Whispering The L-Word

In the few short weeks of the existence of this blog, we have seen Rangers problems with HMRC move from being dismissed variously as “Celtic supporter fantasy” and “it’s a  problem for the parent company, not Rangers” to Rangers’ own Chairman admitting that if the club get hit with the full potential of the tax bill, the famous Glasgow football team would be forced into administration.  It is with no small amount of pride that I note that media outlets in Scotland and the UK generally are using this blog as a reference.  If imitation is the sincerest form of flattery, then the number of blogs conducting outright plagiarism should be taken as a great compliment.  The scale and speed of change in the tenor of reporting has been dramatic.  I do not claim credit for all of that, but if this blog has helped push the truth forward, then it has been worthwhile.

To summarise the situation, Rangers FC are currently appealing tax assessments for underpayment of taxes of £24m and interest of between £10-12m.  If the club loses the current case, it will be the subject of a penalty hearing that could see an additional £18-24m being piled on top.  The evidence against the Ibrox club is overwhelming.  I have seen evidence that leaves me in no doubt that within Rangers the knowledge that what they were doing was illegal was both widespread and explicit.

In parallel with the tax drama, we have had front-row seats to a theatre of the absurd production: Rangers’ takeover saga.  With the assistance of a well-oiled media machine, public relations teams for prospective custodians have had little difficulty getting publicity.  Truth and transparency have been victims in these killing fields of agenda-driven misinformation.  Most damaging of all for Scottish football is that Rangers’ supporters have been handed a never-ending series of straws at which to clutch.

The takeover scenarios boil down to two options currently: Craig Whyte and a hurriedly thrown together trial-balloon linked to current Rangers directors Paul Murray (no relation to former Chairman, Sir David) and South African-based Dave King.  Murray and Lloyds Banking Group appear to be throwing their weight behind the Whyte plan.  However, the sub-committee of the Rangers board charged with assessing Whyte’s proposal are less than impressed.  Everything I can glean from this situation suggests that they are right to be concerned.

Whyte does not have the money to fund the takeover on his own.  However, he does appear to have secured some of the credit required to allow him to conclude a deal.  His plan would be to pay off the bank completely (allowing Lloyds to get off stage and to be nowhere near the scene should the tax bill hit).  Sir David Murray will also benefit by putting as much distance between himself and the imminent disaster that awaits what was once the jewel in his crown.  (I am very doubtful if Murray will receive much, if anything, for his shares.  Rangers’ shares are truly almost worthless to any informed investor just now.)  As discussed in the previous blog, it is a virtual certainty that Whyte will flip the debt taken on to finance the deal back on to Rangers FC.  So far from becoming debt-free, the debt may actually increase as a result of this transaction.  (Whyte’s reluctance to speak on the record provides the cover of deniability when the saviour status accorded to him in many corners of the press falls short of reality).  The deal for Whyte becomes a low-cost gamble.  If the tax case hits, he and his creditors will have priority to pick over Rangers’ bones.  It is likely that he seeks more control than the 85% shareholding Murray can give him to further enhance the claims of Rangers’ new creditors in the event of administration.

If Whyte is able to clear the bank debt for £20-21m, he can get rid of Murray for a nominal fee.  There are other creditors who would not be cleared now, but so long as they can be subordinated down the creditor priority list in the event of administration, they will not matter.  In this scenario, Whyte may not have much reason to care about the tax bill!   If Whyte’s due diligence has produced fire sale valuations of Ibrox, Murray Park, and player contracts in place at the time as exceeding this total, then he and his backers have no reason to fear the tax bill.  The worst case would be that they get their money back.  The best case would be that Rangers win their appeal of the tax bills in their possession and they could then sell the club for a decent profit.

There are a couple of challenges with this analysis.  Firstly, it takes a very generous valuation of property values around Ibrox and Murray Park to get close to these valuations.  How much will continuing player contracts be worth in August 2011?  Others will be able to estimate these values better than I can, but I struggle to make this deal add up.  That would not present a problem.  In every deal, there is someone whose optimism and valuation exceeds that of the man on the other side. Much more serious for Rangers fans are implications of such a strategy for Rangers as a football club.

Under the status quo, Lloyds would be treated as a secured creditor.  HMRC would have by far the largest claim on Rangers assets, but would be an unsecured creditor.  With total debts in the region of about £90m, Rangers’ survival would depend upon Lloyds and HMRC agreeing to accept pennies on the pound and allowing the football team to continue in operation.  The PR problems that would face a High Street bank in being held responsible for closing Rangers would help build pressure for both Lloyds and HMRC to do a deal.  However, a new creditor in the form of Whyte and his backers, would be more immune to such special pleading.  Their business plan would explicitly require that they do not share with any of the subordinated creditors.  HMRC can veto any creditor deal that would keep Rangers going.  Whyte and backers would only be able to force the discussions to a conclusion that sees them take virtually all Rangers’ assets by pushing for…  the L-word: Liquidation.

This explains the hostility to the Whyte proposal from the existing Rangers board.  Whyte is anything but a messiah, and actually amplifies the risks to Rangers’ existence.  Venerable Rangers-first types like Johnston and Greig would see that far from revitalising their club (as the PR leaks promised), this is a vulture capitalist play.  It is actually quite a good and credible distressed debt investing opportunity that exploits the aversion of Lloyds, and in particular, Sir David Murray to be on stage when the curtain could fall.  The only real mystery remains over quite why Whyte wants the support of the board.  With 85% of the shares, he would be free to fire the board within minutes of taking over.  Per the previous blog, 15% of shareholders can block a change in shareholder rights.  There may also be a ‘poison pill’ provision with this threshold as part of previous deals with Dave King.  This remains yet another factor that the main players seem reluctant to clarify, but Rangers fans and small shareholders must be used to being lied to and misled by now.

The Paul Murray / Dave King situation seems to be a poorly thought out effort to maintain morale while they oppose Whyte.  Putting actual cash into Rangers FC just now by a capital increase would be a waste of money prior to the tax case being resolved.  After the tax case, if Rangers, by some strange quirk of fate, manage to win, there will be plenty of financing options available, and one that leaves the bank and/or Sir David Murray in place would not be amongst the most popular.  However, we come back to the central point of this blog: no discussion of Rangers’ finances or ownership can be made without reference to the tax case.  We have already deconstructed the idiocy of believing that anyone else will pay the tax bill on Rangers’ behalf.  It is a stupid notion that could only be promoted by the most cynical or the most innumerate.  The Whyte plan appears to greatly increase the chances of Rangers FC disappearing altogether should he win his battle but the club loses the tax case.

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 are for one of the largest football clubs in Britain.

209 Responses to Whispering The L-Word

  1. Mark Dickson says:


    Even if you HALVED Rangers crowds they would still have more than DOUBLE most of their nearest SPL challengers.
    Somebody would provide them with banking facilities -every other football club that ever got into trouble still manages to continue to trade so why wouldn’t the Orcs? Albeit they might be kept on a much tighter leash than they have been used to untilrecent times.

    Why are they signing if not to win things? Who says they wouldn’t win things? they won the CIS Cup recently a trophy they often won even during their bleakest years. Most SPL players earn a fraction of what even a scaled down Rangers could pay thus they would still be an attractive financial proposition in SPL terms. Plus there are still players who WANT to play for Rangers.

    I don’t think Rangers problems would be trivial but I also don’t think they would be terminal either. I’ve seen both Rangers and Celtic hit low ebbs in the eighties and nineties – both recovered, both grew stronger again. i seen no reason why that would change now if either team was in trouble again.

  2. Boab says:

    I have never said they would be terminal, just much worse than the picture you are painting. They won the CIS with this squad, any new one after liquidation would be very much weaker.

    The picture is much different from the 80’s and 90’s. In this scenario Rangers are rebuilding with nothing. No players, no assets, with the additional cost of renting the ground from Whyte.

    How you see that as anything but catastrophic is beyond me.

    “Somebody would provide them with banking facilities” -easy to say, who would that be in these economic times. Who would offer banking facilities to a Scottish football club which has been liquidated and stripped of all it’s assets. Certainly not a major financial institution and certainly not without punitive interest rates.

  3. Victor_Arbuckle says:


    I think you are right. Banking facilities will be available to football clubs to bridge gaps in cash-flow. I doubt that many banks are interested in providing “speculate to accumulate” capital for football clubs anywhere never mind in the SPL.
    Football has to live within its means. That will not mean funding speculative purchases of players who might be worth GBP20m in 3 years time but might just as easily break a leg next week and be worth nothing but the insurance recovery… or worse still wasting money on bad players who are worth literally nothing within a few months of being proven to be a dud. Football is a crazy risky business. It needs to be funded by owner equity rather than debt.

  4. Boab says:

    I think even that is hopeful.

    Remember they will have no money at all. Everything will have been taken from them, including any receipts from sales of season tickets (though why someone would buy one just now is beyond me). If they go into administration then liquidation that is lost money to the fans. Particularly if the new club is an entirely different legal entity.

    They also don’t have the ground to secure anything against, as that is now owned by another company and they are renting it. The alternative is that it is left as a Rangers asset and sold off as part of the liquidation. Either way it is not in their hands, and according to the theories here Whyte would be using it as his own security, though I’m not sure how that would work

    So some bank has to grant a facility for them to pay wages etc, and generally run the club. That being until they get enough in to pay that debt, or at the very least service it. In the meantime they are operating with a squad full of free transfers, on minimal wages. So again I am forced to ask, who will do that and what interest rates will they want for it.

  5. Mark Dickson says:

    boab if p.murray and d.king are prepared to raise £20M working capital for the gers when they are still under considerable threat then why wouldn’t they do similar post administration when RFC would be clear of all legacy debt or tax threat and minus lloyds and murray albeit possibly with whyte controlling the major assets? Less than ideal circumstances but better than the current malaise or non existance?

  6. Boab says:

    How do you know they were going to do that, and in what way.

    You have at best seen nebulous reporting, so just to accept that they would and could have done it is no basis for argument.

    Why would they do it if they didn’t own the club, do you think they would just give it to Craig Whyte, makes no sense at all. Alternatively would they buy the club from Whyte, then raise this £20m, again where is that money coming from. Murray is far from being a wealthy man, and King is still to the best of my knowledge embroiled in a fight over £250m tax and 322 charges of tax fraud, money laundering and racketeering.

    The people they raised this £20m from, what would they expect in return. Dave King has already put £20m into Rangers and got squat back for it. His holding is now worth as near nothing as makes no difference. Do you really think other people will be willing to do the same. I simply don’t see that happening if the club is liquidated.

  7. tomtom says:

    Scenario: Whyte owns Ibrox and needs/demands £3m per year to recover the investment. The only players in town are Paul Murray & Dave King.

    Outcome: (If I was PM & DK) Err Mr Whyte we’ll give you half a million a year for the next 25 years – take it or leave it! Not interested, fine we’ll start up somewhere else and your left with a “Whyte” elephant that you can do nothing with. Not only is it only of use as a football stadium, it’s only of use for a football team called Rangers. Getting interested now Mr Whyte, ah thought you might! By the way the half million is on the drip!

  8. Boab says:

    So, in this scenario how did Murray and King get their hands on Rangers. Did they buy it from Whyte. Presumably he would have arranged the lease back contract at that time.

    Remembering that this whole scenario depends on Whyte removing Rangers’ main asset, whilst there is an ongoing Tax Tribunal, and HMRC are taking no action to prevent it. They aren’t for example putting an injunction on any sale, which prevents that very thing happening, which is what one would expect them to do.

  9. tomtom says:

    Boab, It was only a hypothesis based on the assumption that Whyte is only interested in getting a return on his money and is not interested in Rangers from a fans point of view. He owns the stadium because that is the security he took when he settled the Lloyds debt issue. They get Rangers if that is who Minty sells his shares to or if they go into administration and buy it from the administrator.

    I don’t see any reason why Lloyds in principal wouldn’t take Whyte’s money at this point if they are serious about getting rid of them as a client. However, as I have mentioned elsewhere, I think Lloyds have a bigger agenda regarding Minty and they are using Rangers as the stick with which to beat him.

    Anyway it was only one of many scenario’s that we could speculate about here. They only thing that is certain is that none of us know for sure how this will play out. I wouldn’t be surprised if something/someone else entered into the equation, this play has got more twists than a corkscrew.

  10. Boab says:

    I understand now, Whyte buys the stadium and owns that. Murray and King buy the shares and as such own the club (but not the stadium). I don’t see that happening and there certainly hasn’t been any talk of such a thing, not that I have seen. I would be very surprised if Whyte, Murray or King wanted that, if they did the surely they would all have gotten together before now.

    However, in the unlikely event that it was to happen Whyte would still need to set up the lease back contract in advance. To do otherwise would be stupid.

  11. tomtom says:

    But why would they or anyone else enter into a contract to lease the stadium. They would be better off doing the deal with Lloyds themselves.

    Whyte might (just might) think that by owning the stadium he has a lure with which to hook the gullible but rich fans. He knows that he cant raise enough cash to actually buy and run the club but he holds the next best thing – remember how animated the Celtic support got when a move away from Parkhead was proposed. The lure of easy money has attracted far more astute men than Whyte. If the RBS can stick millions into Bernard Madoff’s ponzi scheme and not smell a rat then who knows what other stupid things people with money can be sucked into doing.

    I still think the whole thing is a conjuring trick by the great Sir Minto of Charlotte Sq. If I owned Rangers and at an extremely crucial time in negotiations to sell the club (Alastair Johnson’s 48 hr window) my chairman legged it to the US to see a game of golf I would have sacked him there and then for dereliction of duty. Johnson knew it was safe to go because nothing was, or was even remotely close to, happening. I don’t care how quickly he could have got back, sometimes you just have to be seen even if you are not being listened to.

    Now I could well be proved wrong, this deal will go through and Whyte and Murray have been in genuine discussions but if it is the real thing then they must have spent a small fortune on lawyers for something which could have been done over a few bottles of claret and a freshly slaughtered lamb. We ain’t talking Microsoft here, in the world of high finance this is tuppenny ha’penny deal. Murray owes £750m. Why would it bother him what happens to such a small part of the empire. If it’s that bothersome then get rid of it and concentrate on repaying the rest of the debt, that’s what any businessman would advise. You don’t worry about a blister on your foot when the doctor is planning to amputate your leg!

  12. Boab says:

    It’s the small part of the empire which has been bringing in cash for the last couple of years though. David Murray and Lloyds would have been mad to let it go over the last couple of seasons, it was generating plenty of cash from them while they downsized it. It’s worth letting go now if they don’t win the SPL (or don’t qualify for the CL) as it will then be a loss making business and a drain, rather than a source of income.

    If they were to lose to HMRC then it would be an even bigger drain obviously.

    I have said for a couple of years that the best way out of this (other than a successful share issue) is to sell the stadium and lease it back. If someone could do that they could clear the debt and use the money which was going on interest payments to lease the ground back. It would effectively be selling off the last of the family jewels and using that money to clear the club’s feet. The problem has always been who would want to do it, it would be quite a risky venture. Speculative property deals, which rely on the fortunes of a failing football club in Scotland aren’t really that attractive as an investment.

    It would also be quite unpalatable for quite a lot of the fans. Particularly as it wouldn’t mean they could spend money again, just be free of the debt. They would still have to live within fairly tight budgets as they are now.

  13. abrahamtoast says:

    Getting back to HMRC, rather than what might happen further in the future.

    Firstly let’s presume HMRC ain’t daft, and can see the possibilities of their claim becoming worthless if Whyte gets away with his chicanery. (If RTC can work it out, so can HMRC)

    What is to stop HMRC seeking an injunction to ensure that a sale of RFC’s principal assets could not proceed, perhaps on the grounds of “fraudulent conveyance”?

    Indeed does HMRC not have a duty to protect their own exposure?

    I don’t think HMRC would have a very difficult time persuading a court of their case.

  14. Boab says:

    I think that’s exactly what they would do under such circumstances. I don’t expect them to sit idly by, letting the principal asset of a business be removed from that business whilst they are responding to an appeal against a large tax bill.

    I don’t know if tax avoidance would constitute criminal conduct under the terms of the Proceeds of Crime Act, however if it does then they would also prosecute the person transferring the assets under Section 327 and/or 328 and/or 329 of that Act.

  15. You would be surprised. The people at HMRC running the case just now just want a result. They want a result for a variety of reasons, but collection strategy plays no role in the case just now.

    Assuming they get a result, the collection strategy will be passed to a separate group. I will be honest that I have no idea what their priorities will be, but previous experience suggests that they can be quite dogged.

    Obviously their strategy could range from a narrow economic rationale that says “forget it, we will not get anything” to “no way do we want to send a signal that if you use some fancy footwork that you can beat HMRC”.

    I suspect that their approach will be closer to the latter than the former. However, anyone’s guess on this is as good as mine.

  16. Boab says:

    It will be counter productive if they do not chase the money.

    They currently have this “amnesty” on EBTs and that only works if people know they will be chased if they don’t come to an arrangement. For HMRC not to chase this money would send out the message “why bother the authorities won’t push it anyway”.

  17. ramsay smith says:

    I’m confused.

    Is the idea that Whyte buys the stadium, which is shown on the balance sheet as valued at £120m, for around £20m?

    And this transaction couldn’t be set aside in the event of Administration or Insolvency?

    Is that what’s being suggested?

  18. tomtom says:

    We’re role playing the scenario that Whyte settles the debts and gets control. He ring fences the stadium and lets the club go under. Murray (Paul) and King ride to the rescue. They get the club and Whyte keeps the stadium as his return on investment.

    It ain’t gonna happen – there’s more chance of me riding to the rescue on the famous “White Horse”.

    Just a thought, they could rename a resurrected Rangers as RFC 1690 – think of the number of flags they could sell, it would almost pay for the whole thing on it’s own.

  19. The book value is irrelevant. Everyone knows that it is a fiction and has to be addressed to facilitate a sale. No one is paying Rangers’ net book value for the club.

  20. ramsay smith says:

    ‘The book value is irrelevant’

    Not if it is allowing them to trade while insolvent.

    If total assets are less than total debts then they are insolvent.

    Transfer of the heritable assets at a figure that indicates they have been trading while insolvent is not without its risks.

    If the purpose or the effect of the transfer is tax avoidance then I think questions will be asked. And not just on the internet.

  21. zanzibar says:

    I’ve been reading this site for several weeks now, and cannot praise it enough. Oh for broadsheet or heaven forbid a redtop to go close to what’s been discussed on here. Keep it up please.

    There are two things I would like to say:-

    1. Who at LloydsTSB authorised the unnecessary and wasteful expenditure for 40,000 flags on Sunday?

    2. “To every man there was a penny” (I think is the line) SDM is currently orchestrating the Masonic money, and it will appear, just like the tax bill “from left wing”

    Watch this space!!!

  22. zanzibar says:

    Correction “from left wing” should read “from left field”

  23. Mark Dickson says:

    my scenario isn’t that whyte buys the stadium and separates or ring fences it from rfc, i see he buys murrays shares and also buys lloyds loans to rangers, in the event of any rangers insolvency proceedings he can invoke the securities lloyds held on rangers debts and seize control over the named assets thus sheltering them from hmrc and the administrator, whyte decides what happens with them not others albeit others may have some partial claim on them? IF Bank or invester B buys Bank A’s loans i assume the terms and conditions are transferrable?

  24. Boab says:

    How does he “buy lloyds loan to Rangers” and how much does he pay for it. I’m not really sure what you are suggesting here. Are you saying that Whyte personally (or through a vehicle) pays the loan directly to Lloyds. Rangers aren’t then “debt free” they simply owe the money to someone else now. How much does he pay Murray for his shares, presumably nothing like the 32p or so they are currently trading at. More like 3p presumably.

  25. Mark Dickson says:


    When Romanov bought Hearts he paid approx £4M to acquire the shares from the controlling shareholders he also paid HBOS £14M to transfer that club debt (secured loans) from Bank of Scotland to his own Bank/Investment Co in Lithuania – his companies still hold security over the stadium title deeds even though they already own them 95% via the shareholding – effectively they own or control these assets TWICE ie via the equity and via the loan securities. Romanov’s bank forgave some of the interest payments on these loans and also didn’t deduct any future interest payment they simply rolled it up and then did a couple of debt for equity swaps to make the balance sheet look more palatable as i believe the club is unofficially for sale.

    It was reported in the Herald today that Whyte has a deal with Murray and a deal with Lloyds and they described him as holding 2 aces ….. now this could just be journalistic flim-flam but it could also mean he intends on doing something similar to what iam describing and what Romanov did at Hearts ie he bought the loans (and the loan securities)

  26. Boab says:

    So, in simple terms, Rangers would owe the money to Craig Whyte (or a Whyte controlled business) rather than to Lloyds. They would not be “debt free” as has been claimed, they would simply owe the money to a different entity.

    Separate from that (Whyte taking on the loans from Lloyds) he will pay MIH for the shares, am I right in thinking somewhere in the region of 3p per share if the figure being bandied about are remotely accurate.

    So Whyte is doing two things really, he is becoming Rangers Major shareholder, and at the same time their major creditor. This £10m he is supposed to be giving Ally McCoist, I assume that is just more debt, owed to Whyte rather than another institution.

    So, the reality, in your scenario is that Rangers will be back to owing about £30m, only rather than owing it to a high street bank they will owe it to a venture capitalist.

  27. David Barclay says:

    Please forgive my limited knowledge in this area. I have one question however.

    What is the chance of Rangers calling in the administrators, if Celtic look as if they will win the league, and with no Champions League access to runners up. Will they call in the adminisstrators to take any points deduction this season, when it would make little no no financial difference, rather than put it off longer and run the risk of administration next season?

  28. Mark Dickson says:

    3 pence might turn out to be a good price for Rangers Shares for David Murray IF the alternative is they are about to get creamed and any residual value is wiped out – Minty’s few million quid might be 99% better than what anybody else gets?

  29. Thomas314 says:

    RTC, I’ve read in several media outlet’s that Craig Whyte’s bid is now the preferred one with the RFC indepent board. Is this good, bad or ugly news? It’s seems as if the latest bid is dead in water. Why’s that?

    By the way! Excellent blog. Whilst most of people here are Celtic supporters like me, there is not the vitriol that both sides spout in the DR! Long may it continue this way (well at least until the this sorry saga is over).

  30. H says:

    They would be debt free if there is a debt for equity swap.

  31. tomtom says:

    If Rangers are technically insolvent and are only being allowed trade because the bank have not yet called in the overdraft does Murray not have a responsibility to use any proceeds from the sale to satisfy current creditors? On the other hand I suppose that Whyte could accept responsibility for these debts but if RFC was to go into administration before these debts were settled could Murray be held accountable in any way. It just seems a bit rich that he walks away with a lump sum and the creditors, including HMRC, could be left hanging out to dry.

  32. Ciarans Dad says:

    Who would want to be a supplier to rankers just now. When Whyte play’s end game and if it’s as most people on here suspect, then suppliers along with lizzies henchmen and season book holders will be at the back of a long queue!!
    Think i would be pro-forma!!

  33. tomtom says:

    I was more wondering about the bond holders. I don’t think they would get any special preference but at least they put money into the club unlike during the failed share issue when the vast majority of fans blanked it.

    Still a fool and his money are easily parted!!

  34. Charlie says:

    Johnston does a volte-face regarding Whyte in less than a week.

    The tax tribunal sat last week.

    Any correlation, as in rodents, ship, foundering

  35. tomtom says:

    Maybe Don Corlemurray made him an offer he couldn’t refuse.

  36. Mark Dickson says:

    If Whyte takes control of RFC equity and debt as I suggest and suspect then he would have equity control but also be the largest SECURED creditor, HMRC would/might be owed a lot more money but they wouldn’t have the same legal claim or security over Rangers main assets ie stadium, murray park, car park etc.

    What I don’t understand is how Whyte can make between £5M – £10M available to McCoist to boost the playing squad but do that in such a way that money is protected from being swallowed up and lost by a large tax bill if it hits? Can he provide new loans and write securities giving him first claim on the sale of players bought or secured with that money? ie if Ally buys a £5M player can Whyte draft a loan agreement giving him first dibs on money for that player in the event he has to be sold (in or out of administration) ?

    IF Whyte was genuinely trying to run RFC for footballing purposes how can he protect any investment he makes in the playing staff in the face of a looming tax bill?

  37. Boab says:

    If he owns the club, and holds the debt then he can pretty much do as he wants. If he wants to give them £10m he can, the club simply goes a further £10m in debt to him, as I said in my last they are back at £30m debt, just to a venture capitalist rather than a largely state owned bank. One is forced to think of the frying pan and the fire.

    Something worth bearing in mind actually. Lloyds are owned to a large extent by HMG (47% I think), who I believe have an overseer watching what the bank are doing with our money. Would that bank really enter into an arrangement which was so prejudicial to HMRC’s position.

  38. Mark Dickson says:


    Whyte could potentially place himself in the curious position Romanov holds at Hearts in that his companies are both the controlling equity shareholders but also the main (& secured) creditors so in the event of any administration or insolvency they have prior and first claim over the key assets as opposed to ordinary unsecured ceditors.

    What Iam questioning though is 1) he has to pay something to buy MIH shareholding and he also has to 2) pay something to acquire the LBG debt and most importantly the security over the assets – he can escape doing that ifhe wants to gain control over Rangers affairs though obviously with a tax-case & bill looming he would obviously seek to minimise any amount he pays for the shares which could effectively be worthless or worth very little ……………. so how does he provide further working capital into RFC in a manner he can prevent that money being wiped out? He would already have security over the main assets (ie land and buildings) – can you have a claim / security on football players ie employees?

  39. Boab says:

    It’s not the players which are the assets, that would just be wrong. It’s the players registrations which are traded.

  40. ramsay smith says:

    So the scenario is that Whyte takes an assignation of the LBG standard security in the name of company A, by paying LBG £x. He then acquires shares in the name of company B.

    Tax bill hits, Administration follows and Company A calls up its standard security.

    Company A however is obliged to sell the secured assets, take what it is owed (presumably what was paid to LBG for the assignation plus interest and expenses) and account to company B for the surplus.

    And no one is going to raise any questions about the discrepancy between the sale price of the stadium and the balance sheet valuation?

    You might get away with that in a corrupt banana republic, if you had the ear of the rulers, but not in the UK.

    Minty’s backing Alex Salmond these days, isn’t he?

  41. Ciarans Dad says:

    I see the marauding orcs on folly folly are frothing and foaming at the mouth over the imminently imminent buy out by the ‘Whyte Knight’ (does he automatically get a knighthood for owning Scotlands 2nd largest institution??) and the proposed warchest of £10m.

    Lets just say that the majority of us good guys have got it right and he intends on having 2 companies, one that hold the tangible assets i.e. ipox and mp (all secured) and another company that holds the intangible assets, the players registrations, uefa licence etc, then lets be sure that no warchest is coming any time soon to a cesspit near you as they would just be sold to pay HMRC.

    Then again you dont become a trillionaire by paying people what you owe them, as any available info on the new dark lord would suggest!!!

  42. Fritz Agrandoldteam says:

    I can’t let you away with that ramsay. To imply that the SNP would be sympathetic to the union loyalists at Ayebrokes would mean we are livinging in a topsy-turvy universe. As for an independent Scotland being a banana republic – where were you when the Westminster expenses scandals were all the rage? I think the UK government is corrupt, and would undoubtedly be more sympathetic to the quizling unionist support they have in Scotland. But I do look forward to the day when Scotland is a republic.

  43. Mark Dickson says:

    The only way I can conceive of Whyte providing guaranteed war-chest funds for Aunt Sally is if he has established a loan-to-value criteria for Ibrox stadium which is in excess of what it would cost to acquire the LBG debt ie £20M IF Ibrox is worth approx £40M (?) then Whyte could theoretically loan another £10M to RFC using Hunbrox (and players contracts?) as security and he would then have £30M secured against an asset worth £40M so in the event of a large tax-bill he is able to recoup or claim back the £30M he’s put in …………..

    But crucially the key question is what is Ibrox worth? what would somebody pay for it? and who?
    Could Whyte simply claim ownership of it in the absence of any bidders prepared to pay a realistic amount at a fire-sale that would clear the amount secured against it?

  44. Boab says:

    You said yourself the reality is it’s worth is practically nothing to anyone other than Rangers. Bearing in mind that value is an objective test and worth is a subjective one.

  45. I really cannot seesignificant funds being given to invest in Rangers in advance of the tax case being settled. Sale or no sale, investing in players is a high risk venture at the best of times. Someone buying them as a distressed investment play will not want to risk his profit by blowing it on players.

    You would think that Rangers have season tickets to sell or might be trying to lessen the blow of bad news from UEFA this week? Manipulate the ignorant masses? The Scottish media? I must be just paranoid.

  46. curious observer says:

    Is it possible that he’s just bumping his gums? That once the takeover happens, he’ll be more “forthright” about the bill? Before the transfer window opens, he’ll say “Oops, looks like we WILL have this 50m+ judgement against us, looks like I won’t be buying players. Honest, I wanted to, but now things have changed.” That way it wasn’t in his control, he would’ve given money for players (honest, gov) but now just can’t. Or am I way off base here?

  47. Mark Dickson says:

    I think I’ve answered my own question – IF Craig Whyte or his investment companies provide Rangers with say £30M secured against Ibrox which is a combination of Whyte’s cost of buying LBG debt and providing Aunt Sally with a £10M war chest for summer transfer spending ………. the obvious answer is in the event of an RFC administration or liquidation then Craig Whyte bids £30M for Ibrox Stadium thus anybody else has to pay this price or more but either way as he has the security over the stadium and is first in line then he’s getting his money back whatever happens ………

    for simplicity if he’s put in £30M and he bids £30M at fire-sale he’s effectively claiming ownership unless somebody else bids higher but regardless he is getting his money back or an asset equivalent (assuming he can generate some continuing use for the stadium? ie football stadium for rent? concert venue? new general assembly building for the united presbyterian free church of scotland? etc etc :)

  48. Ciarans Dad says:

    Would that not mean then that hes paid £60m for RFC when if he just waits till the fire sale he might get the whole sh!thole and orcupants for half that or even less??

  49. Mark Dickson says:

    That would seem to be the obvious answer Ciarans Dad? IF we assume that Whyte isn’t a complete moron intent on flushing money down the toilet then we have to assume that he’ll either break that promise to invest funds or else delay and wait until the tax verdict becomes clearer or else find a way he can spend money on the team without risking that money being lost to others (ie find a way of protecting it)

  50. It is hard to legislate for the stupidity of others. It is always possible that Whyte has found a financier with no knowledge of Rangers and who does not understand the extent to which Ibrox is not worth remotely close to this amount. However, I doubt it.

    Most investors in such a deal would be interested only in the liquidation value of Ibrox. That is by far the most likely scenario. Trying to make sense of the combination of outright lies, PR hype, and a smattering of fact is an impossible task. I think that we are left with ignoring the media stories and thinking about what does actually make sense.

    What does not make sense is that someone will clear Rangers’ debt, leave it cleared, and invest lots of money in the team in advance of receiving a bill for £54-60m.

    What would make sense is:
    Whyte finds funding based upon the liquidation value of Rangers assets
    Whyte transfers the money raised to buy Rangers to their balance sheet as debt – to ensure a higher priority than HMRC in administration
    Whyte sells every player who can attract an offer immediately… raising maybe £18-20m?
    Whyte would then take a dividend and distribute all cash from player sales to hiself and his backers reducing their risk to just a few million
    If the tax case hits, Whyte & backers will have priority of the proceeds of a sale of Ibrox and Murrat Park (and remaining player contracts).

    The risk here is that the players refuse to leave this summer. That their asset values are amortoized to zero over a year and you are left with Ibrox and Murray Park as your only assets.
    I guess a quick chat with McGregor & Boughera about their interest in leaving would settle any nerves.

  51. Chico says:

    wouldnt HMRC have something to say about this scenario ? it seems so easy

  52. Boab says:

    They absolutely would have something to say about someone removing the assets from a business which is right in the middle of a tax tribunal, particularly when it is clearly to try to protect the assets of the business.

    However the reality for them wouldn’t have changed. Lloyds already have securities in place and when the assets were sold off they would have first call on them, so that now being another company doesn’t make any real difference. However the person controlling that business now also being a major shareholder does change things a bit.

    Bearing in mind this plan / strategy could leave HMRC no option but to have Rangers liquidated, as it is the only way they could get any money. The could take the view that at least if all assets are sold they will get something, on the secured creditor has his cut. In the even of a large tax bill HMRC would have to agree to any crteditors volountary arrangement before it could be passed. They may refuse to give that agreement.

  53. Mark Dickson says:


    In the event of insolvency proceedings it is the party that holds the security that decides the future of those assets ie holder of the security interest is entitled to seize, and usually sell, the property or asset. They wouldn’t need HMRC to agree a CVA on those assets as they don’t hold any title on them until the debt on the security has been settled (discharged)

  54. Boab says:

    Exactly, so for HMRC to get anything they would have to insist on liquidation. Then the playing squad etc would go as well as the assets which had securities against them.

    If they didn’t the administrator would effectively be saying, we are offering to pay you nothing, would you be willing to accept that.

  55. If a deal goes through, I expect that the shares will be transferred for a price approaching zero. The shares are worthless just now.

    The deal would involve paying off Lloyds’ bank debt (probably £18m or thereabouts. Bank debt was only £20m in June 2010).

  56. Gary c says:

    I have a work colleague who’s an ex tax-inspector. He worked for HMRC for 30yrs before he took his redundancy, He told me today that he still meets up every Friday with the guys from the tax office.He was informed that HMRC are baying for the blood of Rangers and it’s the Solihull tax office that’s dealing with the investigation. Quite a bit far south for a tax investigation in Scotland. I wonder why! :)

  57. Mark Dickson says:


    clearly we can’t discount Whyte doing at least part of what you suggested for the purposes of protecting his investment but what you are suggesting in full would amount to an almost complete asset strip and in some eyes fleecing of whatever value remained in RFC before it all goes teets up ……… there are plenty of financially distressed and far less high profile football clubs you could perform such a vulture feast on without attracting anything like the same outcry or make enemies of dangerous and hate filled nutters that are not averse to sending letter bombs and bullets etc in the post …………….given recent events that would be a potentially very dangerous plan if it was ever executed?

    I don’t think that is his plan – I think Whyte is looking at an arbitrage position on Rangers currently distressed assets and thinks he can find a way to engineer future yield from those assets?

  58. The strategy I have outlined would be very close to an arbitrage position (only risk being fees that players could attract and whether they agree to leave).

    The idea of extracting a decent yield from Rangers’ assets from operating them does not make sense and has never made sense. Imagine the tax case goes away: if you spend £30m to acquire RFC and invest in the squad, to see a 10% return, you would need to be able to extract £3m per year in dividends (or other forms of income). The most I could ever see being extracted from Rangers would be £500k – £1m. That means that you need to reduce the invested capital to £5-10m for it to make sense.

    That such a sum of invested capital looks ridiculously low for a professional football team does not take away from the truth of this analysis for a financial investor. Even in the best of circumstances, Rangers’ next owner needs to do a partial liquidation of assets to be able to achieve a reasonable return on investment. RoIC is the key measurement of performance of any business.
    Unless Craig Whyte has secretly amassed a great fortune and was secretly feverish in his support of the boys in blue, he will be making a financial calculation. Why Rangers and not a lower profile club?
    Because once you have asset stripped Rangers, the brand name will still be more sellable than that of Portsmouth or Preston North End.

  59. Ciarans Dad says:

    I love the questions and answers we are all coming up with, wouldn’t it be wonderful to live in an unbiased country with a media that has no agenda to pursue or a love of succulent lamb and fine wine, and that it was they who were asking all these same questions. Sorry i was getting delusional there.

    Anyhow looking at it all and again the fact that still no stock market announcement, i think i am starting to favour the idea proposed earlier that this is the smoke and mirrors of minty as he needs the season book money to keep coming in, so he’s probably in it up to his neck with whyte helping out.
    And whyte gets the publicity to raise his profile for his next scam.

  60. you address the central problem: the media are an unreliable source of information on any matter related to Scottish football. They repeat what people of influence want repeated and nothing else.

    In the absence of credible stories from the media, we are left to piece together stories from snippets of information and sensible scenarios.

    Fakeover or takeover? Probably both. Whyte might have started as a stalking horse for Murray. Later, he might have seen an idea to actually buy Rangers, but is still short of the funding needed to complete the deal and needs King’s 5% to get the benefit of secrecy over his affairs. In the meantime, both he and Murray are happy to pump out nonsense in the media for a variety of overlapping reasons.

  61. Thomas314 says:

    The Sun is claiming that RFC are offering McGregor a new 6 six year deal. Smacks a bit if you ask me. How can they offer him a new contract when nobody’s bought the club yet. Sasa Papac claims that the new deal he was offered was not serious!

    BTW! Quite few media sources are claiming that Whyte is worth anything from £500m to around £800m. They that is the value of his companies they claim.

  62. Thomas314 says:

    Oop’s! Last sentence should read ” They say that is the value of his companies.”

  63. Boab says:

    He managed to become one of Scotland and the UK’s richest ever people and no-one noticed. Good trick that.

  64. ramsay smith says:

    Some questions for those puting forward the possiblity of Rangers avoiding the tax debt by leaving it behind and transferring the assets to various phoenix companies.

    Do Rangers not have to register with the SPL to be allowed to play in the league?

    Would the registration not remain vested in the empty shell company alongside the tax liability?

    Why would HMRC not just wind up the company thereby removing Rangers right to play in the SPL?

  65. Ramsay,
    Those who think that the tax debt can be avoided pre-administration by just hiving the assets off into a new company are just mistaken.

  66. timtim says:

    Whats in it for Whyte?
    well ,power for one
    the control a messiah can command over a well fed media
    is a valuable asset it certainly helped Berlusconi and Minty
    and hundreds of others
    Profile amongst the business community is also raised
    and many will happily deal with him because of who he now is

    If the club is liquidated through the taxcase then Whyte will
    possibly have rescued the holy grail that is Ibrox and the spiritual home
    for the reformed club will still be there . He will be seen in a very favourable light

    The last point is the economic situation worldwide
    Whyte may have concluded that this is a good time to take on debt
    if he can secure long term fixed rate finance, or to turn his capital
    into hard assets (Ibrox and MP)

    I think Whyte knows the taxcase is not in their favour
    and the liquidation of rangers will not be blamed on him
    starting again in Div 3 aka Airdrie Utd will not require great funding
    in the transfer market for 4 years minimum
    by then Whyte can offload it for a very handsome profit

  67. Mark Dickson says:

    Fiorentina played 1 season at the bottom tier of Italian league football after their financial collapse and liquidation but as the new club were essentially (although not legally) a continuation of the same Fiorentina football club and traditions they were promoted a couple of rungs up the ladder on the basis of “Sporting Merit and Achievement” to Series B where they promptly won promotion back into the top flight meaning their absence from Series-A lasted only a couple of years ………. would the SPL/SFL really make a Rangers team start all the way at the bottom and work their way back up?

    Whilst fairness dictates they of course should have to work their way back up wouldn’t it also be a gross distortion of those leagues in terms of club size/power and a waste of everybodies time and lost promotion opportunities if it was fairly inevitable they (RFC) would power through the division back to the top flight? Would the SPL automatically grant or reserve them a special place? Can the other SPL clubs afford financially without them in the top flight if that would adversely affect club and overall league finances?

  68. Boab says:

    It would be a total travesty if they were given any sort of special treatment. I would expect them to have to work their way back up through the ranks. Re-iterating I do not think they will go into liquidation. Worst case scenario they will go into admin and lose 10 points. I very much doubt even that happening.

  69. Mark Dickson says:


    The SFL & SPL of course have rules for clubs in administration but it is also the clubs (as members) who decide via the management board and panels the severity or leniency of any penalties imposed on the clubs involved and if memory serves me correctly Livingston only got papped down to the bottom league becuase they were still in administration and uncertainty about resolving their future when the new season began (basically they weren’t in a position to guarantee they could fulfill their fixture list) that is why they got demoted but others like Dundee (twice), Motherwell, Livingston (first time) etc did not.

    I think even though we as fans would want to see the ultimate and harshest penalties as possible imposed on our bitter rivals i think reality dictates that the clubs think differently (ie from the financial perspective) and they would probably lobby for a certain degree of clemency for Der Hun?

  70. Brendan1970 says:

    Could Whyte actually be Stalking Horse for Lloyds?

  71. Jeepster says:

    Ssn Jim White claiming 52 million deal will go through in next 48 hours

    Don’t shoot the messenger

    Actually go ahead

  72. Gary c says:

    In the case of Airdrie, they bought over Clydebank and changed the name to Airdrie Utd and moved the team back to Airdrie. With buying over Clydebank, they held the registration of being a Member of the SFL. If that hadn’t of happened, Airdrie would have been extinct. Now if Rangers do go down the same road and it comes to the L word. They’d no longer be a registered member of the SFL. How they would go about getting re-registered i don’t know. Would they try to buyover another Scottish Club and take their registration or would the rules be bent a little to allow them back into the game?? And for the record, and after speaking to someone who knows Whytes father. Whytes father was a Rangers fan, but for Whyte he was astounded when he first saw his name. 1st. He didn’t believe he had anywhere near the amount of money as being quoted in the Scottish Media to fund such a deal/takeover/fakeover, whichever you want to call it 2nd. He didn’t think he was even a Rangers fan.


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