Rangers Insolvency: Is it inevitable?


Sleep has become a precious and rare commodity in recent weeks and I find myself trying to pry my eyes open to absorb the details of a data-packed Excel spreadsheet. For any normal, well-adjusted person, thoughts of forcing one’s eyes to move cell-to-cell, checking formula-after-formula, deep into the small hours of the morning would evoke a dystopian nightmare from A Clockwork Orange. However, this is not just any spreadsheet. This material has me transfixed. Commonsense says “leave it until the morning”, but I cannot sleep.

This is Rangers’ cashflow projection for season 2011/2012.

Naturally, I cannot disclose the origin of the data in the spreadsheet. However, I have confidence in its authenticity and its accuracy. I believe that it portrays genuine insight into Rangers’ cash flows for the current season. While I anonymise the data and figure out a way of presenting it on a blog, I will just give you the conclusions.

  • Rangers FC face a cash shortfall by the end of this season of about £19m
  • Without a fresh cash injection, Rangers will run out of money in October / November

And most significantly:

  • Without a fresh cash injection-

Rangers will be insolvent before the result of the EBT tax case is even known

Whyte’s new-found candour has him admitting that there is a crisis at Rangers, and that insolvency is a distinct possibility. However, it is tempered with the narrative that he inherited a mess. Any crisis, according to Whyte, is a result of the EBT dispute with HMRC which goes back to a time before owning Rangers was even a gleam in his eye. Whyte has started to spin insolvency as drawing a line underneath the club’s longterm problems. His hints that he might not appeal a decision against Rangers in the First Tier Tribunal (FTT) could be a clue to his real strategy.

To blame the previous regime at Ibrox requires that insolvency can be staved off until the judges sitting on the FTT return with their findings. However, Mr. Whyte will probably be mistaken if he thinks that the tribunal will return a result within a few days of it concluding. An insolvency event prior to that point would reveal the nature of the immediate problem: Rangers’ failure to qualify for the Champions’ League group stages. The arrestment of almost £3m by HMRC and Bain & McIntyre (ex-directors) intensifies matters.

Readers of the replies section of this blog will be aware of the complicated permutations that face Whyte. Delaying an insolvency filing to beyond 60 days after an arrestment weakens the claims of a secured creditor (himself) to reclaim that cash. Delay also requires Whyte to up the ante and provide additional working capital. In return, his reputation would survive the mauling that would accompany a filing without an adverse result in the FTT to hide behind. Whyte also faces uncertainty over the timing of a response from the judges. If Rangers maintain a staunch defence to the end, it is possible that the FTT findings might not be published until February or March 2012. That would require pouring in more cash to survive to this point. (Surely Whyte would not countenance “throwing the game” in the last days of the tribunal to arrive at a speedy conclusion?)

It is worth explaining cash flow for anyone who has not spent much time thinking about the monetary needs of a football club, it is extremely uneven. Cash accumulates over the summer months as season ticket holders renew in great numbers and drops over the autumn as players are paid their monthly salaries and bonuses. A good European run bolsters cash receipts in the short evenings and if post-Christmas European football is on the calendar, then a good season is had by all. Without significant European cash after September, Rangers (like Celtic) face a long period of outgoings being in excess of incoming cash. This funding gap can only be filled by a bank overdraft (short-term debt), a loan, or with the shareholders throwing in more equity. Traditionally, Rangers (and Celtic) have dipped into their overdraft facilities to pay wages and other bills during the months of negative cashflow. There is a problem this season however: Rangers do not have a credit facility with any bank.

Since buying Rangers’ debt to Lloyds Banking Group (who were desperate to escape from the headache of being Rangers’ primary creditor), Whyte has failed to open another line of credit. It would appear that no bank wants to lend to a club facing crippling tax bills or one that has a fan base who will organise a boycott if it has the nerve to ask for its money back. (While discussing Rangers’ debt, a much forgotten fact is that Lloyds were not Rangers’ only creditor. An additional £4m in creditors is still on Rangers’ books bringing to total debt to about £22m when we include the money owed to the club’s parent company).

Are Rangers facing imminent insolvency? If Whyte, or his backers, decide to pour in cash to delay the filing then obviously not. Without additional cash infusions insolvency seems inevitable within the next month.

In coming posts, we shall examine the cash flow projections for Rangers in more detail and ask some of the questions that naturally follow about this case:

Did Whyte really just gamble on Rangers qualifying for the Champions’ League group stages? Was insolvency part of Whyte’s plan from the beginning? How can Whyte hope to make a profit from his £18m + £1 investment in Rangers?

As this blog has maintained from the outset, the story being parlayed from the top of the marble staircase does not make sense. We now have a few more pieces of the jigsaw and will be able to make more sense of this case as time goes on.

In the meantime, I need some sleep.

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.

442 Responses to Rangers Insolvency: Is it inevitable?

  1. TheBlackKnight says:

    ramsay smith says:
    25/10/2011 at 10:05 pm
    Lord Wobbly says:
    25/10/2011 at 10.13pm
    Private Land says:
    25/10/2011 at 10.14pm
    Private Land says:
    25/10/2011 at 10:15 pm
    Private Land says:
    25/10/2011 at 10:16 pm

    Leeds!

    Now that would be ironic (assuming you know the financial history of Leeds and a certain game against Rangers in the old days where the derogatory tag of ‘marauding hvns’ was first posed in the press) 😉

  2. Mark says:

    LW, TBK be careful lads or I won’t spoon you afterwards

  3. curious onlooker says:

    Davythelotion says:
    Celtic may or may not be title contenders this season, that’s not the point. Celtic were eliminated from the Europa League by a team who cheated. It’s all about the cheating!!!
    Betting on Celtic to win the title is a rich person’s game, supporters want their team to try and succeed. Ferguson had a five year dry spell, Wenger hasn’t won anything for ages. The point is that you have to allow a manager to develop his style and his team, in football longevity is all, Coyle is having a mare at Bolton Moyes is steady as you go at Everton.
    Celtic fans should support Celtic and refuse to sing / chant anything about Rangers, they’re gone.

    I welcome your outlook !
    I only wish that football wasn´t such a pressurised business and returned to being a sport the numbers talked of were thousands and not millions. That managers and players got time to prove themselves and everyone sung positively about themselves.
    However Sion have a case on-going that may yet show they didn´t cheat but that´s by the by and this blog is about another case.

    I think RTC is going to be proved correct in his 2 “clouds on the horizon” at Ibrox

  4. Interested Observer says:

    Hello. I am neither a Celtic or Rangers supporter and have been following this blog for several months. I’d like to congratulate its author and the knowledgeable posters who have contributed to this site which I now visit several times a day!

    This site has been consistently ahead of the curve and from what I’ve read in the last couple of days it appears that we are reaching an end game with administration for Rangers just around the corner.

    What this site has done is report on the biggest football story in Scotland in years while the mainstream national football media have completely ignored it, whether it be because they weren’t intelligent enough to handle it, or deliberately, to their eternal shame.

    In my eyes they have lost all credibility and when the boat eventually comes in, they’ll be exposed as having missed the biggest story which was right under their noses. Instead of digging and trying to find out exactly what’s going on at one of the biggest clubs in Britain, we’ve been forced to read articles which have amounted to little more than Rangers PR which has been fed to them.

    Well done to all of you for uncovering this story and continuing to add to it and letting fans and everyone else know of the scandal currently taking place at Ibrox. Well done and keep up the good work.

  5. Friday looks like being a good day.After following this site for ages I admit my .knowledge of economics,law,etc has increased way beyond what I thought it would ever be.I believe,however,that sometimes the simplest way is the best.Therefore,can someone answer me this?.
    If an administrator is appointed,They,not CW get paid first(If they didn’t,no one would do the job).Administration could be lenghty and very expensive,especially to CW.
    Receivership/Liquidation,whatever,would be far quicker and therefore cheaper,leaving a lot more cash for CW to take.
    Just a thought which I am sure has been thought out by others on here.

    Going to miss this.Hope there is enough to keep going.Maybe RTC can enlighten us with info he has and we can discuss it for a while.

  6. droid says:

    The drowning man is not troubled by rain. -Persian Proverb

  7. TheBlackKnight says:

    Total coincidence. Just like The Whyte Knights co founder/director…,,,,,

    “Liam Murray has picked up during 15 years of working for such giants of the financial world as Price Waterhouse in Ireland, and among the Gnomes of Zurich in Switzerland, before becoming one of the founders of Cairns.”

  8. Johnobhoyo says:

    Yes that’s what I was thinking. A so-called reputable firm like PWC wouldn’t register any company name using one of their employee’s own name surely?

    Maybe some bright spark saw the Gerard Moran buying those compnay names from earlier today, googled his name, saw that an IRISH bloke with that name worked as an accountant for PWC and the rumour of PWC being brought in as the administrators was born.

  9. v says:

    If rangers re-appear as a newco, where will the funding for the running of the newco come from?
    Especially if rangers will have only 2 home games before the start of december

  10. Hugh McEwan says:

    Johnobhoyo says:
    25/10/2011 at 10:34 pm

    After Phil’s tweet about PWC surely this is just some bizarre coincidence that some guy has found over on KDS???

    http://ie.linkedin.com/pub/gerard-moran/12/5b1/512
    ==========================

    Oh Good Lord.

    That is genius.

  11. TheBlackKnight says:

    droid says:
    25/10/2011 at 10:51 pm
    “The drowning man is not troubled by rain. -Persian Proverb”

    “if ma enemy is drownin, fling him a medicine baw, no a lifeline”

    Scottish Proverb 😉

  12. Lord Wobbly says:

    Long term readers of this blog may recall my take on the religious angle (ie there is no god). As long as people look down on others in the name of some imaginary character, then we will not improve. Yet another example here:

    Pmacgiollabhain What kind of person, in Scotland 2011,
    would say of the other side’s lawyers “they must be
    Papes they’ve got red hair!” No, seriously!

  13. Mark Dickson says:

    The Black Knight.

    So do you think it would be one SPL club potentially facing a euro ban or if it all blows up that the SFA & SPL were complicit they might just chuck all of Scotland out UEFA Competitions for a couple of seasons ?

    Given that HMRC tried to force Hearts into administration earlier this year then there perhaps might also be questions asked about Hearts UEFA license? And when were Falkirks Tax-problems in relation to their last Europa appearance and defeat in Viduz?

    Maybe this thread will have serious and uncomfortable ramifications if tugged?

  14. droid says:

    The most perfidious way of harming a cause consists of defending it deliberately with faulty arguments.F Nietzsche

  15. Davythelotion says:

    Droid says:
    the drowning man

  16. Lord Wobbly says:

    Mark Dickson says:
    25/10/2011 at 11:01 pm
    The Black Knight.
    So do you think it would be one SPL club potentially facing a euro
    ban or if it all blows up that the SFA & SPL were complicit they
    might just chuck all of Scotland out UEFA Competitions for a
    couple of seasons ?
    Given that HMRC tried to force Hearts into administration earlier
    this year then there perhaps might also be questions asked about
    Hearts UEFA license? And when were Falkirks Tax-problems in
    relation to their last Europa appearance and defeat in Viduz?
    Maybe this thread will have serious and uncomfortable
    ramifications if tugged?
    ~~~~~~~~~~~~~~~
    Better to confront this rather than sweep it under the carpet. Sort it out once and for all.

  17. Mark Dickson says:

    Has any Scottish clubs ever been refused or asked any questions about their UEFA License approval? Has it been nothing more than a rubber stamping exercise whose primary function is ‘enabling’ all our clubs to compete in Europe?

  18. Davythelotion says:

    Droid says:
    the drowning man is not troubled by the rain

    ___________________________————–

    when you’re swimming in sh*t, keep your mouth shut. From the book of CW

  19. TheBlackKnight says:

    MD,

    A thread that must be pulled however!

    The SFA would indeed be in a difficult position. Unless they were misled or “misstatements” were now (or soon to be) apparent 😉

    It seems unlikely the whole of Scottish Football would suffer for anothers ills.

    Hearts and Falkirk were in discussion with HMRC and the liability was apparent, I believe.

  20. Colm Buddy Clancy says:

    Friday would suit me perfect for Administration,going 2 see Charlie and the Bhoys….
    Carlsberg don’t do perfect nights out,but……..

    Listened for a hour on Clyde SSB,lots of whataboutery still going on,daryl opening a lot of eyes though….

  21. MidlothianCelt says:

    droid says:
    25/10/2011 at 10:27 pm

    Paulsatim says:
    25/10/2011 at 10:32 pm
    ——————————————
    I had to Google Iggle Piggle – your kids must be younger than mine. I’m more a Rosie & Jim kinda guy! 😉

    ——————————————-
    Lord Wobbly says:
    25/10/2011 at 10:29 pm

    Private Land says
    25/10/2011 at 10:32 pm
    ———————————————
    Despite happily (in solidarity) singing along with Tom Robinson’s “Glad to be Gay” at Tiffany’s (St Stephen’s St, Edinburgh) circa. 1978 I confess to know little of homo-erotic fantasies – although I did have a weird dream once about Henke and Caesar!
    ———————————————————

    Johnobhoyo says:
    25/10/2011 at 10:34 pm

    I agree the Linkedin entry looks mighty coincidental – although does the fact that it’s actually from their Irish site mean that the guy works for PWC in the Free State? Jeez – that would sure fuel the conspiracies amongst our bluenose bretheren!

    Time for a large Glen Garrioch 12 y.o. before hot water-bottle time.

    RTC – apologies for going a bit off-topic – I was led astray!

  22. CMC says:

    TheBlackKnight says:

    Lloyds

    However, isn’t that contradictory to what RTC is saying in his headline piece??

    He alludes to the fact that ” Rangers do not have a credit facility with any bank.”

    For me, a lot of this site is a whoosh, right over my head. However, just like reading through the biased jargon used by the press, you can build up a picture on here of how events will unfold, yet, we are still in the dark about how Whyte was funded in the first place.

  23. TheBlackKnight says:

    CMC says:
    25/10/2011 at 11:17 pm
    “However, isn’t that contradictory to what RTC is saying in his headline piece??
    He alludes to the fact that ” Rangers do not have a credit facility with any bank.”

    I never said Rangers did. The Whyte Knight does however with his below radar companies.

  24. v says:

    I may actually have a good idea…

    I, like a lot of posters here, feel that we owe RTC a large drink for this blog. I’ve learnt a huge ammount & have been informed, educated and entertained

    RTC, there are obvious practical difficuties with buying you a drink so, if you would care to name a charity, I’ll ‘buy them a drink’ instead
    Just spreading a little more good around

  25. Lord Wobbly says:

    MidlothianCelt says:
    25/10/2011 at 11:14 pm
    Lord Wobbly says:
    25/10/2011 at 10:29 pm
    Private Land says
    25/10/2011 at 10:32 pm
    ———————————————
    Despite happily (in solidarity) singing along with Tom Robinson’s “Glad to be Gay” at Tiffany’s (St Stephen’s St, Edinburgh) circa. 1978 I confess to know little of homo-erotic fantasies – although I did have a weird dream once about Henke and Caesar!
    ~~~~~~~~~~~~~~~
    This might be more Mark’s area of expertise, but I think you might be confusing self-abuse with homosexuality. Not mutually exclusive I grant you, but I am most definitely the former.

  26. Lord Wobbly says:

    v says:
    25/10/2011 at 11:22 pm
    I may actually have a good idea…
    I, like a lot of posters here, feel that we owe RTC a large drink for
    this blog. I’ve learnt a huge ammount & have been informed,
    educated and entertained
    RTC, there are obvious practical difficuties with buying you a
    drink so, if you would care to name a charity, I’ll ‘buy them a
    drink’ instead
    Just spreading a little more good around
    ~~~~~~~~~~~~~~~~
    Alcoholics Annonymous?

  27. v says:

    LW, if It was AA I’d be as well keeping the money and cut out the middleman 🙂

  28. Lord Wobbly says:

    Alcoholics Anonymous even! Y’see?

  29. TheBlackKnight says:

    v says:
    25/10/2011 at 11:31 pm
    “LW, if It was AA I’d be as well keeping the money and cut out the middleman ”

    Are you Craig Whyte? 🙂

  30. Slimshady says:

    Lord Wobbly @8.59 pm

    “One day,and that day may never come, I may call upon you to do me a service, but until that day”……………………………………………………..
    ……………………..keep the link open, since:-”Sonny’s thinkin’ a goin’ to the matresses already”
    ————————————————————–
    LW, that puts me in mind of Mohammed Ali against, I think, it was Jurgen Bling of Germany. As the end of the round approached, with Bling on the ropes, Ali leaned over to Reg Gutteridge of ITV and said “Reg, I hope you ain’t goin’ to be too long with your commercials, I don’t think I can hold this sucker up much longer….”

    A bit like MBB and RFC?

  31. MidlothianCelt says:

    Lord Wobbly says:
    25/10/2011 at 11:23 pm
    ———————————-
    Ah – gotcha – Onansim!

    FiveFingerShuffleBrakeClub

    BTW – strongly agree with you on the religious angle. 😉

    Bedtime – ‘nite all.

  32. v says:

    TBK

    No, I’m poor, even compared to him!

  33. v says:

    yes, that poor

  34. sannabhoy says:

    Apologies if already posted ,

    with regard to the company formations today , it is standard practice among accounting firms to ‘form’ a new company with a member of staff , or a ‘proxy’ as the owner. As a freelance contractor , I’ve done this myself – then , when i was ready , the ownership was sold on to me . It’s very possible that this could be the case here .

    Oh , and what I think of a suitable ironic twist , the share issue of the company is generally 2 shares , each valued at …… £1 . So has the MBB paid twice for these new companies what he paid for Rangers ?

    Sanna

    PS . I notice ‘v’ suggesting a cyber drink/donation for RTC . As a regular on other mb’s and someone who enjoys the face-to-face contact just as much , it wouldn’t/shouldn’t be beyond us to arrange a get-together post-armegeddon .

  35. Lord Wobbly says:

    Watching Code Breakers: Bletchley Park’s…doc on BBC2. It strikes me that this blog is a kind of mini-Bletchley Park, with the heavy-weight bloggers pouring over the snippets of information that come their way. Me? I’m the tea boy, who tries to keep everyone’s spirits up with a quip here and a joke there. Unsung heroes all, whose story will one day be told.

  36. v says:

    LW, hopefully no one goes the way of Alan Turing

  37. TheBlackKnight says:

    sannabhoy says:
    25/10/2011 at 11:42 pm

    Could also just be a guy buying a company name in the hope someone may need it soon.

    Remember when Berners-Lee’s ‘www’ was launched. IBM/ Apple domains etc were all bought by forward thinking individuals!

  38. TheBlackKnight says:

    Lord Wobbly says:
    25/10/2011 at 11:44 pm

    Strong with milk and no sugar, for me. And mind wash your hands! 😉

  39. sannabhoy says:

    LW , to continue your analysis analogy , i’d imagine the MBB must be tearing his hair out a la the hitler bunker scene (apologies for confirming the godwins law ) with the investigative speed of some of these posters . If it’s not the MG05s , it’s new company registrations and linkedin searches. The forensic spotlight being shone upon them must be disconcerting – mind you , if he walks away with a £5-10 million profit for a years work , will he bother ?

  40. sannabhoy says:

    TBK , did you really use ‘forward thinking’ in the context of Rangers FC ?

  41. andy Fitzpatrick says:

    Lol lord w
    I think I’m the enigma

  42. Lord Wobbly says:

    Slimshady says:
    25/10/2011 at 11:38 pm
    ~~~~~~~~~~~
    😀 but I think you’re giving the MBB far too much credit. Ali he ain’t.

  43. TheBlackKnight says:

    v says:
    25/10/2011 at 11:40 pm
    yes, that poor

    😉

    But rich in spirit!

  44. droid says:

    Didn’t Mr Murray move his financial affairs into an Irish Republic Offshore facility?

    The historic irony is that it is now the hvns turn to flee for the refuge of Ireland

  45. TheBlackKnight says:

    And so to bed!

  46. andy Fitzpatrick says:

    There is a bar we could all meet up,,,LLOYDS, then on to the blue lagoon for a fish supper so we will have to meet up on a Friday.

  47. Lord Wobbly says:

    TheBlackKnight says:
    25/10/2011 at 11:51 pm
    Lord Wobbly says:
    25/10/2011 at 11:44 pm
    Strong with milk and no sugar, for me. And mind wash your
    hands!
    ~~~~~~~~~~~~~
    Milk? I think you need to speak to Mark.

    oh dear….

  48. droid says:

    Pmacgiollabhain

    news.stv.tv/scotland/west-… linkedin.com/pub/gerard-mor… I have heard that RFC have engaged PWC for strategic advice. Coincidence? The same Gerard Moran?

  49. Goosy says:

    Well at least one bear got it right at the weekend

    He forecasts the phoenix will be called “Glasgow Rangers Football Club Limited” who will have to start from scratch and see all the records move across the city in time

    http://blogs.soccernet.com/rangers/archives/2011/10/for_every_fiver.php

  50. longtimelurker says:

    Could this be our man?

    From a big hint on KDS

    Gerald Moran
    Partner

    Gerald qualified in 1974. He joined Hu nters as a partner in 2004, having previously been a partner at Dawsons. He specialises in all aspects of property work, building on his background in property development, banking and taxation. He has expertise in Stamp Duty Land Tax as well as planning and restrictive covenants, having spent some years acting for local residents fighting off proposals for adverse development, and work involving compulsory purchase and compensation. He has acted in cases such as re Diggens in the Lands Tribunal, and his work has been covered by national and local media. He is a member of the Land Law and Conveyancing Committee of the City of Westminster and Holborn Law Society and on the council of Stamp Taxes Practitioners Group.

    E-mail: Gerald Moran

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