Blinded by the Whyte

I am in little doubt that, in coming years,  at least one book or Ph.D thesis will be written about the takeover saga at Rangers.  If the author has any desire to faithfully record the events, much must be made of Scotland’s “Street of Shame”.  The most important aspect of this story is the way the journalism profession has plumbed new depths of obsequiousness and fealty.   In their fight to be next in the queue to receive the next “another 48 hours” exclusive, Traynor, Speirs, and Tom English have somehow managed to have daily conversations with their masters at Rangers FC, and with MIH’s notorious PR firm, Media House, without ever asking the the crucial questions.  (Or more accurately, they understood the issues that must not be discussed lest they lose their access privileges).  A host of minor characters from STV, BBC Scotland, and SKY Sports have also jostled with each other to sell their professional souls to be next in line to receive the next carefully crafted mendacious morsel from the Whyte camp.

It is the Whyte “camp” that we will discuss today.  One of Craig Whyte’s first actions when deciding to investigate a bid for Rangers was to hire a PR firm: Hay McKerron.  The Whyte project was masterminded by Gordon Hay, a partner at the firm and former Daily Express hack.  I am told that one the first objectives of the campaign was to convince the world that Craig Whyte is a Rangers fan.  That seems like a reasonable objective.  It would kill any innuendo suggesting that Whyte is a carpet-bagger intent on asset stripping Rangers FC.  It would reassure all concerned that Whyte would be a safe custodian for the club.  It would eliminate the need for David Murray to sit in a nice-London-hotel and ask: “ok, gentlemen, before we do this, can you tell me how you’re going to run this club?”  With a devoted Teddy Bear at the helm, Scottish football could finally breathe easy.    It should be a simple task.  You would have Whyte pull out all of those childhood photographs with him sporting the famous blue jersey, interviews with old school friends who could attest to Craig’s lifelong passion for the club, and you could include an interview with the man himself waxing lyrically about those great Rangers days of his youth: Souness’ first game for Rangers; beating Leeds United home and away in 1992; and winning 9 in a row.  At least it would be easy if the buyer of the club had any historical or emotional attachment to Rangers.

Instead we saw planted posts on FollowFollow.com claiming to know Whyte back in the old days in Motherwell attesting to the blueness of his nose and a three-line whip to Hay’s journalist friends that their supply of stories would be cut-off if anything with a negative tinge was to be printed.  Such actions helped kill a line of enquiry that had many Rangers fans wondering: “Who is Craig Whyte?  Is he one of us?  Why does he want to buy Rangers before the tax case is settled? ”  With journalists refusing to do their job, the information vacuum was filled with a constant stream of “almost there!” and “another 48-hours!”  It worked.  Rangers fans were marionettes with Gordon Hay as the puppet-master tugging on their heart-strings.  Distracted by the excitement an imminent deal, few Rangers fans (and no journalists) have found time to ask the obvious next questions:

• Where did Whyte get the money? (He has no publicly verifiable track record of legally obtained wealth)
• Does Whyte understand the gravity of the tax situation and how much the bills could be?
• If he does understand the tax case, then why would he buy Rangers now?
• Is Whyte just buying the bank debt? i.e. that Rangers’ debt will not change?

Of course, the Scottish media will be rushing to curry favour with the new man. They will need to kiss-up with extra vigour out of fear that they could have their lunch-lines cut as the Ibrox ‘Old Guard’ prepare to exit.

The facts of Rangers under Whyte’s ownership remain the same:
– A tax case that was scheduled to finish this afternoon
– Tax bills of £36m (underpayment and interest) and a penalty case to start in some months
There are no other questions worth asking until Rangers supporters receive honest and forthright answers about Whyte’s plans for the various tax case outcomes. This blog has made clear that the only financial model that makes sense for Whyte is that he will have purchased the debt from Lloyds Banking Group directly (preserving their security interests and preferred creditor status) and will have paid £1 for MIH’s shares. He must then be ready to sell any playing asset that attracts a reasonable price. If the tax bomb detonates, he would exercise his security rights. If HMRC do not agree to just walk away and accept zero (or close to it), the only way for Whyte to claim what is his in law, is to see Rangers liquidated.

Rangers fans also need to understand that the terms of the deal that have been leaked so far would not leave Rangers debt-free. Firstly, only the £18m bank debt will have been paid. That would still leave at least another £6m in other loans (used to pay for Jelavic), capital leases, and negative working capital. If he has just purchased Lloyds’ debt, Rangers’ debt will not have changed at all! They will just owe the money to Whyte and whomever has funded him. (Who would be more reluctant to foreclose on Rangers FC? Lloyds Bank or a shadowy group of barely known investors?)

We should be in no doubt that Rangers are now much more likely to be about to jump out of the frying pan into the fire.  That Scotland’s media has been so easily placed in Whyte’s back pocket is a testament to the skills of Gordon Hay.  As his company’s own website boasts:

Often keeping something out of the news is as important as securing publicity. As poachers-turned-gamekeepers, we know how the media thinks and how it works. Our easy-to-follow 12-point plan for dealing with the media in a crisis could make all the difference between making or breaking your business.