The Waiting Game

Another Scottish season has drawn to a close with Rangers FC taking the lion’s share of the spoils.  With the possibility of qualification for the UEFA Champions’ League and profits for the 3rd year running, it will have been a great financial year for the Ibrox club.  That 85% of the shares of such a business should be sold for just a touch more than a millionth of a penny each should not be forgotten. We are left to choose between the image of Sir David Murray as a benevolent team-player who made “yet another” generous gift to the club he loves or a man so gripped by fear for the consequences of his reckless illegality that he would give the club away to get off stage.  We are all free to make our own choice as to which we think is more likely.  However, those poor souls naive enough to believe that Murray bailed-out to help Rangers fly, at a price of £1 for control of Scotland’s “second-greatest institution” and at a time of strong profits, need to ask themselves: “Why did no one else want to buy Rangers’ shares at such a price?

As an aside, let us also dispel the myth of David Murray as Rangers’ benefactor.  Of the £165m that Rangers lost under his stewardship, not a single net penny was contributed by Murray himself.  In fact, when we look at the net balance of related-party transactions between Rangers and Murray’s other companies, businesses from which he took personal cash dividends, it is clear that Murray removed cash from Rangers FC.  However, as much as it pains me to say it (as it is what he wants) Murray is yesterday’s man and no longer a moving part in the on-going saga of Rangers FC and their illegal tax schemes.  Given the loyalty of the Scottish media to Murray, he is unlikely to ever be blamed for anything that follows.

Next, let us just re-cap what we know to be the facts of this situation:

  • Rangers are now owned by Craig Whyte’s newly formed “The Rangers FC Group Limited” (formerly Wavetower)
  • Whyte’s company paid £1 for 85% of Rangers’ shares
  • This same company purchased the debt owed by Rangers to Lloyds Banking Group
  • Rangers’ debt has not changed as a result of this transaction
  • The sale to Whyte’s venture has no direct effect the tax case
  • I am still waiting for confirmation that the First Tier Tribunal completed on time

In a previous post, I covered Whyte’s “reluctance” to be questioned on either the tax case or the source of his funding. Until we know who has lent Whyte (a man of little legally traceable wealth) the £18m to purchase the debt from Lloyds, it is difficult to understand what the motivations of this transaction really are. Why has Whyte rushed in where other angels feared to tread? We will look at a few possible scenarios later this week.

However, before we look at these permutations, I would like to mention the rumour that was circulating this weekend: that Rangers have had a third offer to settle the tax bill rejected by HMRC. This time the offer is apparently for £23m.  I know nothing about this.  It is possibly true, but I have not heard anything either way.  (Previous offers of £4m and £10m have been rejected in the last year.  These offers were made by Rangers and were rejected by HMRC).  While this rumour is possibly true, a £23m settlement cost on top of the cost of acquiring the bank debt for £18m would put the cost of owning Rangers well beyond any financial logic. With a total invested capital of £41m and a minimum required return of approx. 9%, Rangers FC would have to be capable to returning an average of about £3.7m per year to its owners, and that is before a single additional penny is invested in the playing squad. If this rumour is true, it would rule out the idea that Whyte is a rational financial investor. We would have to look at other motivations for owning this football club.

It would not be unusual for new owners to seek to settle long-running tax disputes with HMRC.  If history is a guide, HMRC’s attitude has been to be flexible to new owners on interest and (even more so) on penalty payments where there is a willingness to pay the core tax bill in full.  Where a settlement offer requires time to pay, flexibility on historical interest would be harder to obtain, and interest would continue to accrue.   If the new owner was someone with a normal history with HMRC it would be easier to imagine that concessions might be made.  However, the new owner is Craig Whyte. (At least he is the public face of the new owner).  Craig Whyte is a name attached to numerous bulging files in the cabinets of HMRC (and possibly other government departments).   A frontman with a famously chequered past?  It would be surprising if HMRC would see any approach for a settlement as a chance to turn over a new leaf.

In coming posts, we will look at a matrix of motivations and outcomes for Whyte and the tax case.  Despite the efforts of his PR henchmen [google the following phrase: “A self-made businessman (he started an accountancy course but failed to complete it”)], the core facts of this situation have not changed.  The Scottish media remain a mixture of spineless cowards and craven paid-off lackies.  The tax case remains a threat to the existence of Rangers FC.  Until we know more about who has funded Whyte and what he expects to achieve, Rangers FC will remain an enigma wrapped in a riddle.

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.

140 Responses to The Waiting Game

  1. easyJambo says:

    Same T/O and Wages stats as before with European progress included

    Celtic Turnover Wages Ratio Euro Progress
    2004/05 62,168 37,394 60% CL Group
    2005/06 57,411 32,490 57% Lost CL qual
    2006/07 75,237 36,421 48% CL Group + last 16
    2007/08 72,953 38,981 53% CL Group + last 16
    2008/09 72,587 38,751 53% CL Group
    2009/10 61,715 36,483 59% Europa League Group
    2004/05 55,134 27,303 50% UEFA Cup Group
    2005/06 61,165 27,989 46% CL Group + last 16
    2006/07 41,768 24,258 58% UEFA Cup last 16
    2007/08 64,452 34,339 53% CL Group + UEFA Cup Final
    2008/09 39,704 30,662 77% Lost CL qual
    2009/10 56,287 28,133 50% CL Group

  2. Boab says:

    You’re comparing apples with oranges when you just look at purchases, Adam.

    Rangers and Celtic operate differently in relation to merchanding. Rangers only report their net profit from it, as they have outsourced that part of the business. Celtic on the other hand record both sales and cost of sales.

  3. Lord Wobbly says:

    I take your point Adam. But the glaring difference is the level of financial shite that both clubs have got themselves in. If Celtic had been staring down the HMRC barrel that Rangers have, then I have no doubt that belts would have been tightened and figures improved. We have stared oblivion in the face once before and survived. Rangers may yet survive, but I suspect more belt tightening has yet to come before your future is decided.

  4. Brendan says:

    …2nd week in July, Mcgregor deal nearing completion,3rd week in July Rangers receive offer for Boughera, last week in July Mcgregor deal hits snag..head being turned by EPL giants,Sally promised significant funds to strengthen squad for CL qualifiers. August..Mcgregor sold for 5 million, Boughera for a million, rumours of Davis heading back to the EPL…WHyte dissappointed with Mcgregors lack of loyalty and now too late to complete a major signing before CL qualifiers. End of August Rangers will not be held to ransom in bid for Willo.Jelavic signs for Norwich.

    Happy days LoL

  5. ciarans Dad says:

    I’m not an accountant but just wonder if you factor in the £51m moved from RFC to MIH (dodgy daves move the debt about but make it look like a shares issue) and then the £24m under payment in PAYE, how does the last decade look between Rankers and Celtic given that there was no financial fair play as SDM helped in his own way to bring ruin to the financial institutions!!

  6. Adam says:

    Thats fair enough Boab. My reply was to the original accusation that we have “failed to cut operating costs significantly” made by RTC.

    I would suggest that a £13m reduction in Annual operating expenses is “significant”

  7. ciarans Dad says:

    Sorry, posted before I had finished. What I was going to ask does the above mean that ranjurs would have still been around if another £75m of losses had been on the books or that they would have been able to buy all the players they have over the last few years, so basically what I am asking does it all amount to financial doping.

    PS. Still waiting for Carlos Duvall to answer the questions put to him a few weeks back..

  8. Adam says:

    ciarans Dad, the £51m was a share issue. It wasnt moved from RFC to MIH. It was a MIH company who underwrote the £51m and put it into Rangers to clear the massive debts we had at the time.

    Like Rangers, Celtic have had share issues to ease debt problems over the years. To the tune of £47 million(minimum as i can only remember 3 but think there was a 4th) i believe.

    As for the PAYE, well thats an ongoing case and we need to wait to see the outcome of that. I think though we are starting to lose the point here. The point being that neither club can be profitable without CL money and that we have reduced our Net Operating expenses significantly over the last couple of years, contrary to what was stated.

  9. jac smith says:

    Nicely Put.

    No one makes a penny when one invests in a Soccer Club.

    Why should Mr. Whyte expect to make a peny,either?

    My guess.

    He is investing in Rangers for their real holdings.

    What do you say?

    Do you agree?


  10. Adam says:

    If it was financial doping, then im sure we will see people in court.

    If i was you though, i wouldnt hold my breath on that.

    They had advice. They had the scheme working elsewhere in the Group. They had the pressure from a multi-millionaire businessman who surely knew what he was doing. They got it wrong. Probably. Perhaps. Potentially.

  11. ciarans Dad says:

    At least the Celtic share issues were to raise capital unlike rangers to wipe out years of overspending. Also Celtics at least had the semblance of an issue with fans and financial institutions oversubscribing to each issue where as Dave had to buy his own shares as everyone, even his own brethren, seeing it for what it was, a get out of debt scheme.

  12. jbj712 says:


    did the RFC not say that Whyte would send a letter to their shareholders – setting out where his funds came from?

  13. Martybhoy59 says:

    followed this blog since its inception can’t claim to understand all the financials fascinating stuff. There is no doubt our “esteemed” (ahem) sports journalists dip in and out of here, this is the particularly sad part not in an emotional context but in relation to the journalistic integrity of the Scottish compliant media. I just can’t understand how any journalist worth his salt refuse to acknowledege that the story is out there and that they have a moral duty to robustly invetigate the intentions of Whyte.
    Don’t get me wrong as a Celtic supporter I am happy they continue to peddle the myths and untruths that come out of Ibrox but my god if the roles were reveresed, my club have been dragged through the gutter by these same self styled journos for a hell of a lot less than is going on at this corrupt club.

  14. Adam says:

    Not sure what any of that or the share issues have with the topic in hand but if you want me to concede that Celtic fans chucked £40m into the club whilst Rangers fans clearly saw what Murray was up to and refused to bail HIM out then yes, i agree.

  15. Adam says:

    He did jbj. Said originally by the 16th May, then changed it to 6th June.

    Im on record as being one of the few, so it seems, Rangers fans who is very wary of this whole deal. I await with interest to see what he has to say and I hope im wrong about him.

  16. droid says:

    !Viva RTC!

    I note a significant increase in the use of the term illegal when describing the actions of rfc in the use of EBTs. I do not recall the same degree of conviction some 6 or 8 weeks ago (maybe I am mistaken?).

    Is there the potential for some form of criminal action being taken against directors?

    Is this what the last stand off was about in trying to warn against Mr Whyte taking over ie there was no safety net for the directors involved in the EBT decisions?

    I noted on Mr Betts’s et al site there was a case study of how a director’s home had been ‘saved’.

    Could there be similar developments afoot?

  17. Boab says:

    Subscribing to a share issue is not “chucking money into the club” Adam. It is buying a share in it.

    Ppeople talk about fan ownership all of the time. We already have the facility to do that, it is called buying shares.

    However you are right in one thing, Celtic’s share issues have been succesfull. People have wanted to buy the shares, and that is new money being invested in the club. Sales, share issues or borrowing. That is how you get money into a PLC.

  18. jbj712 says:

    Thanks Adam – for a while I was beginning to think that I was making it up !
    Like the way you defend your fellow supporters by inferring they didn’t invest because they were sceptical of Minty
    Does that mean that now he’s gone you are all poised with cheque books at the ready to help brother Whyte?
    Or is cut too much from the same chancer cloth as minty?

    Must say that I’m glad RTC has returned – stay safe and keep up the good work!

  19. Adam says:

    Its as if you didnt read my reply. Strange.

  20. I think the chances of a criminal case coming from this are very slim (unless someone has perjured him or herself).

    A bigger risk for directors would be lawsuits from stakeholders. Shareholders, creditors, and trading partners who have relied upon directors statements of confidence in the outcome to retain shares or continue trading with Rangers. They would have a claim on the directors’ personal assets.

    The two largest claimants are likely to be HMRC and The Rangers Bond holders. HMRC have not typically gone after directors like that, but this is not an ordinary case. I have no inside knowledge of how they would proceed following a result, but it seems a little coincidental that David Murray has been placing his ownership of some assets in offshore trusts. This may well be a defence against a UK government action against him. When you get into a scheme as flagrantly and as deeply as Rangers did under Murray, you have to wonder what else he has been up to.

    Alastair Johnston might have enough assets to be worth going after, but I think that his 1 April head-nod was designed to give himself a defence that he did provide a warning.

    However, while it was at HMRC’s discretion, criminal charges are very unlikely for anyone.

  21. Adam says:

    Boab, buying shares in a football club is “chucking your money in” Ask the £600 quid subscribers of the first share issue at Celtic Park what their ownership is worth now and what they get out of it.

    Its a purchase of the heart and fine well you know it mate.

  22. I missed this promise of transparency. It will be interesting to say the least.
    Do you have a link or source that quotes him giving these dates?

  23. Boab says:

    No problem with that Adam, just pointing out that the comparison part didn’t really work when the businesses worked so differently.

    With regard the cost cuts, clearly they were needed and Rangers have managed to do that. If I was a fan I would want to look a bit deeper than the headline figure. Where have these cuts been achieved. I think some will be cuts in the overall salary budget, but some may be other things like maintainance. If stories are to be believed the stadium could do with a bit of repair and this may just be building problems for the future.

    They have clearly done well in cost cutting, and clearly needed to. However at what cost long term.

  24. Auldheid says:

    Never mind the residual asset value of a player, how does a player get paid and for how long?
    What half decent player would enter a contract that might just add him to the list of creditors.
    Papac has apparently signed for another year, any contract over a year is a huge risk to any player thinking of signing.
    Players and agents will be asking the questions the media should be asking but will actually expect answers that stack up.

  25. Adam says:

    “As a condition of this dispensation, Wavetower is required to send to shareholders, no later
    than 16 May 2011, a circular providing further details on Wavetower and further disclosure in relation to the terms of the acquisition.”

    “Further to the announcement made on 6 May 2011, the Company announces that, with the agreement of the Independent Board Committee of The Rangers Football Club P.L.C. and the Takeover Panel, it has extended the timetable within which a circular will be posted by the Company to all of the shareholders of The Rangers Football Club P.L.C. to a date on or before 6 June 2011.”

  26. Auldheid says:

    ” When you get into a scheme as flagrantly and as deeply as Rangers did under Murray, you have to wonder what else he has been up to. ”

    “By their fruits you shall know them” springs to mind.

    One fruit being the worst ever season in the history of Scottish football.

    What else indeed?

  27. LightingMonkey says:


    Sorry didn’t realise you’d replied.

    In terms of his money making from MHG it’s pretty much all in the company RNS releases on the investor news section of their site and it took me an afternoon to trawl all the way back through them. And having just checked back through I’ve realised my post above is a bit wrong.

    It’s more correct to say he has the potential to make about £2M (as it stands) from an investment of around £650k. Which is a decent return but obviously doesn’t dent what he needs for Rangers and more importantly has yet to be realised and at the moment 30% of the company is only worth £400k.

    At various times he’s sold shares into the market then exercised warrants/options to generate cash although never in massive amounts.

    As an aside, I’ve seen some tipping MHG as a share to watch that may increase in value up to 10x or so. It may yet turn out to be a decent punt.

  28. Boab says:

    I didn’t say it was a wise or profitable investment. I know a lot of people with shares in Celtic and not one of them thinks they will ever make any money, or even get their investment back. It is as you say an investment of the heart rather than of the head.

    That however does not mean they were “chucking money at the club” as you described it (in deliberately emotive terms). It was buying a share in the club simply to know that they not only supported it but were also part owner.

    Out of interest Celtic shares have held their value reasonably well over the last couple of years if I remember correctly. Rangers on the other hand dropped from about 48p to about 30p over the space of a year (again from memory). That’s ignoring the fact that 85% of them recently sold for £1 obviously.

  29. AsDryAsADeadDingoesDonger says:

    Heyyy G-Day mate, It is great to see you back at it RTC (and others of course). I was getting worried re your absence! I had visions of a bloke being carried off backwards as his heels dragged the dirt to an awaiting vehicle!! I was desperately searching web based chat sites for signs of life from your good self. So, it’s great to see there is still a pulse.

    What is the possibility of Wyte and Murry being in cahoots? Kinda like “heerah you hud this fir me the noo”, I need tae hide fae rah polis en at”!

    lets say that the tax meteor is about to land on the marble staircase and lets say Mr True Blue (Murry) is land owner with the money making big Castle (asset), and Mr Whyte is the concierge etc.
    Mr True Blue say’s help me Mr White all the kings horses and all the kings men are coming to take the Castle and it’s Play Park away if I don’t give them 80mil dues? Mr White say’s o.k, lets play pretend then. “fir a pounda” sign here and let me put my name plate on the Castle and Play Park door and you supply me with a ($20m) fence around them so they can’t touch them! You hide in the shadows till they go away! Kings Calvary arrive only to find there is nothing to sell now other than some old bits n bobs and some live stock etc. Kings Calvary return with nothing or minimal gold coin and believing Mr True Blue has rode off into the sunset and the Castle is owned by new owner now! (Case Closed?) The local natives that have enjoyed there weekends around the castle so far, Well they start to get restless and discontented with the new name of Castle “United” and the pseudo owner as he won’t maintain their previous lifestyles around the grounds and so get rebellious! What’s this, Who’s that, there is a silhouette on the horizon, It’s, It’s Mr True Blue on his prancing horse, he’s come back to save the day for the natives and buy the Castle back “firrah poundah” (an a wee hidden bonus for his trouble). He’ll maybe change their name again to “?” (Gers, Bears, GRFC or hopefully the Rump Rangers LOL) and sit comfortably upon the throne. The natives were all joyous and happy that they did not ask why all this had happened in the first place they just rejoiced and idolised the return of the saviour and lived happily ever after! (Therefore saving himself/Rangers $XXX amount due to HMRC)

    Could Mr True Blue ever be held accountable if this was the arrangement between him and Whyte?

  30. Ciarans Dad says:

    What it has to do with Adam, is that you were showing the money that was/could be made from rangers if involved in champions league whilst trimming costs. The point i was making is that rangers moved a lot of debt from one part of MIH to another to shore up what was an already bankrupt institution and that was before they illegally underpaid their PAYE bill.
    So factoring in the removed debt along with PAYE, even with CL money which is not guaranteed you have to wonder where Whytey thinks he can make this work and get a return on his benefactors money.
    The issue of Celtic having succesful share issues is that they never spent what they didn’t have until they had it, where as Murray was attempting a share issue to pay off an overdraft. Big difference!!

  31. Adam says:

    Celtic shares have dropped from 69p to 39 p in last 3 years. In same period rangers shares have dropped from 57 p to 30 p.

  32. Boab says:

    I didn’t know they were as high as 69p that recently. I thought that the had gone from about 52p to 44p, is that in a shorter period. I have to confess to rarely looking back further than1 year.

  33. George Dallas Peat says:

    If Rangers shares are worth a millionth of a penny each then the only way that the price would increase is if there is major investment in the club. With a tax bill a bank loan stadium repairs and a penalty fine needing to be repaid and that is before any quality players have signed up. I am therefore interested in how any further proposed fan investment would hold up.

    Quite simply as has been debated already. The only place to make profit within the confines of Scottish football is within Europe and more specifically the CL. Now knowing this would you take this ultimate gamble with your tens of millions knowing that if I got a ticket to a European Rangers game and sang a sectarian song then it would be a 3 year ban and the games a bogey ?

    Is any sane person actually going to tell me that this is a gamble that you would be prepared to take ?

    With the background that I have described I feel I can safely predict that Rangers FC will be lucky to shift season tickets in a dilapidated stadium with an SPL squad that is on a downward spiral and with a rookie manager. The haunders that the national association provides will also start to decrease.

    Now Ally Mc Coist may be the new Bill Shankly in waiting but with this background i.e knowing that the future profits to be made within Scottish football are practically non existent

    Is it a venture that the fans will buy into ?

    In these credit crunch days they will not get a bank loan for it when genuine well run businesses cant.

    The banks cannot see Rangers football club far enough. They are both synonymous with wasting millions upon millions of our cash especially now that LBG is publicly owned

    Are the fans really convinced that Murray has left the scene ?

    Also dont forget that Dave King and/Or SARS have still not left the scene either. Which is an irritant but a big irritant. Cant see Dave Kings mother selling her shares for a millionth of a penny either. Why ??? so that situation is also hanging around causing a stink.

    So when you remove the cloak of financial possibilities and look at the reality of the situation the only instant solution is a move to a more lucrative league.

  34. Alan Coupar says:

    However, before we look at these permutations, I would like to mention the rumour that was circulating this weekend: that Rangers have had a third offer to settle the tax bill rejected by HMRC. This time the offer is apparently for £23m. I know nothing about this. It is possibly true, but I have not heard anything either way. (Previous offers of £4m and £10m have been rejected in the last year. These offers were made by Rangers and were rejected by HMRC).

    As all tax dealings are private by law, I can only assume you are at the heart of this investigation and are employed by HMRC. If so you are a brave fella as your job, I assume, will be on the line if caught…

  35. George Dallas Peat says:

    The board announces that Cairn Financial Advisers LLP has been appointed PLUS corporate adviser to the company with immediate effect.”

  36. Not The Huddle Malcontent says:

    why wouldn’t Whyte use RANGERS money to pay RANGERS tax bill?

  37. Not The Huddle Malcontent says:

    do those operating expenses include money that SHOULD have been paid to HMRC? 🙂

  38. Boab says:

    What money would that be. If you are talking about potential Champions League money they haven’t actually qualified for it yet. If they do they will have to wait to get it, some of it will be next year.

    It’s hardly a bargaining chip to take to HMRC, we can pay this with money we might earn. If it does become “Rangers money” as you describe it then there is no reason why they wouldn’t use it to pay “Rangers tax bill”. Quite the reverse, I would encourage them to do exactly that and pay what they are due. I’m sure Her Majesty’s Government will do exactly the same thing.

    Apologies if you are referring to some other money which is “Rangers money”.

  39. peter lamb says:

    if they where able to pay £23m with champions league money then why where they still in £27m debt before the takeover why didnt they just pay off lloyds with this money last year and murray not have to sell their club.i dont think this holds up at all to be honest!

  40. Billy says:

    I don’t think any Rangers fan will refrain from renewing their season book on the basis that their purchase could be deemed worthless should RFC fold. Much better for them to protect their spend by using a credit card when making their payment, thereby having adequate insurance should events take a turn for the worse. How ironic it would be should they use a card supplied by Lloyds to complete the transaction.

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