The once-mighty Rangers have been reduced to pleading for acceptance into the Scottish Football League's First Division
Contemplating the husk of the once-mighty Rangers, reduced on Friday to pleading for acceptance into the Scottish Football League's First Division, you can take your pick of the high point which best illustrates the depth of this fall.
Many people think automatically of 20 years ago, when Walter Smith's Scottish title winners beat England's, Leeds United, in the European Champions League, and came within one goal of the final, losing to a Marseille later convicted of match-fixing in their own league. Or just four years ago, when Rangers, again managed by Smith, competed in the Uefa Cup final, their fans descending on Manchester in tens of thousands to see a 2-0 defeat by Zenit St Petersburg. At home, there was the procession of Scottish Premier League championships, shared seven each with Celtic since the country's top clubs mounted their financially-driven breakaway from the SFL in 1998.
A deep breath is needed before summing up the state Rangers are in now. The Glasgow football institution collapsed into administration in February owing a possible £100m, nine months after a disastrous sale of the club for £1 by its former owner Sir David Murray to the now-disgraced Craig Whyte. That takeover is the subject of an investigation by Strathclyde Police, in conjunction with the Serious Fraud Office, to examine whether any criminal offences of dishonesty were committed.
The SFL clubs are meeting at Hampden Park on Friday to consider whether even to accept the bones of a newly-formed Rangers, perhaps into its Third Division of threadbare crowds, which many fans and clubs believe to be just. The chief executives of the SPL and Scottish Football Association, and David Longmuir, the SFL chief executive, have urged the clubs to accept Rangers into the First Division. They warn that the SPL's TV and sponsorship deals, which financially maintain Scottish professional football, will collapse if Rangers are exiled from the SPL for too long.
Rangers' grand name has landed in this historic embarrassment because of the way its assets – essentially Ibrox and the Murray Park training ground – were sold by the insolvent club's administrators, Duff and Phelps. The Yorkshire businessman Charles Green, formerly chairman of modestly performing minor plcs, backed by a consortium including offshore trusts not yet fully identified, bought the bones of Rangers for £5.5m. That acquisition was not approved by 75% of creditors, in a company voluntary arrangement, the mode of post-insolvency salvage preferred by the football authorities north and south of the border.
Her Majesty's Revenue and Customs, beyond tolerance of football clubs leaving millions unpaid in tax, and particularly Rangers, with whom it was already in major dispute, refused to approve a CVA which would deliver a fraction of the amount owed – £21m unpaid under Whyte. So Green then bought the assets with a newly-formed company, Sevco, the £5.5m barely stretching beyond the administrators' fees.
Neil Doncaster, the SPL chief executive, argues this distinction should not mean the "newco" Rangers have to start in the Third Division. He has repeatedly stated that BSkyB and ESPN, who have committed £80m to a five-year TV deal from 2012-17, the Clydesdale Bank and other SPL sponsors, require as a condition of their financial commitment that Rangers and Celtic, the two box office names, both be in the SPL.
Doncaster told the SFL clubs that the broadcasters and sponsors could live with Rangers out of the SPL for a minimum of one season, but are not interested in broadcasting the Third Division and would walk away or seek greatly reduced renegotiations. The SFL clubs, without bumper attendances or a TV deal, rely on a payment from the SPL agreed when the top clubs broke away, now around £2m. Doncaster has made himself extremely unpopular warning that it too would fall away, if the SPL collapsed into financial chaos, with reduced TV deals and wages to pay. Some SFL clubs, including Raith Rovers, have vowed they would still hold the SPL to it.
Doncaster argues that risking this level of financial meltdown over the difference between a sale of assets via a CVA or to a new company, is disproportionate. In English football, the authorities prefer a CVA, but HMRC votes against every proposal, and if its proportion of the total debt is enough, the CVAs fail. Rangers' former Champions League opponents Leeds, whose collapse most closely resembles that of Scotland's fallen giant, had a CVA defeated in 2007. Unnamed investors via offshore tax havens, represented by Ken Bates, bought the club's assets outside the CVA. The team had already been relegated to League One and Leeds were not made to start again, as a new company in League Two. As a sanction for failing to achieve a CVA, the Football League docked Leeds 15 points, on top of the automatic 10 for going into administration – and that 25 point penalty was itself criticised by many Leeds fans as too harsh.
Last week the SPL clubs voted overwhelmingly not to accept Green's Rangers newco into the SPL. Doncaster argues that acceptance into the First Division will represent an adequate penalty for the gross failures which led to the club's insolvency, and enable the bulk of the SPL's financial foundations to be maintained. He is supported by the SFA's chief executive, Stewart Regan, who fears that if money is drained out of Scottish football with Rangers in the third, not only top players' wages, but youth and other development projects will be hit.
Rangers' collapse has sucked Scottish football into a vortex of political infighting. Last month Longmuir sent proposals out to the SFL clubs urging them to accept Rangers into the First Division, saying if they did not, the SPL would grab the division and call it SPL2. That led smaller clubs to understandable cries of blackmail. Longmuir's proposals suggested that the two leagues themselves could be reunited if the SFL clubs please the SPL by accepting Rangers into the First Division, but that looks a vague offer by the SPL, hastily made, uncertain ever to be fulfilled.
Hence clubs' moral outrage at the overspending and scandals, at a great club which should have known better, wrestle on Friday with the practical warnings of meltdown in a sport which, after all, is professional and does need money to survive. The outcome, despite some clubs' public statements, is fiendish to predict.
When HMRC voted down the CVA, it made it clear it wanted Rangers liquidated so that a full investigation would be carried out – BDO have been appointed as liquidators – into which directors were responsible for the collapse. HMRC wants BDO to pursue individuals personally for money in recompense, if they are found culpable.
Whyte will clearly be the subject of any investigation, having bought Rangers without declaring that he had in his record a disqualification from acting as a company director. He promised to pay off Rangers's £18m debt to Lloyds Bank and fund the club but, as is now infamous, only raised the money once he had bought Rangers, by mortgaging four years' season ticket receipts to the factoring company Ticketus.
Murray insists Rangers were not heading for administration while he was in charge. In an interview with the Guardian, he also denied that he left Rangers himself to avoid the consequences of losing the tax tribunal case, in which HMRC is challenging the club's use of employee benefit trusts to make payments of £48m between 2001 and 2010. Murray argues that Rangers followed professional advice to pay employees via these offshore loans, a device which was legal at the time; the case turns on how Rangers operated their scheme and senior counsel have argued the club's case. He says even if they lost, he would have sought to negotiate paying the tax due, which would have been "difficult" but do-able, as Rangers had significantly reduced their indebtedness to the bank through the 2000s.
"I will be co-operating 100% with any investigations," Murray said, "and I do not believe there will be a case to answer. My great mistake was to sell to Craig Whyte. I owned Rangers for 23 years and put £100m into the club, and this is a very sad end."
The manner of any new beginning for the remains of Rangers depends on the votes of Scotland's smaller clubs, most of whom dream of modest success and balancing the books, not of overreaching themselves to bestride the stage in Europe. Read More
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