Rangers own goal leads to ruin
The liquidators' report into the finances of Rangers FC lays bare the extent to which the Glasgow club has itself been a football kicked from end to end by dodgy dealing and financial incompetence.
Rangers is carrying £114m worth of debt – mostly unpaid tax, but also money owed to ticket company Ticketus, and the two past owners, whose actions drove the club into the ground in the first place.
Current owner Craig Whyte, bought the club for a pound from property developer Sir David Murray when a tax avoidance trick backfired leaving the club owing more than £50m in tax. Whyte paid off secured bank debt of £18m and £2.5m in back taxes.
But he did it by mortgaging future tickets sales with the company Ticketus, and used a financial instrument called a floating charge. That means that though he didn't use his own money, he may nonetheless appoint his own receiver and claim assets equivalent to £18m.
Sir David Murray is also on the list of creditors – albeit for a smaller amount. His company Premier Property Group holds security for £110k on a parcel of land next to the Broomloan Stand at Rangers' Ibrox ground. Liquidators Duff & Phelps found the club was using tax and VAT receipts as cash flow, so now the debt to HMRC is even higher than when Whyte took over.
It was not until November last year that Rangers FC informed the stock exchange and the Scottish Football Association that Whyte was disbarred from being a company director. The SFA originally approved him but has now decided he doesn't pass the “fit and proper person” test. A bit late in the day!
Rangers were sitting top of the Scottish Premier League when the liquidators were called in. The SPL rules meant that 10 points were immediately deducted from their total.
Now the SPL on April 30 debates a change that would increase the penalty for insolvency to 15 points or a third of the club's previous year's points – whichever is the greater. The change would apply to Rangers if they are still in administration at the start of the season in August. That would make the club a less attractive prospective so Duff & Phelps have postponed announcing who their preferred bidder is.
But the potential bidders are nothing to get excited about – the usual motley crew of local businessmen and international opportunists including:
- a consortium of car dealers, property developers and finance company bosses, led by current board member Paul Murray. It would include Rangers' second biggest shareholder Dave King. King is banned from disposing of any assets in the UK because he owes £250m in taxes to the South African government (where he lives)
- Tennessee tow-truck millionaire Bill Martin who may have never seen a football match in his life and possibly never set foot in Scotland. His sports background includes a failed attempt to start an ice hockey team in San Diego, and a short-lived rival auto racing circuit to NASCAR
- a Singapore consortium led by businessman Bill Ng who claims to be a lifelong Rangers fan though it is not clear whether he has ever seen Rangers play except on TV perhaps.
One thing is for sure – nobody is consulting the fans who have paid their ticket money, bought the strips, cheered the victories and mourned the defeats over the years. They have no say and no power.
Rangers debts pale into insignificance when you look at what's happening in England. At the end of last season Manchester United had debts of £590m; Chelsea £734m and Liverpool was within an ace of going into liquidation after the Glazers bought the club by borrowing money against its own assets.
And this is the face of 21st century football – clubs bought and sold speculatively and loaded with debt whilst communities get no benefits. Only TV companies, who stage matches at times to suit themselves, and corporate box freeloaders are considered. The players are almost as miserable as they are well paid and the whole thing has little to do with sport and is certainly no fun anymore.
12 April 2012