Yet another 24 hours
01/04/2011 17 Comments
Nick Nolte and Eddie Murphy might be forgiven for thinking that they have a another sequel coming up if they were to have the misfortune to stumble upon any form of Scottish sports media today. The rumours are flying fast and thick and the ‘Comments’ feature of this blog seems to have become a dumping ground for a lot of them. Keep them coming. Even the ones I cannot post are at least very entertaining. Best of all are the guesses at my identity. I have had everything from Graham Speirs to Phil MacGiollabhain.
Anyway, what to make of today’s high tension non-event? I have tried to develop theories that would explain all of the data, and the only scenarios that do this would look like the plot of a John Grisham novel. However, in a decade that started with Enron & Arthur Andersen and saw the creative fiction of the mortgage-backed securities industry near its end, it would be difficult to dismiss even the most elaborate of Machiavellian schemes as possibilities in the on-going Rangers takeover saga.
On the other hand, if Occam’s Rasor is at work, the simplest explanation with the fewest leaps of faith will be the most likely to be true. The simplest explanation for what we have seen is that Whyte and Murray are simply a couple of barrow boys who think they can pull a fast one on the other, but are both enjoying the benefits of publicity and distraction that come from drawing this process out. Ignoring the hyperbole of the “leaks” to the media pack’s dimmer bulbs, this hypothesis says that they will have deferred detailed agreement on the thorniest issues until last- both hoping to have momentum bounce the other in to necessary concessions. The thorniest issues remain: price for MIH’s shares and the tax bill.
There is simply no getting over the fact that it would require a complete idiot to pay more than a pound for all of Rangers’ shares just now. However, Sir David Murray’s track record in separating fools and money does go back a long way. Anyone who could get Joe Lewis to throw away £40m for 20% of any SPL club would feel confident in his ability to get the better end of any negotiation. If he can get anyone to hand over several £m for MIH’s shares, it would be a great piece of brinksmanship. However, if all that is on the table is a token, the old steel trader will probably want to take a chance on a better than expected outcome from the tax tribunal. In the meantime, the negotiations circus will provide a nice distraction.
Less is known about Craig Whyte. Much less. However, the record indicates that he is a trier. He may have picked up the scent of a motivated seller and might feel that with time ticking down, that he can secure control of Rangers’ shares for a nominal sum. He would feel that time is on his side and that this builds the pressure on the seller to take any deal. If he can acquire the shares for next to nothing, he has bought a an out-of-the-money call-option on the tax case. If Rangers lose, nothing much is lost. If Rangers win, he just made a huge return. In the meantime, the negotiations circus provides some very favourable publicity.
At some point in this tale, after achieving agreement on countless red-herrings, they have to agree on the matters of substance: a price for the shares and responsibility for the tax bill. If they have just deferred the details on these topics, reports of imminent deals will have been far off the mark. To expect Whyte to part with substantial cash for the shares and to accept the tax bill risk would be to take him for a fool. To expect Murray to hand over the shares for a pound and to give a water-tight, cash-backed, guarantee on a £60m potential tax liability would be to expect him to be more panicked than perhaps he is.
On balance, this narrative is the simplest explanation for everything we have heard. That the negotiations are nowhere near as advanced as the feverish announcements from Scottish ‘churnalists’ would have us believe and that the immovable object must meet the irresistible force: each one hoping that the other blinks and a bargain is had.
I revert back to the business fundamentals of this predicament and say that any deal to sell Rangers before the tax case is resolved requires at least one fool or an elaborate deception. It just does not make sense otherwise.