Zura Khizanishvili (right) has become a regular for Rangers

The Dark Blues were looking for a seven-figure sum for the 22-year-old Georgian international defender while the Ibrox club offered significantly less when his contract expired in June.

Rangers are believed to have made Dundee an offer of �100,000 earlier this month, but the Tayside club elected to go to a tribunal.

Dundee insisted they were entitled to compensation for the player, who arrived at Dens Park from Lokomotiv Tbilisi in March 2001, because he is under the age of 23.

But the SPL tribunal, which was chaired by Rod McKenzie along with Frank McConnell for the league and players' representative, Tony Higgins, found in favour of Rangers.

This is a sad day for the underdog, a sad day for Dundee and a sad and worrying day for Scottish football. Dundee FC statement

An SPL statement said: "The compensation tribunal established by the SPL to consider Dundee FC's claim for compensation from Rangers FC in respect of the latter's registration of Zura Khizanishvili sat today.

"It heard a number of arguments that Dundee FC was not entitled to any compensation under the rules of the SPL.

"The tribunal held that one of those arguments was well founded.

"In consequence of Dundee FC's failure to comply with these rules, the tribunal dismissed Dundee FC's application for compensation."

Khizanishvili, who has won 21 caps for his country, has become a regular in the Rangers side.

Fifa rules stipulate that clubs should receive compensation for young players moving on, but BBC Sport understands that Dundee have been caught out on a technicality.

It transpires that when offering Khizanishvili a new deal at Dens Park, the club simply wrote the player a letter and did not approach the matter within the correct legal framework.

A tribunal recently ruled that Manchester United must pay Sunderland �2m for forward David Bellion - a player who arrived on Wearside from France around the same time as Khizanishvili and played far fewer games in England than the Georgian has in Scotland.

Dundee reject Zura offer

Although the SPL say their is no right of appeal, Dundee will explore every possibility to get the decision overturned.

A club statement said: "Dundee Football Club have followed the procedure which most other Scottish clubs have followed in the last 20 years in relation to out-of-contract players.

"This, in effect, means that most Scottish clubs have been in breach of regulations for the past 20 years.

"As a result, Rangers Football Club have obtained a top class player for precisely nothing.

"Dundee Football Club, meanwhile, are simply expected to bear the costs of nurturing Zura's career and turning him into a world class player for Rangers to profit.

"We shall strongly consider all avenues of appeal including, if necessary, an appeal to the administrative courts.

"This is a sad day for the underdog, a sad day for Dundee Football Club and a sad and worrying day for Scottish football."

Meanwhile, Dundee have confirmed a payment of over �80,000 to neighbours Dundee United for gate receipts following last month's derby.

A war of words erupted between the clubs when Dundee failed to hand over the cash recently, but the issue has now been resolved.

A Dundee spokesman said: "We've paid the money as we always said we would and we now consider this matter at an end.

"We'd also like to thank Dundee United for their patience."