• Clubs would be offered financial incentives to leave SFL • Majority of clubs voted against Rangers entering First Division

Scotland's football authorities are to enter a desperate race against time to oversee a league reconstruction model aimed at preventing Rangers from starting next season in the Third Division.

At a meeting of Scottish Football League clubs at Hampden Park on Friday – at which representations were made by the Rangers manager, Ally McCoist, and the chief executive, Charles Green – 25 out of 30 votes rejected the possibility of the team entering Division One. The upshot of that was an announcement that Rangers must enter Scotland's league set-up in the fourth tier; where they are due to face the likes of Peterhead and Annan Athletic.

That would represent a catastrophic fall from grace for a club historically regarded as part of Scotland's establishment and which only recently featured regularly in the Champions League.

Those overseeing the game in Scotland have been vocal – and controversially so – about the need for Rangers to compete more prominently in the professional game than at the bottom rung. Such comments have roused anger amongst supporters; Rangers entered administration in February and are now in the process of being liquidated, hence a "newco" business has been formed.

Stewart Regan, the Scottish Football Association's chief executive, said last week: "There's really only one decision for the game now – that Rangers come into football in the First Division."

Regan had estimated a potential loss of £16m and impending disaster for Scottish football if Rangers competed in Division Three. Nonetheless, his organisation is yet to grant Rangers membership of the association.

Neil Doncaster, the chief executive of the Scottish Premier League, even made several public pitches aimed at readmitting Rangers into the top-flight. That notion was rejected by member clubs, much to the general delight of supporters.

The SPL is due to meet on Monday, when the concept of an "SPL2" is set to be discussed. Under that plan, Rangers would be invited to join with other clubs offered financial incentives to leave the SFL and take part in a new setup. The rejection by SFL chairmen of the First Division proposal, nonetheless, highlights the scale of such a task.

SPL clubs have a serious fear about the potential loss of commercial contracts – notably key broadcast agreements – if Rangers are not part of their setup. A four-year television deal between the league and both Sky and ESPN, due to start at the beginning of next season, remains unsigned. Sky is yet to clarify its position but a critical component of earlier arrangements has been its screening of four Old Firm matches per season.

One SPL club, Inverness, spoke out about its fears. "There will now inevitably be serious consequences for the game in Scotland," said their chairman, Kenny Cameron. "We have all, as clubs, accepted the views of our stakeholders in making the initial judgement to uphold sporting integrity.

"All clubs will now have to live with the repercussions of this decision. Scottish football was at a crossroads today in terms of what was on the table for all clubs regarding reorganisation, financial distribution and a road map that would have taken the game forward.

"But this has now been thrown into disarray by this decision. This is a sad day for all clubs in Scotland. We will be convening an emergency board meeting over the weekend to discuss the very serious financial implications for us as a club going forward."

A Rangers statement, issued in the immediate aftermath of the SFL announcement, claimed Regan and Doncaster "will introduce a plan for SPL 2 – which would include Rangers – and invite existing Division One members to join."

Intriguingly, the club swiftly amended those words to state an SPL2 "was mooted last week" when it was suggested that it could "swing into action in the event of today's outcome but it is not known if this will be the case".

Given that Rangers are perfectly aware of the precarious financial position of so many SPL clubs, their public utterances must be placed in context. Green said: "From the outset, we made clear we would play where we were told to play and we just want to get back to playing football.

"This decision maintains the sporting integrity that clubs and fans across Scotland have been calling for but it also impacts massively on Scottish football as a whole and only time will tell what the consequences will be.

"Rangers have been handed the ultimate punishment of starting again from the bottom of the leagues but there is an overwhelming feeling among fans and within the club of 'wiping the slate clean' as a club free of sanctions."

McCoist added: "I fully accept the decision of the SFL today and thank them for allowing us into the SFL. Clearly, starting again from the bottom league is not ideal and makes the task of rebuilding Rangers a longer one but the SFL was placed in an impossible situation and I respect its decision."

David Longmuir, the chief executive of the SFL, said: "I'm comfortable today that the Scottish Football League made a very, very decisive decision that was based on sporting fairness and I think the Scottish Football League were in the right place to make that decision.

"Today's decision has been one of the most difficult for all concerned but it has been taken in the best interest of sporting fairness which is the fundamental principle of the Scottish Football League."