ayr United, despite suffering an SFA ban for betting on football matches, but next season he’ll be wearing the black and white of Dunfermline.
Wages of around £700 a week have been suggested, alongside a welcoming signing on fee, which his old club couldn’t begin to compete with without screwing creditors.
Ayr chairman Lachlan Cameron didn’t miss the target when he was asked about the economics and morals of the move saying: “We were all disappointed to lose Michael period, never mind to a competitor, but the fact is there was no way we would be able to compete with the financial package they put on the table for him.
“It baffles me how a team, that a year ago were on the brink of extinction with no assets and debts far outweighing any reasonable chance of getting out of, can offer such a rewarding package to a single player.
“There was no way, given our goal of playing within the financial fair play rules, that we would have been able to match it and still put together a supporting cast behind him.
“With the catalogue of teams that have gone into administration or out of the game in the last eight years, it disappoints me that there seems to be no real consequences for financial misbehaviour.
“If I had no moral compass, I would suggest that Ayr United should screw the creditors, tax payers and everyone else and end up debt free with a shiny bank balance.
“It may be viewed as a fault by some, but I am unwilling to play the game that way.”
In 2012 following the administration and liquidation of Rangers the SPL changed their rules to inflict a penalty of one third of the previous season’s points penalty on a club rather than the 10 point deduction.
The merger with the SFL saw the penalty for first time administration become 15 points with a 25 point penalty for a second administration.
As well as Moffat Dunfermline have signed Gregor Buchanan from Airdrie United and Andy Stirling from Stranraer.
After signing Stirling Dunfermline boss Jim Jefferies said: “I told the board that we are looking for a central defender, two strikers and a wide player. I have got one striker and the central defender and we are close to getting another player. That’s all we want.
“If we get the other boys that we have targeted we will have strengthened well. We are very comfortably off in midfield and I am happy with the rest of the boys.”
In May 2012, between the administration and liquidation of Rangers, Neil Doncaster openly encouraged clubs to dump their debt saying: “Clubs can theoretically shed £100m of debt, agree a CVA at a penny in the pound and come back in with all that debt shed. Clubs can do that now within the rules.
“Oddly enough you might end up with more money going to creditors through the newco route than through a CVA.”
Doncaster added: “In Scotland we have never had a newco at any time but in England, whenever a club goes into administration, a newco is the natural consequence.
“So the likes of Crystal Palace recently and Plymouth in the last few years took their points deduction for going into administration but in terms of coming out the newco was the preferred route.
“Clubs continue over a course of many, many years. The fact that those clubs happen to exist within several different corporate structures over the period of their life frankly doesn’t seem to concern people south of the border.”
For Doncaster’s benefit a newco isn’t the natural consequence when a club goes into administration. A newco comes to life when a club is liquidated.
After last year’s fiasco in League One it seems that the same supporters are paying money in which it is clear every club that lives with it’s means and pays HMRC are being disadvantaged.
In England Orient chief Barry Hearn is scathing about the treatment of club’s using administration to obtain success without paying their dues.
In 2010 commenting on the administration of Portsmouth Hearn said: “Clubs that spend more money than they can afford, that go into administration, have been guilty of cheating, nothing less. ‘They are fielding a team they couldn’t afford to field in a level playing field situation.
“It is a horrible thing to say because no one wants to be accused of cheating, but we have allowed a system within football to evolve where clubs are almost incentivised to gamble.
“They are gambling with the future of their club and they are gambling with the future of the game. ‘In June, at the chairman’s conference, I am proposing a rule change. ‘I am saying that any club that goes into administration should be relegated two divisions.
“It is draconian as a penalty but it has to be. We have to show the world we have the ability of governance, that we are not prepared to put up with cheating at any level.”
Four years after Hearn’s attempts to properly punish clubs that go into administration First Division supporters in Scotland are still being cheated.
CLICK HERE for an explanation of adminstration v liquidation ‘newco’ rules