Perspective is difficult to find in these times, when information floods in from all angles on a daily basis. With this in mind, The Battered Bunnet put a day aside to give you a detailed summary (below) of how we go to where we are today. He pays particular attention to some of those who plan to be part of the game’s future, with a nod to those currently in control of the game.
It’s a fascinating read:
Scottish Football is in crisis, a crisis that has been 15 years in the making by the Directors of Rangers Football Club plc, compounded by a chronic lack of Governance and Oversight by the cronyistic SFA through the years.
Let’s revisit the cause of the crisis for a moment:
When David Murray bought Rangers in 1988, the club had won but 4 league titles in 20 years, and prior to the arrival of Graeme Souness, had been a Scottish League also ran for a decade. Souness, with David Holmes as Chairman, started the reversal of fortune and effectively restored Rangers as a player in British football.
Murray, giving credit where it’s due, transformed Rangers both as a football club and a business. Between 1988 and 1996, Rangers’ turnover increased by a factor of 5, double double and then some in only 8 years. During this time, the club became dominant in Scotland and competitive in Europe, while considerable sums were invested in the stadium and infrastructure, providing Rangers with a (comparatively) vast commercial resource to fund its football operations. While the club carried £9M of debt at this point, it was profitable, posting £2M surplus in 1996, and breaking even over the period of Murray’s tenure to that point.
By 1996 Murray had a valuable football business on his hands, and perhaps the smart play would have been to sell it. Football was in an expansionary phase, and there would have been a queue of interested and well bankrolled investors at the door. Instead, Murray chose to redouble his efforts, and taking Rangers ‘to the next level’ became the mantra adopted by the man and his increasingly fawning press.
Highlighting that Murray was not alone in thinking that Rangers could indeed become one of Europe’s top clubs, the following year Joe Lewis invested £40M in return for a 20% share. One wonders what Murray might have walked away with had he sold the lot to Lewis at that time, but he kept his hand in the game, and went all in over the following 6 years.
Between 1997 and 2003 Rangers lost an eye watering £152.6 Million. Joe Lewis’ £40M was gobbled up in jig time, followed by £20M of Dave King’s tax efficient stash, plus a £32M investment by Murray’s business, £6M from smaller shareholders, and a further £15M of NTL’s investment in the hopeless Rangers Media venture. At its nadir in 2004, Rangers net debt was a staggering £83 Million, a monument to the ego of David Murray and his ‘dream’ for Rangers.
Unfortunately, burning shareholders’ and creditors’ cash at such a breath-taking rate was not sufficient to fund Murray’s project, and the club embarked upon a series of schemes to pay players and reduce costs. A Discount Option Scheme saved over £2M between 1999 and 2003, while an Employee Benefit Trust framework saved £45M of payroll tax and gross wages between 2000 and 2010. It is worthwhile noting that the cost savings alone from these schemes gave Rangers a financial advantage equivalent to the total payroll of every other SPL team excluding Celtic.
We know now, thanks to the admissions of former director Hugh Adam, that ‘off the books’ payments to Rangers players had started as early as the mid-1990s, and the DOS and EBT schemes were simply formalising a by then established practice.
By 2005, with Rangers reduced to little more than a financial basket case, Bank of Scotland insisted that the club be brought back into balance, and following a failed public share issue, Murray’s holding company swapped £50M of Rangers’ debt for increased equity. The following year JJB paid £15M cash as a future royalty for a 10 year solus agreement on Rangers merchandise. Murray might very well have sold the jersey, but Rangers at long last had gotten rid of all but £6M of debt, and a new ‘sustainable’ plan was implemented, a plan that endured no longer than Paul Le Guen’s 26 games in charge.
When Walter Smith replaced Le Guen, the new plan was binned and Rangers once again embarked upon a ‘front loaded’ business model, with debt increasing on the back of player purchases and wages that the club could not sustain. By 2009 Rangers had £33M of bank debt and Murray’s companies, so long the guarantor of the funding, had utterly collapsed in the property and construction crash of 2008. It is worthwhile remembering that some £70 Million of Rangers’ losses through the years remains on the Murray International Holdings Ltd balance sheet, unpaid to the part-nationalised Bank of Scotland/Lloyds Banking Group.
Early in 2010, following an unusually long Tax Enquiry, Rangers received a Tax Assessment from HMRC for their use of EBTs in the preceding 10 years. The Bill for £24M, had a further £12M of accrued interest attached, and the promise of penalties to come.
Alastair Johnston, who had replaced Murray as Chairman of Rangers following the crash of Murray’s business empire, had a decision to make. In the summer of 2010, £36M tax demand in hand, and an appeal against which scheduled for October, Johnston was planning the coming season’s business. He could have chosen to sell the top footballers which would have brought in around £20M of proceeds. He could have chosen to run the club on a reduced cost model, one that was profitable on domestic football alone, thereby banking a further £20M from their participation in the Champions League. Had he done so, and ring fenced the cash, Rangers would have been in a position to withstand losing the Tax Case Appeal without bankrupting the club.
Alastair Johnston and his Board chose not to. He chose instead to spend money increasing the size of the squad, with £4M spent on Jelavic alone. Whatever else you hear about Rangers’ sorry plight, remember that in the summer of 2010 Alastair Johnston and his Board decided to prioritise football results ahead of the very existence of the club. That was the last time that Rangers’ fate was in the hands of the Club. From the moment the decision was taken not to act, Rangers’ fate was sealed.
Craig Whyte’s bizarre 9 month tenure of course is attracting all of the headlines, and Murray’s reckless disregard for shareholders and laws have precipitated the crisis, but Alastair Johnston, along with Paul Murray, Martin Bain, John McClelland and the rest doomed the club by their inaction in the summer of 2010.
We are now aware that Rangers’ use of unlawful tax strategies had a consequent impact on the proper Registration of their players. I won’t pour over the relevant rules here, suffice to say that in making payments to players via undisclosed agreements that were not provided for in the football contracts lodged with the authorities, many of Rangers top players have been ineligible to play in official matches for a decade or more.
As if it couldn’t get any more damning, the very Directors of Rangers who conceived, implemented and administered these contractual arrangements, were simultaneously Directors of the SFA and the SPL, the bodies responsible for Governance and Oversight. Step forward John McClelland, Martin Bain and Campbell Ogilvie. That Ogilivie is currently President of the SFA simply beggars belief. It appears as though Football in Scotland has been bent for 2 decades, and the people responsible were running the game.
There is a current SPL Inquiry into this issue, and perhaps that will reveal the true extent of the breaches of rules, but from the information now available in the public domain, there is a prima facie case for voiding the results of hundreds of matches in which Rangers have participated over the years, and stripping the club of any titles won during the period. The expulsion of the club from the game is talked of. In terms of athletes and duration, it represents a bigger sporting fraud than the Balco case, and is on that basis, the biggest scandal in the History of Sport.
Did I say a ‘moment’? Forgive me, but it has taken a little while to describe 15 years of malfeasance and deception.
In summary, in the 15 years from 1996 to 2011, Rangers have spent a staggering £168 Million more than they have earned. They have saved a further £47 Million of payroll costs via the use of questionable tax strategies. They have corrupted the rules of the game from the inside. And now they are bankrupt, with the very real prospect of £100 Million of creditors being turned over in one of the biggest corporate failures in Scottish business history.
Against this backdrop, Scottish Football has to divine the way ahead. We have to figure a way out of this mess and build a new future. Everything must be on the table, everything that is except narrow self-interest.
Following a Liquidation, if a group of supporters of a dissolved Rangers get together and start a new football club, one that looks like and sounds like Rangers, playing in blue shirts at Ibrox or elsewhere, I say good luck to them. Of such like-minded people are Football clubs are born. There is clearly a business opportunity given the size of the support for the old club. The pathway is straight forward: Put a Business Plan together; Invest the necessary Capital; and Apply for membership of the Scottish Football League. If the club prospers on the park they will be rewarded with promotions and will emerge into the top flight in their own merits, self-respecting and respectful. Such qualities does Meritocracy provide.
That is a decision though for Rangers supporters. The rest of us need to figure out a new plan. Without Rangers there will inevitably be less money in the top league, fewer fans perhaps, less TV and sponsorship money. We need to accept that reality and respond to it.
I suggest we look towards Cooperation, Collective Interest, Inter-Dependence.
The hardest hit will be those clubs most reliant on the money lost. Redistribution of TV income should be considered. No question.
Youth Development should be looked at again, not least because for most clubs it will define their future. Closer cooperation amongst the clubs can yield benefits for both clubs and players. A modified Draft system might be appropriate, whereby players graduating from Under 19/20 are available to be signed by other clubs in a predetermined sequence, perhaps with the developing club having a first option on 2 players, the remainder co-opted into the draft.
Considering Celtic’s worldwide scouting network, is there potential to share information on overseas prospects with the other clubs? An easy thing to implement.
Looking at income, the huge imbalance created by the participation fees paid to clubs qualifying for the Champions League distorts domestic competition. Can we consider a distribution to all clubs of Marketing fees and likes from UEFA for our clubs’ participation in UEFA competitions?
Finally, what other means do we have, given the collective talent and resources of the top clubs in Scottish Football, to generate new opportunities, new market share, new income? If necessity is indeed the Mother of Invention, we are not short of need. Let’s get innovative.
Of course, all of this is based upon a consensual approach to the crisis we face. It is widely reported that the other 10 clubs in the SPL are meeting next week to consider an appropriate response to the problems we all face. Celtic have not been invited to attend. This in itself is a concern, as it draws something of a line in the sand between the interests of the 10, and the interests of Celtic. One SPL chairman told BBC Scotland: “This is a once-in-a-lifetime opportunity to change things.” Such change, hatched by the 10 other clubs and forced upon Celtic is not a cooperative approach.
Moreover, Celtic are by a distance the biggest box office in the league. This season attendance at Celtic Park equates to 72% of the total attendances at all other grounds excluding Ibrox. A series of decisions on restructuring the SPL and redistributing the proceeds from the competition that excluded the stakes of almost half of the fans in the league is surely invalid.
Quite what will these clubs do with their self-acknowledged ‘once-in-a-lifetime opportunity to change things’?
Perhaps the 10 SPL Clubs will come up with some truly radical and forward looking ideas that are at face value, innovative, imaginative and laudable.
Perhaps though they won’t. Perhaps their ideas will be a little more self-interested. That is certainly the form book in Scottish Football.
Redistribution of SPL TV and Sponsorship income that excludes the Champion team from the divvy? Why not eh. The 10 Clubs will have the SPL voting majority to do so.
What would the implications be should the 10 Clubs decide that gate sharing was the way ahead for the SPL? Certainly, in the absence of Rangers, they would carry the voting rights to approve such a decision, irrespective of any objections from the fans whose money would be redirected.
And indeed, the admission of a New Rangers directly into the SPL, bypassing all meritocratic and long established practices in the game worldwide.
Establishing a new business is a challenging activity. Doing so in the midst of the financial chaos enveloping Rangers is utterly fraught. Those considering such a move need to have confidence in revenue projections and market. In the case of a New Rangers, the arbiter of revenue is the League they will participate in. It is reasonable to assume that informal soundings have been taken by those considering a New Rangers project from those with the power to determine which market they will operate in.
I have no problem with Stephen Thomson of Dundee Utd picking up the phone and chatting to Stewart Milne of Aberdeen. Indeed, I would expect it in the ordinary course, never mind the crisis we all face. However, given the likelihood that those behind a New Rangers are right now making their initial pitch to each of the 10 clubs, it is somewhat distressing that those same 10 clubs should in short course arrange a meeting to discuss and plan the way ahead, excluding Celtic and the interests of half the remaining fans of the SPL.
Paul Murray, Martin Bain, John McClelland, Alastair Johnston, Dave King: The men who brought this disaster down upon the game in this country, who corrupted the game from the inside for a decade or more, who burned £100 Million of creditors money, who are responsible for ripping off the Tax Payer and the Football Fan alike, who failed to act on Rangers’ crisis when action was most needed, these men and their likes are currently negotiating with the 10 Clubs the conditions for the entry of New Rangers directly back into the SPL.
The very essence of Sport, the history of Football, and the future of the Game in this country is to be decided in the coming weeks by the chairmen of just 10 Clubs. In the hands of these men is the legacy of the game accidentally entrusted, and its future precariously placed.
At our moment of crisis, when wisdom and consensus are most needed, what direction will they take? Where will Scottish Football go from here?
To a new, mature, responsible and progressive place? Or to Hell in a Handcart.
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MWD – please accept my condolences.
TinyTim – big heart, not the first time I have written that. Sorry to read of your sad losses. Your second comment about your sister – just laughed the teardrop back into the duct. I have also never been more aware of the gift of now. In the last three years people dear to me have become ill, some have passed away. Dark clad and shadow faced, this reality sits in the corner of my vision. Enjoy the huddle.
celt55 on 11 March, 2012 at 09:59
Great minds, eh?
;o)
No press conference on Friday – absolutely NO coverage/mention of Celtic in today’s Sunday Herald. Co-incidence or what?
roy c – thaks
kayal33 – Atlantic league oh yes yes yes! That is my favourite future so far.
Although I must say, when i was still living in Glasgow and going home and away every game, I hated the idea of moving even to an english league – because I knew I would no longer be able to travel to every game.
Condolences to MWD and the family of his friend
I’m off on the roads and the miles to Dundee now. I’ll take any result, short of us being knocked out, without complaint.
BOBBY MURDOCH’S CURLED-UP WINKLEPICKERS
Sparkleghirl
Many thanks, it’s all way over my head.
roy croppie on 11 March, 2012 at 10:04 said:
Monaghan1900
haha
I’ve just waved over to him with a friendly two fingered gesture. He seems to be getting sedated now.
I’m going to bite the face off him if I get the chance.
sixtaeseven: No NewCo in SPL and it’s Non-Negotiable!
Snap! Just a different source.
Just wanted to add my own appreciation for the piece by The Battered Bunnet. Well done.
Someone on here suggested the possibility of getting fatigued with the whole RFC ( IA ) business. Personally I came face to face with that sentiment yesterday.
A female friend took me along to see the Picasso exhibition at Tate Britain and afterwards upstairs there is another show of the impact upon British art of the last few centuries of immigrants to this country.
Some fantastic work on show but after looking at a portrait of Charles 1 we moved on to a maritime scene of William and Mary leaving England in 1677. Somehow or other and whilst demonstrating my knowledge of both artists and the historical context I managed to link the whole business of The Glorious Revolution ( The Boyne, colonisation of Ireland, Famine, Irish Immigration to UK, establishment of Celtic and on to the Big Tax Case ).
My voice was raised and there was a palpable anger in pretty hushed environs.
Bit of a wake- up call nevertheless.
This business is beginning to dominate my waking time. No sign of fatigue.
Good luck to the Celts today and keep on with the fight for justice.
Had a few in my taxi asking about Rangers and their plight.
One bloke finished the conversation with,.”its.a shame”
My reply was “I know they are.”
Bom dia,
Currently sitting about a mile offshore from the beautiful beaches of Fortaleza on a rat and cockroach (but H*n free) pipelay barge. Not the best way to start a Sunday, but it could be worse. For a start I could be an iBrokes creditor (OK, that’s maybe taking it a bit too far, I admit).
Anyway, on the flight up here I was reading this months “Placar” (Brasil`s version of Four Four Two). One article, in particular caught my eye, stats relating to European football caught my eye. Of all the top flight clubs/leagues in Europe, Celtic are the team with most non home based players in their squad (84%, it claims). That canny be right. Is it?
reilly1926 on 11 March, 2012 at 08:06 said:
I think Hector and his mates could do worse than giving the snake Mingwall a tug.
Before reading TBB’s excellent article I had a rough grasp of the disgraceful
events which have led to the current situation but I was hazy on any detail or chronology, so a big thank you to TBB.
Some hymn singing from Ibrox this morning: the Rangers’ way.
http://www.randalstowncsc.ie/content.php?477-Sectarian-Protest-At-Ibrox
This was taken from the Sunday Mail website this morning. At first I thought they had a “scoop” interview with Moonbeams and I was looking forward to him answering questions on double contracts but alas it was just the usual “sources close to” pish from the excuse of a newspaper.
===================
FORMER Rangers owner Sir David Murray yesterday described his decision to sell the club to Craig Whyte as his “one mistake”.
He said he had been duped into doing a deal with disgraced Whyte and claimed he had no idea that the businessman had previously been banned from being a director of a company.
But critics have said Murray should have been aware of Whyte’s murky past before selling him the club for £1.
Since Rangers crashed into administration, many fans have blamed Murray for their club’s plight – and not just for handing control to Whyte last May.
The steel tycoon once famously promised to spend a tenner for every £5 spent by Celtic, but now his financial management of the club during his time in charge is in the spotlight.
Murray said yesterday: “Everyone forgets the good times.
“But the one mistake I made is I sold Rangers to somebody who was, unfortunately, untrustworthy.
“There’s no system, it’s self-policing. If someone is struck off as a director, it’s their duty to tell you. So if he doesn’t tell us and he doesn’t even tell the SFA or the bank, then we’re not magicians. We’re not mind-readers.”
Whyte was disqualified from running a company for seven years in 2000.
After paying £1 to take control at Ibrox, he wiped out an £18million debt owed to Lloyds Banking Group – but later admitted finding the money by selling four years’ future season ticket sales to London firm Ticketus for £24.4million.
The SPL champions were forced to call in administrators last month when it emerged that HMRC were owed more than £9million in unpaid tax since Whyte took over.
Last week, administrators Duff and Phelps said Whyte didn’t put a penny of his own cash into Ibrox.
Murray has said privately that he had no idea that Whyte used the Ticketus cash to fund his takeover.
An independent probe by Lord William Nimmo Smith found that Whyte’s failure to disclose he was banned from being a company director breached SFA rules.
A source close to Murray said: “The main thing was that the club had been for sale for four years and no one had come forward. Then Whyte comes forward.
“Murray asked for proof of funds and Whyte gave it. The money was in the bank – no one knew where it came from.”
But fans say Murray’s use of a controversial Employee Benefit Trust has been the major catalyst for the crisis at Ibrox.
The trust, through which players received tax-free cash in an offshore account, led to an investigation by the taxman, which is ongoing.
Meanwhile, Murray has told friends he believes the club will be sold to an outsider and not the Blue Knights consortium being headed by former director Paul Murray.
The source said: “He thinks it’ll be an outsider who’ll buy it and that’s probably for the best.”
School should give Whyte the boot
Craig Whyte’s former headmaster has urged his old school to remove mention of the shamed Rangers owner from their website.
John Duff was rector at Kelvinside Academy in Glasgow when Whyte was a pupil from 1985 to 1987.
A story on the school’s website hails Whyte’s takeover of Rangers – but since it was published the businessman’s carefully constructed image has been destroyed.
Duff said: “I wouldn’t regard him as one of ours to shout about. I would be keen to see it removed.”
The supporters of ranjurs in their many guises are aye ready to run with the O@@ F@@@ escape plan when it suits them…..
ie when it is clear their beluv’d team is sinking…………………
In previous times when Celtic had the guts and vision to make the case for a bigger league outside of Scotland, snyde ‘fans’ in the media rubbished any attempts…….and always the stories with quotes from Walter and Ally would appear, as if by magic, about staying, supporting etc etc for the ‘guid of scoddish football’……
Shameful.
TBB
Excellent summary, if we are giving Murray credit (unlike Llyods Bank) where credit is due then he does deserve a mention for ending Rangers discriminatory signing and employment policy.
Just a thought!
Is it wrong that I was discussing the rangers situation with a friend who is a decent fellow but follows the dark did and I didn’t help him get his head out of the sand. If anything I may have placated him with messages of “it will be OK”.
Tee hee
Vmhan Supporting Lenny! on 11 March, 2012 at 09:52 said:
Googybhoy morning amigo, that was indeed a great article about County Coatbridge, however there are more than a few events in Glasgow for St Patricks week culminating on the 17th….. Although this may overlap to Sunday at Hampden.
………..
Good to see that. Well done.
SuperSutton on 11 March, 2012 at 10:24 said:
Is it wrong that I was discussing the rangers situation with a friend who is a decent fellow but follows the dark did and I didn’t help him get his head out of the sand. If anything I may have placated him with messages of “it will be OK”.
Tee hee
Can’t see anything wrong with that – it will be OK.
It’s been an enjoyable week watching and discussing the huns’ plight. But I’m glad we are back on the park today.
It won’t be an easy trip to not so bonny Dundee, but with captain Broony back to lead his troops we should pick up another win. As always an early goal or two would be nice to settle the team and allow us to play our football. I’m going for a 3-1 win.
Excellent Synopsis TBB,
It should always be remembered that Alastair Johnston bought Jelavic when RFC had taxes to pay and Craig Whyte sold him when being harried to keep him and spend even more.
It’s strange that the head of the SFA has censured Mr Whyte for not putting money into R@ngers, while UEFA are fostering the opposite in their financial fair play initaitive.
For those who try to point out that RFC disputes the tax bill, it should be pointed out that you can pay the momey and still carry on your appeal negating interest and penalty charges, certainly the most prudent course of action.
Should be a good a good game today;
Celtic 2-0 Dundee U
While I think most Tims are pretty well clued up on the facts surrounding the Hun saga, I can’t help wondering how the average bear must be dealing with this.
His heid must be spinning faster than that poor lassie’s in the Exorcist.
At least we can see through (most of) the media spin. The MSM garbage is the average bear’s only hope, plus he’s got to take our version on board as well.
Maybe somebody should get Father Merrin on their case.
JCGE
Re the quote from Vanguard Bears. What is it with these peepel with their “of that there is no doubt” and Fat Sally ” There’s no doubt about that” and “Let no one be in any doubt about it” blah blah blah.
I know the orcs are by their very nature of limited vocabulary but Jeezo gie’s a brek and change the record!
Lennybhoy…Supporting Neil Lennon and CFC until I die on 11 March, 2012 at 08:23 said:
Haven’t been in the big tree since I was at school! Don’t gt the chance to get out much, last time I was out was about August last year, st Andrews was the Pub of choice
You?
Green Lantern (((((0)))))
Their syntax is based on the rantings of big Paisley; they always seem to be proclaiming this or that and signing covenants in blood. Very angry peepil.
And where do they all get their ridiculous names?
See SSN breaking news….
http://en.wikipedia.org/wiki/Philip_Anschutz
Just got a text from a mate back home suggesting this fella may be interested in the huns.
He is clearly sports-mad,and a ruthless megalomaniac to boot.
Apart from that,I make no comment,as it sems he’s a fairly litigious bloke!
….and note words “have had”
The thoughts of Paul McConville make interesting reading. I can see Whyte being conveniently turned into the pantomime villain and all things bright and beautiful before he came along but that is not how a court might see it.
http://scotslawthoughts.wordpress.com/2012/03/11/the-sfas-fit-and-proper-test-self-certification-for-football-clubs-a-farce-part-1-craig-whyte/
What time is the KO lhads, out here in NZ its sometimes hard to get that info
For the Atlantic League idea, it would be possible for Celtic to simultaneously be involved in the AL & SPL
The AL team would be the 1st team, but a league of say 12 teams and the end-of-season play offs would be 14 matches a season
The SPL team would be strong enough to compete, but “weak” enough to ensue the SPL was competitive. Same would apply to Ajax/ PSV/ Anderlecht etc
Qualification for CL/ UEFA would be through the national leagues – at first (?)
sixtaeseven: No NewCo in SPL and it’s Non-Negotiable!
The level of exorcism required would ‘tax’ their beliefs beyond their understanding..
Always been guarded about confusing my abilities with my ambitions, a sobering thought for the Ibrox custodians. .
That’s a very good article on Coatbridge in SoS today. It mentions the Slap-up slum from the turn of the century, ie 1900. In the early sixties, my Dad, Mum,my sister and I lived in a ‘single-end’ in the Slap-up, one room sharing outside loo with two other families in the mot deplorable conditions.
But we look back fondly to those rosy days……….Aye right!
Anyone know if the game is on the Farm today?
Cheerscfc
EKBhoy
I believe it is
Super Sutton 10.24
It will be ok seems a very helpful and empathetic comment to reassure yours Rangers loving friends. Other positive hopeful comments could be
Hey what’s a debt between friends!
Celtic are saying nothing just as they don’t to add to your worries.
You’re right, as your song says “Celtic know all about troubles, we will fight till the day is done”
That Paul Murray must be worth a few bob
Her Majesty will tell HMRC how best to treat Rangers
BobbyMurdoch7121 on 11 March, 2012 at 10:46 said:
What time is the KO lhads, out here in NZ its sometimes hard to get that info
1:15 Celtic Park time.