Is the Rangers crisis undermining the false economy of Scottish football?

There’s always been something slightly delusional about football. Listen to a football fan talking, and it’s ‘we’ did this and ‘we’ did that. The truth is that the commercial relationship between fans and their clubs has long since been notional. These are big joint stock companies whose relationship with their fans is purely sociological. The Rangers FC crisis is living proof of that departure in the interests of club and fans.

The Glasgow Herald has discovered there is barely any money left to do anything with. Why? Because, it seems, the man who took over the club didn’t have the cash he said he had:

Whyte’s purchase included an undertaking to provide £5m of investment in the playing squad through his company, Rangers FC Group. The company also stated an “intention to invest” £20m on players by 2016. Whyte also had to provide £1.7m to fund capital expenditure in relation to improving kitchen and public address equipment at Ibrox.

He finally admitted this week that he sold off £24.4m of supporters’ season tickets to partly fund the takeover with £18m used to pay off the club’s debts to Lloyds Banking Group. His predecessor Sir David Murray required Whyte to show that he had £24.4m in working capital as a condition of the sale.

Mr Smith and Mr Russell lost their jobs as the administrators said the unpaid tax under Whyte’s regime was expected to be £5m higher than first thought. They originally said unpaid PAYE and VAT worth around £9m was not handed over to HMRC, and was used to keep Rangers running, prompting the club’s slide into administration.

The new tax liability, which has been built up since October, would take the total debt to the taxman to £14m. The club is already facing a tax bill of £49m, plus interest, if it loses the “big tax case”.

It should be said that the club was badly run long before Whyte took over. The fans are now rallying round and trying to do what they can. The Administrator has dispatched Ali Russell and Gordon Smith.

But this is a deep deep hole, that’s going to take some filling. Celtic FC, an infinitely better run club, still made only £177,000 in the last audited year of business and is carrying a debt of £9 million. And debt, as we now know, is relatively easy to carry when times are good, but much less so, when the climate changes.

A bit like the Greek debt crisis, this domestic fiasco threatens to take the whole economic underpinning of Scottish football with it.

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  • Skinner

    Traditional companies with one major shareholder just aren’t the right vehicles for football clubs. The emotions of hundreds of thousands of fans are tossed around at the whim of a chairman who is primarily looking out for himself (as any business man is expected to do of course).

    Football clubs as a whole are a victim of their own attractiveness to the egotistical billionaire. It is now mainly just those clubs whose owners can afford to pay silly wages and risk huge losses who can compete at the top level. For those lesser-value owners that try, and fail, hell hath no fury like a football fan scorned…

  • DC

    Mick, as you are journalist is there any way you could find out whether Rangers could play in the English leagues, it looks as though the mighty Gers are heading for liquidation. Better off in England I reckon, albeit in the ‘conference’ and working its way up.

  • Barnshee

    Establish exactly what assets Rangers Ltd have –Who owns the Ground-what else do the OWN ?

    If they have been clever enough to ring fence their assets HMRC can GAF themselves. HMRC will end up with SFA and bear the costs of administration. ( Though the fact that an administrator as been appointed suggests that there is enough money to pay him at least)

    Looking Forward to the eventual appearance of Glasgow Rangers 2012 Ltd

  • lamhdearg2

    Not only Scottish football, most, if not all English prem clubs (and the rest) are in debt, and as can been seen on the bbc news site, the good times are soon to pass, as we will all be able to watch live footy on tv without paying the antichrist for the privilege (he pays most of their income).Rangers may be better getting this out of the way now, but then i thought that about Leeds, and less than 5 years later they are back in debt again.

  • Dec

    Barnshee

    Rangers…clever?
    Are we talking about the same institution who received legal advice on the legalities of EBT from a man who runs one of Britain’s largest pornography production firms and had been struck off by the Law Society of England and Wales?
    The same instituition whose former chairman once promised a £700 million revelopment of Ibrox complete with hotel, casino and, wait for it..a ‘Hover Pitch’?
    And also once proudly declared that Rangers would spend £10 for every £5 Celtic spent, before selling his 85% stake in the club for £1 (50p in Celtic terms)?
    Whose current chairman appears to be caught out lying on a daily basis?

    Here’s a handy explanation of the current situation Rangers finds itself in, Barnshee:

  • lamhdearg2

    barn, Rangers own the ground, but as its a listed building (the main stand) selling it to pay the tax bill would be hard.

  • Dec

    ‘Rangers may be better getting this out of the way now’

    Getting what out of the way now? This isn’t a minor surgical procedure we’re talking about. Rangers aren’t just in debt, they’re facing liquidation. They will owe £15 million in unpaid tax by the end of February, they’re currently operating on a financial shortfall of £10 miilion per annum and that’s before we get to the estimated £75 million they owe HRMC.

  • jthree

    This is proper reporting which showed-up the Glasgow sports media

    http://rangerstaxcase.com/

  • jockybhoy

    Your link does mention that the couple of hundred £k mid year profit was down from £7m the year before. Ask yourself if Rangers hadn’t “financially doped” themselves to the Champion League millions, how strong would Celtic’s figues look?

    And that is the issue. It’s not just that Rangers used tax dodges to strengthen themselves, they did it at the expense of EVERONE else in Scottish football – not just Celtic. We’re not arrogant enough to thing we’ll win every game (high profile game we’ve lost have been Ross Couty, Clydebank and Inverness in recent years), how many teams did Rangers deny silverware and revenue because of their unfiar advantage? Those scaremongering about the game being dead are OTT. And did I hear anyone bemoan Rangers winning 9 leagues in a row whilst Celtic were coming 4th and 5th? I don’t think so.

    Rangers made their bed, let them lie. Scottish football doesn’t need them any more than they needed Celtic when we took time out to get our own house in order.

  • lover not a fighter

    The ” carry on ” at Rangers and indeed other clubs is a revealing of the type of business people we have on our hands at this time.

    The same kind of “carry on ” is going on in many business but the “dealings ” are not made public.

    Between dodgy bankers and iffy business people perhaps we should look to our politicians or even spiritual leaders.

    ” Oh Dear ! ! ! “

  • ThomasMourne

    Football fans are to blame for the financial difficulties of big clubs – not the dodgy billionaires who seem to lose any sort of business acumen they might once have had when they get involved in football.

    Where do clubs get their money – apart from the tainted resources of Russian / Arab / Indian shadowy characters?

    Most money comes from Sky TV – the proceeds of excessive charges to misguided punters with more money than sense.

    Secondly, there is the income from team gear and associated crap in the team colours. Again you cannot be a proper fan without buying all this rubbish.

    And then there are the admission charges to games which are disgracefully high, but no problem to people even from Norn Iron to hop on a plane and worship their gods in Liverpool or wherever.

    It’s great to see these big overblown teams collapsing and the sooner it happens to ManU, Chelsea, ManC, etc the better. Then perhaps football can go back to being a sport instead of a business.

  • lover not a fighter

    A football club must be one of the easiest business’s to run.

    You know how much you pay out and you know how much you get in (bar a good cup run and who would bank on that)

    Yet this is too difficult a task for so many.

    These clubs are being run into the ground on purpose by unscrupulous people.

    The naivity of some people on this issue leads to the old conclusion of “one being born every minute”

    Unscrupolous people are robbing these clubs blind and spinning fine tales as to where the money is going.

  • CW

    What, still no blog on Frank Carson? Tut, tut Mr O’Toole, this just won’t do!

  • redhugh78

    lover not a fighter ‘Unscrupolous people are robbing these clubs blind and spinning fine tales as to where the money is going.’

    I think in the case of the huns it’s more a case of them robbing the tax payer blind.

  • lover not a fighter

    redhugh78

    Yes, certainly robbing the taxpayer

    and the club (who owns the football clubs !)

    Not to mention the fans of the these clubs.

    Is it Barcelona that is owned by the fans. Surely fans have to get more say in these clubs.

    Football teams are nothing without their fans yet football clubs treat their fans as nothing.

  • cynic2

    Why just Scotland? English football is deeply corrupt and a giant Ponzi scheme where the players are the ‘traded assets’

  • Henry94

    Lover not a fighter

    Should fans of bands then also have a say in how they are run as they are also nothing without their fans. Fans are customers not owners. If it is impossible for fans to withdraw their custom then they are bound to be treated badly as they have effectively become captives to a local monopoly. No wonder sharks are attracted.

  • redhugh78

    lover not a fighter

    The Rangers fans can’t say they weren’t warned, remember Hugh Adam the former Rangers director
    http://www.scotsman.com/sport/football/top-football-stories/adam_shakes_ibrox_pillars_with_warning_of_bankruptcy_1_595808

  • Mick Fealty

    jthree,

    That’s a great find! Many thanks. I heard about it from two different people today (so your work has not gone unnoticed), now’s the first time I’ve had a chance to look.

  • lover not a fighter

    Reply to cynic:

    No argument there. The carry on in Scotland is borrowed from England. Shysters masquerading as business people using football clubs for dodgy deals.

    What have the politicians got to say about it.

    Or god forbid actually do something about it.

    Reply to Henry94;

    Football clubs have a physical presence in their communities and have existed for longer than bands (bar the rolling stones”). There is a cultural and heritage aspect to this.
    And yes the fans should withdraw their financial support until they get a greater say in their clubs

    Reply to redhugh78;

    How have some football clubs been getting away with this stuff for so long and what are the politicians going to do about it ?