It wasn’t supposed to be this way. Craig Whyte would not have expected Champions League football when he worked on the deal to buy Rangers last spring, but, by his own admission, income from the Europa League group stage was in the budget.
Winning the league came as a surprise late in the process and may have fuelled some summer transfer bids but income was about to fall well below expectations. Ally McCoist won only one game in four cup competitions, against Arbroath, season ticket sales didn’t bounce and with no serious income streams open, Rangers were set for a seriously low income season.
In addition, the injury to Steven Naismith robbed Rangers of what I understand would have been a £5m sale in January.
People have tried to assert that Whyte’s plan for Rangers was to liquidate the company all along, this is clearly not the case. Rangers were moribund while the First Tier Tribunal (FTT) was yet to report but Whyte planned to run the company, without reverting to administration until and perhaps beyond then.
As well as having to deal with the income shocks resulting from multiple on-field failures, Rangers were hit with an expenditure shock. The FTT was delayed from November to January. If it had proceeded as planned in November it would have reported in January. The delay was crucial, Rangers were going to spend a lot more money before the verdict was announced.
If the verdict arrived as expected in January, and Rangers won, it was game on. They would have been in a position to borrow like any other club and could have raised fresh share capital. There would have been no administration. This was the preferred outcome, Whyte would have emerged with his reputation intact and with a valuable football franchise for the outlay of exactly £1.
If they lost, Whyte could have presented a fait-accompli to the world.
He could have explained to the Rangers support that the total tax liability was “likely to be around £75m” and that there was no point putting fresh investment into a black hole, which was inevitably going to lead to liquidation – all for misdemeanours that occurred before his time. The support would have been distressed at the death of their history, but, crucially, they would not have blamed Whyte, whose reputation would still be intact.
He would immediately have applied for the 10 day grace period to consider appointing an administrator and used that time to tell the SPL and SFA that he could re-emerge with Newco FC within days and allow the league programme to complete as normal. He had security over the stadium, would be in a position to re-employ the players and would be able to honour financial commitments to other clubs, while securing the television and sponsorship contracts.
Public sympathy would have been behind him, Sir David Murray would have carried the blame (perhaps correctly) and I believe only Celtic would have voted against him. Newco would have been back in the SPL and, if the Daily Record’s reporting of Whyte’s thoughts on penalties are anything to go by, he expected to be docked a comfortable 25 points.
HMRC forcing Rangers into administration this month created enormous problems. Administrators Duff and Phelps are now in control and opened the club’s finances up to scrutiny.
As soon as it became evident that he securitised season ticket money from future years, three days after buying the club, placing the money into his own bank account, not that of the football club, Craig Whyte’s methods were subject to derision and outright disgust from many angles, most importantly from the Rangers support.
As things stand, Whyte cannot slip away. He has to stand with Ticketus, who will hold a security on Ibrox through one of Whyte’s companies, and he stands to gain an enormous amount of money for a year’s hard work. Ticketus are also in for the long haul, they have coughed up over £20m and will need a sizeable commercial return.
Many observers have noted that this has not progressed as a normal administration. It’s not a normal administration. The secured creditors (Craig Whyte and Ticketus) need to sell a lot of tickets beyond administration, either as Rangers, if they are successful in the FTT, or as Newco, if they lose the FTT. Selling a lot of tickets is a really tough challenge right now and will be made considerably more difficult if there are swingeing cuts made to the club staff and infrastructure now. Their interests are considerably best served by keeping Rangers as buoyant as possible.
Even if they manage to feed enough cash to the administrators to keep Rangers playing football until the verdict is delivered, the opportunity to present the league with a fait-accompli has gone. Everyone expects Rangers to fold and will have been busy working on a contingency plan.
Any goodwill that Whyte hoped to harvest has also gone, he is seen as a pariah, without friends within the game, in the political world, the media or the Rangers support. When he looks to build a consensus, there will be no advocates for his position. Quite the opposite, people want rid of him.
The on-going police enquiry and his interesting relationships with the Insolvency Service and HMRC will only cloud matters further. For all the bluster on these subjects, no one has been able to explain to me any illegal activities, in fact, most of the illegal activity he has been accused of are either perfectly legal or simply did not take place as described, but there is enough potential in this mix for many years of civil legal challenge, if not more serious issues.
Whyte and Ticketus now have decisions to make on how much extra skin to invest. Ticketus are in the game for a lot of money already and will be keen to protect their cash. It remains to be seen how much cash Whyte has in the client account at Collyer Bristow, but it’s clear that between them, Ticketus and Whyte were prepared to guarantee the administrators full wages and costs for the club for February.
The fact that the tap has been turned on 100% for the last two weeks suggests they have enough cash to run at a lower percentage for a while yet. Duff and Phelps will know how much money is available and will have an expected date for the verdict. It would be enormously bad judgement if they exhausted cash reserves before the verdict arrived.
As long as Ticketus investors hold their nerve, and the police don’t spike the process, Rangers will survive until the verdict. If they lose the verdict, and all expectations are that they will, what are we looking at?
As I said above, Whyte’s chance of presenting a fait-accompli has gone. He would need to go for a prepack liquidation but there are likely to be legal challenges to him making off with the assets of Rangers. At best, this would delay him for anything between weeks and years. Any police involvement would make matters even more difficult. If a negative verdict is delivered anytime soon, Rangers will cease.
Even if this happens, Whyte will still owe Ticketus a lot of money and will try to phoenix as a Newco. He will have the stadium and will be in pole position to apply for membership to the SPL or Scottish Football League.
A route back into the SPL in these circumstances would be difficult to achieve. The SPL board have the authority to accept a club into the league but I hear it is likely that, due to the importance of the matter, they would refer the decision to a vote of the entire league. Back in October I thought the fait-accompli was certain to be voted into the SPL, now I can’t see a Newco being voted in.
You would expect an application into the Scottish Football League to be accepted but there may be a rival bid. The ‘Blue Knights’ bid would not include Ibrox but have a number of options. They could ask to rent Hampden or Firhill, or could adopt a struggling lower league club, like Clyde. These notions are likely to be progressed but establishing a new club, without players or a stadium, would be an enormous challenge.
All of this would play out against a great deal of uncertainty. Whyte’s ability to sell tickets to Rangers fans must be in doubt. If a rival club wanted back into Ibrox in the future they would need to give the ultimate floating charge holder – Ticketus – the same kind of return Whyte has committed to. There is also the possibility of a lot more to come out about the old regime at Rangers, some of whom are behind the Blue Knights bid.
Even if someone gets a phoenix off the ground at Ibrox, keeping it alive will be difficult. The cost of running football games there every second week is considerable. Doing so, while repaying Ticketus, and competing against lower league (or SPL) opposition, will cut any football budget to levels not known in 30 years.
For now, everyone connected with Rangers needs to make confident noises but even if they die, their ghost is already in enormous peril.