INSIDE STORY: Rangers' still in financial mess

Stephen Crilly 07:32 16/03/2015
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Ibrox Stadium has witnessed hard times over recent seasons.

There are two questions to be asked: When did Rangers’ troubles begin and where this sorry, embarrassing and, at times, laughable saga will end? Last things first.

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Over the past two weeks, a new board led by Scot-born South African businessman Dave King have taken over the Scottish club. This is a good thing. Probably. Every one of the directors who presided over the worst period in this club’s history are gone. The supporters believe at last that their club, who were once one of Europe’s top spenders in terms of wages and transfers, is on its way back.

Ah, but this is Rangers, or ‘Sevco’ as those who would have you believe the club is now known as, a nickname for ‘The Rangers Football Club’ which came into being when the old club went into administration back in 2012. So nothing is ever that simple.

Mike Ashley, owner of Newcastle United, retains 8.9 per cent of the club’s shares, and has full control of all retail stores. Oh, and he is owed anything up to £10m (Dh54m) depending on who you believe. Now his allies on the board have been kicked out, he will want paying.

Rangers aren’t a very good football team. They lie third in the second tier of Scottish football. The term “the worst team in the club’s history” has been used time and again. Few argue. There is every chance they won’t win promotion this season.

The club don’t have the money to keep the lights on. There isn’t enough staff to service what remains a big operation. Ally McCoist is serving out the rest of his managerial contract on the golf course. His stand-in, Kenny McDowall, didn’t want to be there either and on Thursday was replaced by Stuart McCall, an ex-Rangers player, and a fine one, but an average manager.

With 11 games to go, McCall described his decision as a gamble, and this is coming from a man who was out of work. He said: “I’m not putting the boot into the players because they know it themselves but anyone who has watched Rangers for the last three or four months would say they have been struggling.

“But they wouldn’t be at Rangers if they weren’t good players. I would have signed most of these players but you need a different mentality to play for Rangers.”

Rangers' recent form has been poor but promotion remains the target.

That is where Rangers are. Let’s return to where they once were. Back when Rangers ruled Scottish football, under former chairman David Murray, they spent fortunes on players thanks in part to large loans from the Bank of Scotland, that they really couldn’t afford to pay back. Brian Laudrup, Paul Gascoigne, plus every half-decent Scottish player ended up at Ibrox on serious money.

When Dutchman Dick Advocaat became manager in 1998, the spending went through the roof. However, Ibrox was full every week and the TV deal wasn’t bad, but this tactic was never viable unless they did well in the Champions League, which they never did apart from in 1993. The gamble never paid off.

It became clear in around 2004 that things were going badly. Murray admitted they would need to reassess how the club was run. By 2009, Rangers owed between £25m and £30m (Dh135-Dh160m) to the Lloyds Banking Group who, according to then manager Walter Smith “were effectively running the club.”

During 2010/11 Rangers spent £27.7m (Dh150m) on wages with the bulk of that, some £21.5m (Dh116.4m), going on players and football management, while £6.2m (Dh33.6m) went on non-football related wages. But that was okay. Because almost 38,000 season tickets were sold, they played in the Champions League. 

They then managed two home ties in the Europa League. Rangers also won the League and League Cup. So even with the debt piling up, they got away with it. Just.

The glory days of Gascoigne and McCoist in the 1990s seem a distant memory for supporters.

But there was trouble in the background. The tax man (HMRC) began to show an interest in the way Rangers had been paying their players, through an employee benefit trust (EBT). The figure spoken about was £49m (Dh265m) plus interest and penalties. Trouble was brewing.

In 2011, former chairman Alistair Johnston admitted “the club may go out of business.” In May of that year, Murray sold his 85.3 per cent to Craig Whyte for £1. Whyte told the media, who swallowed his pitch, that he was a bonafide billionaire, a Scot who had made good in the markets. Except it was nonsense. Rangers needed money and he didn’t have it.

Whyte, who had forgotten to disclose he had been previously banned as a company director for seven years, pledged to pay off the bank debt and invest money in the squad and stadium, which was badly needed. So he borrowed £26.7m (Dh144.6m) against future season ticket sales from a company called Ticketus – and didn’t tell anyone.

It was a secret that did not remain a secret for long. In early 2012, Rangers were into administration, an embarrassment for the club. The supporters truly believed this was the end. It transpired that Whyte refused to remit the pay-as-you-earn tax deducted from his employees to HMRC. This was bad. Really bad.

Administration became liquidation when HMRC would not do a deal. Rangers were in debt to the tune of £134m (Dh725m) with no chance of paying off. So they ceased to be. “140 years of Rangers liquidated… after just 8 minutes of a meeting” ran the headline in the Glasgow Evening Times.

Depending on your point of view, either a new club was born or the old one got a new owner. Charles Green, an Englishman with no links to the club at all, was.

He was not universally popular from the start. Statements such as “my dream is to have a two-tier European competition with Rangers at the heart of it” made jaws drop. Had he not heard of the Champions League and Europa League?

He also made this speech after his club’s first game, a cup tie at Brechin City that had gone to extra-time. It’s a fair guess his boasts were not heard at the Nou Camp.

Having not been allowed back into the SPL – 10 out of the other 11 clubs voted against the proposal – they started again in the fourth tier. They won that league, albeit with a few bumps on the way, then were promoted unbeaten last term.

Over this time, Green moved on, the first tax case actually went in Rangers favour, their best result by far, but by this season Ashley had rolled his tanks on the the Ibrox lawns, sniffing out the chance of buying a big club on the cheap. He hasn’t gone away.

Rangers are third in the league and onto their third manager of the season. The club need money. The stadium, once arguably the finest in Britain, is crumbling. The new board (and Ashley) have work to do.

Rangers captain Lee McCulloch said: “I think it would be a wasted season if we don’t go up. It would go down as a massive failure. There is a lot of personal pride at stake for me. It’s not as if I’ve been going home and made a cup of tea and thought everything’s all right. It’s killing me inside to see Hearts so far clear in the league and we’re nowhere near them.

“Everything else seems to have been sorted out, so it’s basically up to us now to try and get a play-off place and see what happens.”

But everything else hasn’t been sorted out. Some £30m has been frittered away over the past two years, an astonishing sum. Ashley is still there and one more season out of the top tier could be…well your guess is as good as mine. This isn’t over. Not by a long way.

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