Rangers: fakeover or takeover?


Today’s SKY Sports reports that Lloyds have cleared the way for Craig Whyte to complete his takeover of Rangers is interesting.

As others have noted, is this finally the Messiah or is it yet another round of PR headgames?

When it comes to media manipulation and Rangers FC it is hard to be too extreme.  We have seen decades of Sir David Murray’s spin-machine at work.  Now that it is about serious issues, we have seen some incredible stuff in the media.

So what is it?  Fakeover or takeover?  I have seen nothing that indicates that Craig Whyte has the wealth necessary to conclude such a deal with or without the taxcase. (I have looked).  A trail of shell companies with a very poor track record of compliance with Companies House filing requirements and transactions that never seem to be much more than a few hundred thousand pounds.  Let us not forget that he was recently taken to court over a measly £80k for building materials.  (Odd that I did not find any companies in his portfolio that resold building materials.  Anyone know the outcome of this case?)
But let us just suspend disbelief and go with the idea that Whyte does have some money.  I would question the sanity of anyone who was willing to meet the stated price for Rangers.  So I refuse to believe the story as it has been spun, a  £33m purchase that would clear the debt and give MIH a nice consolation prize. Even if sold for a much lower price or just given away, that is not the end of the issue.

For Rangers’ problems to go away, he needs to have deep enough pockets to be able to pay off the tax bill. Stories that someone else will guarantee this are incredible. Any guarantee that does not include £60m in cash going into escrow is not worth the paper it is written on. For when HMRC call, they will not care for pieces of paper and promises. If not paid on time, it will still be Rangers FC who are forced into administration. It could take a couple of years for Rangers’ new owner to force a guarantor to pay up. His shares in his company would be long gone by then. Whyte’s legal recourse would be to take the guarantor to court. If that guarantor is Sir David Murray, I would advise caution. Companies House records show that Sir David has been moving at least some of his assets into offshore trusts.

The guarantee of a man who may not have any or many assets in his own name is not worth much at all.

About rangerstaxcase
I have information on Rangers' tax case, and I will use this blog to provide the details of what Rangers FC have done, why it was illegal, and what the implications for what was (updated) one of the largest football clubs in Britain.

71 Responses to Rangers: fakeover or takeover?

  1. Brandon Slamrage says:

    cheers for the blogging.

    Many, many of us are sick to death with people getting ‘txts’, etc claiming to be in the know.

    Whilst I understand your position and the restraint, perhaps, you have to place on what you say; I have enjoyed reading it.

    All the best,

    Brandon Archibald Farquar Walter-Mitty Slamrage

  2. As discussed in detail in other responses, it is a waste of everyone’s time to compare other cases- Arsenal, Vodaphone, your uncle’s VAT problems, none have any bearing on Rangers’ case. The Arsenal case is very different. (Although you might want to inform your friend that Arsenal paid £11m in tax and interest. They dodged a penalty payment by being very cooperative).

  3. Again a voice of sanity. The wingnuts from both camps have found this blog and tried to turn it into a conventional Old Firm slagging match. (I should start a separate blog with the comments that don’t get approved!)
    I don’t hide my agenda. I think that the behaviour of individual Rangers executives has been disgraceful and that the entire Scottish media has bathed itself in shame. I want people to know what I know (and what I think). However, Celtic fans squealing with delight at the thought of the tax case have not considered the potential for this process to free Rangers of the millstone of debt and incompetence which has marked the last decade. Rangers fans exaulting the thought of Craig Whyte while knowing absolutely nothing about him. They seem to think that the devil they don’t know has to be better. Well both sides need to slow down and think for once instead of point scoring.

  4. Basically the value of a business is the present value of all of its future owner earnings (money the owner can withdraw as dividends).
    Another definition of business valuation = Debt + Equity.
    So, PV = Debt + Equity
    When selling a business, normally only the equity is involved. (The media claims of the bank demanding that the debt is cleared is a bit odd, unless there has been a default of a covenant).
    So you are right, if you determine the value of all of the future profits and subtract the debt, you are left with the value of the shares (equity).
    The problem is that Rangers FC have lost an accumulated £160m since Sir David Murray took over. The last 2 years can be seen as a blip. The shares of Rangers FC (and those of Celtic FC for what it is worth) are really worth nothing from a financial perspective. Their value is extrinsic and derives solely from the emotional attachment someone has to the honour of being booed at games and having your character assassinated on messageboards in the role of custodian of a football club.

  5. PortyBelly says:

    Lol – yes, i am taking your inside information, although not necessarily your extrapolations, as true… although you COULD be another Joey Skaggs, i suppose 🙂 (You are going to reveal all tomorrow, I can tell..!!)

    And my assertion of the HMRC as being the source of your information is down to my knowing one of the players in this case and the well reported leakiness of the organisation http://www.dailymail.co.uk/money/article-1342876/COMMENT-ALEX-BRUMMER-Pitfalls-sheltering-business.html

    As to Phil having got his info from Martin Bain, that was just the start of it all. The info I was talking about was his insider knowledge of the ongoing investigation. Anyway, as Pedro mentioned, time will tell.

    As an aside, does anyone think that the Chancellor’s Budget announcement to end the uncertainty over these Trusts by firmly outlawing them may have an impact on future cases, as Courts may take the law change to mean that it was a previously legal practice?

  6. ramsay smith says:

    Is that not just a variation on the greater fool method of valuation?

    And does an asset stripper not have an altogether different way of valuing a business?

    Incidentally is the figure in the balance sheet for Ibrox and surrounding land realistic?

  7. Obviously, I am not going to get into a guessing game over how I know what I have posted, but you would be surprised how many different organizations have access to this information.
    On the question of the effect of the law change, I don’t think that it will have much of an effect on cases which are underway. It isn’t a jury trial and 3 judges should have the training and experience to evaluate the case on the law as it applied at the time. Everyone is human, so a bit of an effect would still be natural, but I don’t know that you could say that all 3 judges would be swayed the same way.

  8. No definitely not. It is about value rather than price. Price is what you can get someone else to pay, but there are ways to measure the intrinsic value of a business. An asset stripper will do a mixture of comparing the current price with the liquidation value (i.e. resale value) of the assets individually and the present value of cash flows that come from owning an asset. Where an asset can be sold today for more than the present value of its future cashflows, he will sell. (As anyone else should).
    If this post is alluding to some people’s views that Whyte will be an asset stripper, I disagree. I cannot find any evidence of that type of corporate-raider activity for him. Rangers don’t even have many assets today which could be easily sold off separately. So I am dismissive of those charges. My central issue is the lack of evidence that this is serious at all. All I have are the whispers from “representatives” from Whyte who are giving contradictory and rapidly changing snippets to a wide array of no-mark minor journalists. It does not ring true.

  9. BigC says:

    Apologies if you’ve gone over the Arsenal case previously, I’ve only recently come across your excellent blog.

    Its refreshing to get one insight into the tax case (and the lack of proper media scrutiny that should be on-going) without all the usual petty point scoring between Glasgow teams.

  10. JohnBhoy says:

    Part of the enjoyment for me of reading this blog is that it confirms much of what I have heard from my own source, who is close to the case, even though my understanding of the issues has now been added to greatly by your detailed and seemingly authoritative information. I’ll say this: for a fairytale, it is very believable.
    I was told that the reason the tribunal had to be completed in two parts was due to the conflicting diaries of the three judges who are hearing the case. Next month was the first time they could all be brought together in the same place at the same time.
    This, in part, rubbishes any suggestion that information discussed on this forum could have any influence on the case. This is not a jury trial. The verdict will be decided upon by three very experienced judges based on the evidence presented to them in the tribunal chamber.
    The notion that they could be influenced or even annoyed by the warblings of internet bloggers is fanciful.

  11. Jack Simpson says:

    Great blog dude at last someone who tells it as it is..

    My My My Big C and where have you been hiding for the past twa years :-))

  12. Boab says:

    Are you sure it is three Judges in this case. If this is a complex matter, which it sounds like it is then it seems likely that there would be other experts on the panel. I would have thought that someone like an experienced CA with tax expertise would have been there.

    I have no idea how this particular panel is made up btw, just conjecturing on my part.

  13. BigC says:

    Up North, scared of these modern computer things! (Always enjoyed reading various blogs or the “banter” on the BBC’s 606 but never had the urge to join-in).

    Looking forward to more chats with my work colleague, especially now I have a lot more facts and figures at my disposal.

  14. Tribunal judges for complex cases will meet all of the experience and training requirements you suggest.

  15. JohnnyPaton says:

    When Celtic’s previous regime announced a link-up with Swiss financiers Gefinor with a view to building a new superstadium, the Daily Record sent reporters to Switzerland to investigate these claims. Gefinor subsequently denied the claims and the Celtic directors made to look like prize idiots. Where is the indepth investigation into Mr Whyte and Mr Ellis? The supposed buyers of the second biggest institution in Scotland?

    Surely someone can inform the masses of the truth behind these two chancers, or perhaps it’s true to say it’s not in Rangers’ best interests therefore not in the tabloids best (financial) interests either.

    Celtic supporters found out about Whyte in minutes through that magical web portal called Google and dare I say it, if this pair were after ownership of our club there would be mass protests by fans following the exposure of their credentials in the Record or Sun.

    I’ve passed the address of your excellent blog on to some of my more deluded Rangers supporting friends in the hope that the penny might drop but I’m not holding out much hope.

  16. An excellent point. I say that not out of partizanship, but because such close scrutiny prevents disasters like the one we see unfolding at Ibrox or like that which happened to Celtic in the pre-McCann phase.

    Celtic supporters may not have enjoyed the widespread ridicule to which every half-baked crackpot idea from Celtic’s board was subjected. Yet, casinos, levitating grass pitches, and development of the Hinchelwood area (which Rangers do not even own) have all been given rapturous applause every time they are re-unveiled. Those of us who are exposing the cover up are actually doing Rangers supporters a major service. We are filling the void vacated by a sycophantic and corrupt media establishment. If we really meant Rangers harm we would say nothing.

  17. PG4 says:

    Rangerstaxcase….

    Great blog, keep up the good work.

    It’s good to see a bit of straight talking on this issue. My question, how likely is a takeover,? In your opinion. It has been imminent for 5 months or so, i personally think it’s nonsense. I am sure you will have a more informed answer for me though.

  18. Boab says:

    Cheers for that.

    I just thought they might want someone well versed in the intricacies of EBTs and in particular their administration (which appears to be one of the big issues here). I know that trusts can be very complicated things and that some QCs will not even give advice on them, instead referring people to a chambers which specialises in the subject.

  19. Bob,
    The judges are well qualified to sit on such a case. Definitely no lack of experience or knowledge in the field of EBTs.

  20. It was all getting a bit frantic and I wasn’t sure what was going on- and decided to stick several posters in SPAM until I figured out how to approve messages individually.
    I accept that you were making some valid points- so your posts would be welcome again.

  21. Mark Dickson says:

    Sky Sports news reporting Murray has agreed a deal with Whyte.

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