13 February ~ Rangers lodged legal papers signalling the club's intention to go into administration this afternoon. The move would bring with it an immediate ten-point penalty and almost certainly hand the title to Celtic. Last November (WSC 297), Alex Anderson reported on the severity of club's financial troubles.

In Scotland even the legal system seems to be Old Firm-centric. Celtic decried an Edinburgh Sheriff Court jury when the case of a Hearts fan assaulting their manager, witnessed live on TV across the country, was found not proven. Two weeks later, however, Scotland's supreme civil court redressed the balance by exposing the threat of Rangers going bankrupt in the very near future.

HM Revenue & Customs' pending claim against Rangers has been common knowledge in Glasgow football circles for at least a year now. That the cost to Rangers, should they lose November's tribunal on tax liabilities, could be anything up to £50 million was central to all coverage of the May 2011 takeover of the club by venture capitalist Craig Whyte. What happened in court on September 13 made it all decidedly more real.

Ring-fencing a sum of £480,000 for the potential settlement of a lawsuit against the club may not seem overly dramatic. But judge Lord Hodge declared he was "satisfied there is a real and substantial risk of insolvency" at Rangers as he granted an arrestment warrant for the money. The most powerful club in the history of Scottish football was having its assets frozen.

The previous Rangers ownership under Sir David Murray has, if Private Eye and other less reputable sources are to be believed, made an arse of paying players through the borderline-legal Employee Benefit Trust system. In seeking to avoid income tax or national insurance payments, Rangers opened themselves up to a massive claim by the tax authorities.

Hodge emphasised he was not concerned with the "actuality or probability" of insolvency at Ibrox but "the degree of possibility". That possibility centres on the fact that Rangers' June 2010 accounts showed net assets, including the stadium, of £70m – a figure that leaves little wiggle room when all is considered.

HMRC are chasing £35m in tax and a further £14m in interest and penalties. Sheriff's officers turned up at Ibrox in August to arrest funds for a separate, smaller claim for £2.3m in unpaid taxes (and an attendant £1.4m fine). Also, Rangers currently have no credit facility with any bank and Whyte has not, as was widely believed, wiped out the £18m debt of the previous regime. Instead he has transferred it from Lloyds Bank to his new company, Rangers FC Group Ltd. Suddenly all talk of the SPL champions going bust loses its note of hysteria.

Having been knocked out both European competitions before September, the tax tribunal provides a different kind of big-money showdown for Rangers fans this season. Whyte called a press conference as soon as the story broke and vaguely assured everyone Rangers would be playing at Ibrox long after all the hurriedly assembled journalists were dead and buried. However, the idea Rangers are too big a public institution for any bank to risk shutting down does not apply to HMRC, particularly in a financial downturn when public examples need to be made.

Scottish football could not afford to let Rangers fold, but around half the country's fans would dearly love to give it a try. Administration and a points deduction could see Celtic finally regain the SPL in much the same way they qualified for this season’s Europa League. Bankruptcy for the first time in 140 years and any need to reform would be a humiliation beyond anything suffered by a club that has never been relegated and has only once finished lower than fifth.

The immediate embarrassment was apparently heightened by the source of the latest freezing of assets. Former chief executive Martin Bain, sacked for declaring his mistrust of Whyte's stewardship, is suing for breach of contract to the tune of £1.3m. Bain was Murray's right-hand man and worked closely with manager Walter Smith in the last four seasons as Rangers overcame burgeoning financial difficulties to win eight domestic trophies and reach a European final.

For some, that successful period was the most romantic of our lives supporting the club. It seemed to be the result of a familial loyalty among those in charge. Now we are wondering how much it really cost. Bain could, of course, be deliberately using his claim to publicly undermine a man he thinks is bad for Rangers – leaked legal papers detailed Whyte's assurance that he would let Rangers go under if the final HMRC bill exceeded £15m. Or Martin could just want his wages, net of tax. Alex Anderson

Comments (10)
Comment by kevin cosgrave 2012-02-13 20:53:15

It is a shame that the writer feels the need to knock Celtic in the article, it doesnt reflect well on him. The best thing in the long term for scottish football and society would be no Glasgow Rangers FC and no Glasgow Celtic either, in the long term the Particks, Falkirks Motherwell, Hearts, Hibs Kilmarnocks, etc would thrive if they were not losing so many potential supporters

Comment by Afrikaams 2012-02-13 21:44:08

Yes, close Rangers and Celtic down, solve all of Scotland's social problems and double the crowds of the other clubs, that's what'll happen. I can only assume you've never actually been in Scotland Kevin Cosgrave.

Comment by Alex Anderson 2012-02-13 23:03:52

Kevin - where on earth do I knock Celtic? I mean if you want me to I really can - but I've got enough on my plate with Rangers right now ...

Comment by TheRedMax 2012-02-14 10:40:46

It would be a disgrace if RFC was reinvented in order to escape the tax man, taxes that every other business in the country, large or small, are obliged to pay. Not to mention the trail of debt that they will leave behind including transfer fees & gate receipts owed to other clubs who have done their utmost to pay their way however difficult that may be.
If there’s a new Rangers, then they start with a trophy haul of precisely zero and the SPL should insist that the reinvented club take the 5 stars off their shirts. Those stars belonged to the "old" Rangers.

Comment by Diable Rouge 2012-02-14 10:53:21

So, does that mean you consider all the honours won by Fiorentina to be null and void?

Comment by Alex Anderson 2012-02-14 11:42:51

@TheRedMax - glad to see you're as upset as me by the whole affair. Reading between the lines I don't THINK you're a Rangers fan (Could be wrong) and yet you seem genuinely outraged - and here was me thinking the rest of Scottish Football would be laughing up their sleeve at us.

Congratulations though on being the first to demand - and I mean "DEMAND!!!" - the removal of the five stars from the shirt. There's no legislation, football or otherwise, which covers the application or removal of stars above a crest other than registering them as part of your kit at the beginning of each season. Does Celtic's ONE star mean they've only won ten league titles? Do Rangers' five stars mean we've won five champions leagus? Does Aberdeen's two stars men they've won twenty league titles? Who else on the planet has a star above their crest for winning the CWC and the Super cup? England and Denmark each have one star above their crest - same as Ivory Coast - have they each won ten of one thing or have they all won the same trophy once each? Naaaaahhhh - like football finances, we know every team is just at it.

The stars thing is completely random and applied with an entirely private reason by the teams who choose to use it - but thanks for confirming that you always knew EXACTLY what Rangers' meant.

Glad they got to you, ambulance-chaser.

Comment by Mr Beast 2012-02-14 13:02:20

So Alex, given developments and assorted finger pointing from the old and new boards since your original article, who is the main villain in this, Murray or Whyte?

Leaving aside the stars, The RedMax's first point is fair enough though isn't it?

Comment by scofmann 2012-02-14 15:29:35

Genuine question; is it not a little strange that a club with such strong links to Her Majesty would go so far out of the way to try and escape paying taxes to the National Purse?

Comment by Alex Anderson 2012-02-15 12:49:04

@Mr Beast - aye, fu** it - you know I need to talk about it:

Whyte, Whyte and Whyte again. And I'd throw in a little bit of Lloyds Bank and The Rangers Trust - the main parties agitating for Murray to sell, even when SDM realised none of those who'd approached him over the last few years were fit eough to do the job.

Sir David Murray left us with, at the very worst estimate, £49M of debt after 22 years of endless trophies and European glories, providing a state of the art training facility and converting Ibrox from a multi-coloured empty shed into a sleek, 5-star graded European stadium.

Craig Whyte, at the best current estimate, has brought £33.4M of debt in just 9 months. And in that 9 months of seeing us punted out every competition we've entered at an embarrassingly early stage, he has given no leadership, acted like a big huffy wean/slum landlord with the media and - basically - dragged our name through the much in association with his murky business past.

Sir Dave the Mint might have fu**ed up with the EBTs but he did so in an effort to exploit what resources Rangers had to maximum effect - the execution was poor but the move in tself was another bona fide attempt to sate the perpetual yammering of the ingrate loudmouths among the Ibrox hordes. Whyte's entire MO, on the other hand, has been to use the money of the fans and the players (PAYE unpaid) to bring forward administration - blatant asset-stripping.

LOL! And methinks you know fine well, young man, that the RedMax's first point is just wholly subjective, pseudo-moral outrage pish :-) At a time when taking the tax man to Claridge's for lunch convinces the government to let BILLIONS in tax go unpaid in an effort to keep foreign multinationals investing in the UK economy the Rangers situation is like blaming Jade Goody for the rise of the EDL. One wonders if red max applis this levelof forensic moralising to everyaspect of society - or does he just look atRangers and wonder how he can paint them eeeevil??!! :-)

Ach, show me the club in Scotland which hasn't done a dodgy deal or gone into serious hock or even successfully run an EBT. And, like it or not, if we're talking finances, Rangers have been propping up the Scottish game for the last quarter of a century - we're owed as much as we owe but, unlike others, would rather go under than look for hand-outs or blame "society".

@Scofmann - I KNOW!! Absolutely!! Been saying that for months now. "Her Majesty" - she can fu** off to Monaco with Whyte as far as I'm concerned now. Talk about ingratitude! Union Jack RFC scarf duly binned and whatever happens on Saturday they'll be no more asking God to save her ... I can tell ye that for nothing (VAT included) ... think I'll start going to Mass too ... ye know, just to annoy her ... the old boot ...

Comment by Paul Rowland 2012-02-15 15:22:31

£75m in unpaid taxes. JEEZ! Let's face it, they're not going to pay up, are they? We are never going to see that money down here. Not in a million years. We might as well write it off right now. Typical Scots - bleeding us dry, they are. It's all take, take, take as far as they're concerned.

The sooner we give them their independence, the better...


Related articles

Rangers shun steady progress in favour of Steve Gerrard’s star quality
Embed from Getty Images // The former Liverpool player’s move to Glasgow has been hailed as a risk for all – but Rangers can hardly...
It’s Not All About The Old Firm: Defying the odds in Scottish football
by Scott Burns Pitch Publishing, £12.99Reviewed by Gordon CairnsFrom WSC 373, March 2018Buy the book Eight clubs from outside Glasgow have...
Rangers a big, wobbling mess and falling behind as managerial saga continues
Embed from Getty Images // Having failed in an approach for Aberdeen’s Derek McInnes, the Ibrox job has been handed to Graeme Murty until...

More... Rangers