Rangers Cash Flow: A Huge Problem

Following on from my previous post, I am enclosing a screen capture of Rangers cash flow projections for the current season.  It provides a numerical insight into the scale of the problem facing Craig Whyte’s Rangers.

Before we wade waist deep in numbers, I should explain that the data has been anonymised.  By this, I mean that all of the numbers have been adjusted slightly.  However, the net effect of the adjustments on the totals is negligible.  The original raw data  was much more granular and more easily verified.  At the request of the source, some values have been aggregated.

The first point to observe (for those who are unfamiliar with cash flow projections), is that this sheet starts with the 2010/2011 season ‘Actual’ cash flow values as a baseline.  The rest of the numbers represent increases or decreases in cash flow compared with the same period in the previous season.

Next, we should note that Mr. Whyte has some degree of flexibility over when bills are actually paid.  This means that this analysis has an accuracy of approximately of plus or minus one month.  Additionally,  there is currently no evidence of Craig Whyte having made good on the pledges made in the takeover documents to invest cash.  Therefore, I have not shown any investment in working capital from Rangers’ majority owner.

Without Whyte’s investment, the spreadsheet shows that Rangers could survive through the October pay period and hitting a brick wall by the end of November. However, this could also be interpreted as projecting Rangers filing for insolvency before the end of October.  (Rangers fans will be hoping that cash can be stretched out until the end of December when the opening of the transfer window would hold out hope of liquidating assets to extend the life of The Rangers Football Club plc.  I am told that this is highly unlikely.)  Values are in £ 000’s.

Of course, if Whyte has recently made good on his promises of working capital investment, Rangers can breathe for a while longer, but it would be unlikely to even cover the next month’s cash requirements.  To survive to February or March 2012 when the First Tier Tribunal can be expected to return with its findings in “The Big Tax Case”, Whyte would have to invest close to £15m to keep Rangers going.

So where is the investment from Whyte’s “Wavetower”?  (“Wavetower” is now more formally called The Rangers FC Group Ltd and Whyte claims that he owns it 100%).  The takeover documents do provide a watertight promise of investment.  If insolvency is inevitable, the smart move for Whyte is simply to pay off the obligation to a receiver rather than to Rangers prior to insolvency.  If Whyte opts for receivership (and if he defeats any legal challenges to his appointment of a receiver), he will get all of that payment back less expenses.  (As regular readers of this blog will know well, a receiver acts solely to recover the debt owed to the holder of a ‘floating charge’.  In buying Rangers’ debt to Lloyds, Whyte has acquired this legal privilege of priority repayment above everyone else except recipients of statutory payments.  Only once the secured creditors are paid in full would other creditors receive anything).  So, rather than seeing his money consumed by “old Rangers”, Whyte is able to keep his powder dry while satisfying his legal obligations too late to do the current company any good.  (Viewers of Mark Daly’s recent BBC Scotland documentary on Whyte’s business history will feel a sense of deja-vu).  Alternatively, Whyte might be more benevolent than many believe and he may choose to pour in cash until the tax tribunal returns a result.  That would indeed be a surprise.  This would take his investment in Rangers up to a figure of about £33m.  The prospect of a return on his investment would disappear at such a figure.  Basically, Rangers’ failure to qualify for the Champions’ League scuppered any sensible prospect that Rangers could survive to face down HMRC in “the big case”.  Only a substantial cash injection now will prevent insolvency in the coming weeks.

On the subject of return on investment, quite how Whyte plans to turn a profit on Rangers has mystified informed observers of all hues.  Noting that the bubble in Scottish football has long since collapsed and our game is fully decoupled from the continuing financial madness of the English Premier League, anyone making an investment in a Scottish club must value the business based upon the free cash flows (money available to be withdrawn by shareholders).  There are two major ways for Whyte to handle Rangers.  Either he liquidates assets and destroys the football club in the process or he runs the club as a going concern and tries to find a buyer (or pockets an annual dividend).  Whyte has had ample opportunity to liquidate Rangers and make a quick profit.  He has not done so.  We are now left with the going concern option.

Let us look at how Rangers would be valued as a going concern.  Sparing you the details of asset valuation theory, if an owner expected to withdraw £1 million for himself from a business each year, he might pay £10-12 million today.  (This is very reasonable for a high risk business in today’s low interest rate environment).  Leaving aside the idea that supporters would tolerate any owner withdrawing £1 million per year for himself, if the future sale value of The New Rangers as a going concern is at most £12 million (i.e. the most a rational buyer would pay), how does Whyte plan to turn a profit having paid £18 million for Rangers’ debt?

What sort of lender would give Whyte £18m for such a high-risk investment while expecting no more than £10-12 million in return?  No one else would touch Rangers.  What did Whyte see that no one else did?

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.

1,456 Responses to Rangers Cash Flow: A Huge Problem

  1. Hugh McEwan says:

    duggie73 says:
    30/10/2011 at 9:57 pm

    If Lloyds didn’t sell then they’d be in the position Whyte is now vis-a-vis the £18mil debt , so it is somewhat disingenous to say they would have received nothing if they hadn’t sold up.


    Did I say that, I don’t remember doing so.

    They were offered their full amount as far as I am aware. That got them all of their money back and rid of a customer facing a large tax bill.

    Why does their accepting that deal have to be any more complicated.

  2. MWD says:

    ‘Rangers FC 2012 participation in SPL’ latest results (including new worksheet with all printable comments):


    The following survey (4 questions) has been created to gather the views of as many supports from as many Scottish clubs as possible re. Rangers FC 2012 and direct entry back in to SPL if/when the existing Rangers FC experience a liquidation event that sees the death of Rangers FC 1873 to 2011.
    Please pass to friends/relatives/other football clubs supporters websites via facebook, twitter, email, txt etc.


  3. Private Land says:

    Kip Kane says:

    30/10/2011 at 10:00 pm

    Oh ffs!

  4. curious onlooker says:

    Hugh McEwan says:
    He mucked up and never allowed for failure in Europe and arrestments from HMRC, Mr Bain and Mr McIntyre.
    This has left him between £8m and £23m short on his plan.
    CL football would have made saving the club a real possibility.
    EL and no arrestments would have meant he could easily sit it out till the FTT ruling. Then if necessary receivership / administration and blame it on SDM / HMRC.
    He is now having to make it up as he goes along

    Don´t buy it !
    Bain was always going to the courts with the obvious consequences. Should have been settled out of court.
    HMRC were always going to go for arrestment given agreements made and broken.

    CL football was never a given and less likly given funds not released early summer.
    EL was probably the least expected, ok.

    Lloyds had the most to lose and someone out there pwants to inherit a relatively cheap Rangers FC although it can´t be for business reasons.

  5. andy Fitzpatrick says:

    Survey,votes,ect,,what a load of p1sh..there are rules for this by UEFA SFA AND SPL.twitter survey,,,wit next.
    Just saw the Naismith injury,,the rat should have got a straight red for the tackle he injured himself in,,the Aberdeen player had a cut down his ankle.
    Nai sympathy.

  6. TheBlackKnight says:

    OnandOnandOnand says:
    30/10/2011 at 9:58 pm

    Sincere apologies OnandOn, I couldn’t find the ‘irony’ icon 😉

  7. curious onlooker says:

    Go away please !

  8. OnandOnandOnand says:


    Just type “irony” after the post, sings “any old irony, any old irony, any, any any old irony” (shows his age)

  9. TheBlackKnight says:

    Kip Kane says:
    30/10/2011 at 10:00 pm
    “On the first day of the tribunal a signal was passed between Rangers and one of the judges and at least two of them picked up on it.”

    Don’t wish to embarrass you, (I do really) but why do you believe there was more than 1 judge?

  10. Private Land says:

    OnandOnandOnand says:

    30/10/2011 at 9:45 pm

    PL @ 9.36

    Yes, I take that point but it was very brave of CW to take all of this on without a buyer at hand, if sale was his plan. Besides, as I have posted before, why would this new buyer pay much more than CW paid? Business is a tough cookie, if you’re the seller and I’m the only buyer, I’m going to drive your price down. For your version to make sense, CW would have had to bet on there being several bidders to push the price up. In the SPL, I don’t see that as likely

    I don’t think my theory requires that he’s on his todd here. he may well be aware of people (possibly more than one) who would gladly take over RFC, but not with the tax bill in the in-tray. Wouldn’t any owner of a Newco want NOT to be associated with the demise of Old Tory? Come to think of it, any so-called respectable businessperson may not want to be involved in something which stiffs HMRC and the corner shop.

    I might still be miles out, but what about CW’s role as the office cleaner, getting his hands dirty preparing for the occupancy of the nice people?

    As to the value of the club itself, I thought the concensus on here was that if assets were realised, an administrator sale could raise the runoured £30m that CW was owed. As a saleable asset (and I might be talking crap here), my layman’s view is that a debt-free RFC will be worth as much as Celtic are right now, and I thought that the value of Celtic was around the £40m mark.

  11. OnandOnandOnand says:

    PL, sorry, I don’t understand the last paragraph.

    Are you saying that Rangers are worth £40m just now, that is what the administrator should get? He/she then pays CW his bunce out of that? I don’t get the bit about a debt free Rangers being worth the same as Celtic, sorry. For Rangers to be debt free, CW has to pay the wee tax bil and the rest, win the big tax case and have Wavetower write off its debt. How will any of that happen?

  12. curious onlooker says:

    I don’t think my theory requires that he’s on his todd here. he may well be aware of people (possibly more than one) who would gladly take over RFC, but not with the tax bill in the in-tray.
    Would it not be better for CW if Wealthy Ind. puts up the 18M as a sort of guarantee rather than saying I´ll buy it once you sort it out ?

  13. TheBlackKnight says:

    PL, in what way will they be debt free and continue as Rangers 1873 Ltd? with the squad? in the stadium? With investment? Without European money? And possibly not in the SPL.

  14. Lord Wobbly says:

    OnandOnandOnand says:
    30/10/2011 at 10:28 pm
    PL, sorry, I don’t understand the last paragraph.
    Are you saying that Rangers are worth £40m just now, that is
    what the administrator should get? He/she then pays CW his
    bunce out of that? I don’t get the bit about a debt free Rangers
    being worth the same as Celtic, sorry. For Rangers to be debt free, CW has to pay the wee tax bil and the rest, win the big tax case and have Wavetower write off its debt. How will any of that
    Apparently they just give a signal

  15. duggie73 says:

    it was my reading of your 7.22 post. Disnae matter if that’s not what you meant.

  16. stunney says:

    Medals seized!

  17. OnandOnandOnand says:

    I think someone should check CW’s social diary and see if he’s had lunch/succulent lamb with Dave Hartnett at HMRC.

    Is the pic on KDS of tomorrow’s back page of the Daily Ranger a spoof? My irony mode is set to “off”

  18. Hugh McEwan says:

    jimbo milligan says:
    30/10/2011 at 9:58 pm

    Just cannot see whyte for the life of me playing his hand until the FTT has reached a verdict.

    He’s already intimated he wont appeal it ,which is a retreat from his earlier position. But he cant make his getaway until HMRC provide the fatal blow , from that point on the blame gets slung firmly at murray and the taxman , and whyte plays the spin out that he did what he could,didnt come into this with his eyes shut etc etc etc .

    Likewise, I think he will keep it going until he gets a ruling from the FTT if he possibly can.

  19. Paulsatim says:

    OnandOnandOnand says:
    30/10/2011 at 10:37 pm

    Phil Mac saying its legit!

  20. Hugh McEwan says:

    Someone post a link chaps.

  21. droid says:

    Is this the beginning of the end?

  22. Paulsatim says:

    Pmacgiollabhain Phil MacGiollaBhain
    @walshybhoy It is true. I heard about it on thursday, but I couldnt stand it up. I know the DR were working on it.

  23. stunney says:

    Kirk “Eggface” Broadhoof’s agent has reportedly had The Rangers’ medals arrested over non-payment of a 100k debt allegedly owed him by The Rangers.


    I trust the club microwave also seized.

  24. TheBlackKnight says:


    When do you think the gates will be auctioned off? I have an interested party 😉

  25. OnandOnandOnand says:

    TBK @ 10.22

    While I don’t want to legitimise Sam’s latest postings, the Tribunal is made up of a panel so there will be more than 1 member, although might only be one judge member


  26. Jean says:

    Paulsatim says:
    30/10/2011 at 10:39 pm

    God talk about fur coat and nae drawers lol

  27. Jean says:

    Can someone explain to me what medals they’re talking about?

  28. Paulsatim says:

    Pmacgiollabhain Phil MacGiollaBhain
    @walshybhoy I was told that the medals (made of gold) were worth about £17k.
    2 minutes ago

  29. Adam says:

    There was also another story not able to be stood up on Rangers on Thursday, yet Phil ran with that one, until it was “pulled”

    Strange one this.

  30. TheBlackKnight says:

    OnandOnandOnand says:
    30/10/2011 at 10:43 pm

    Damn!!! And the trap was sprung! I’ll have to reset it now.

    Sam, what colour were his lordships socks ?

  31. Private Land says:

    curious onlooker

    Wealthy individual could be involved. I don’t think that my theory depends on CW acting alone (from the book depositary window?)


    I don’t know how much they would be worth. My (admittedly limited) understanding of the worth of football clubs is that Celtic are worth around £40m. My argument is that a post-insolvency debt-free Newco Rangers may be worth around that. If that is true, then CW will easily get his £18m plus change back from that. Depends on the value of a debt-free Rangers.


    My supposition assumes post insolvency Newco. If CW successfully completes a prepack and retains Ibrox in exchange for his £18-£30m, than the only debt that Newco would have is to CW. On sale to Vanity Buyer Inc, there are no significant debts. There is certainly an absence of any £50m tax bill.

  32. OnandOnandOnand says:

    Medals seized? That would suggest that the agent had a decree against Rangers, served a charge for payment and then carried out an attachment of the medals, like an old style poinding. I’m surprised no-one heard that Rangers had a decree against them. might even buy the DR to read about this one

  33. OnandOnandOnand says:


    Baldrick, sorry for spoiling your cunning plan, I now see the wavelength you operate on, I will be aware from now on and try not to interfere with your troll outing.

    As Hugh says, chapeau

  34. Hugh McEwan says:

    droid says:
    30/10/2011 at 10:41 pm

    Is this the beginning of the end?



    Thanks for that.

  35. stunney says:

    Adam, you appear to know what is happening. Do you have an approximate date for an insolvency event happening?

    You’re on record that it won’t happen this week.

    What about:

    a) the week after
    b) some time this month
    c) before Christmas
    d) early 2012
    e) post end of season
    f) won’t happen
    g) scoobieless

    Inquisitive minds wanna know, like ‘n’ at.

  36. Bhramblejelly says:

    Maybe this week is going to be a turning point for Scottish football. If RFC do enter some formal insolvency procedure then I do hope that the leaders in the SPL & SFL will have had some strategic discussions and are able to use the situation as the impetus for major change within the game.

    This event will prove that the way that RFC has been run is untenable. With Hearts seemingly behind with wages again and Motherwell not long out of administration, the outlook is bleak.

    The first thing that needs to be done is to deal with the offenders and to make sure that they are punished sufficiently. In my own view this should include separate penalties for administration (if that happens), for any breach of the Fit and Proper person rules and for any misleading of the SFA that allowed their name to be put forward for a UEFA licence if the various SFA submissions have been completed incorrectly.

    As always it will be the fans who suffer most but a strategic pre-pack admin cannot be allowed to become an attractive template for other clubs. Nor should club owners be able to hold back investment, stage manage an insolvency event and then put in money that should have been paid to the ongoing creditors.

    Even if RFC were to be relegated, what a shot in the arm for the lower leagues if RFC had to fight their way back to the top. Full grounds everywhere they’d go and tv cameras follwing them. It’d shine a light right across Scottish football’s divisions.

    The wider issue is how to deal with scottish football after such a seismic event. As I said, the model is not working.

    As a Celtic fan I despair at the lack of progress through the youth system at Celtic Park for the plain fact that the bottleneck is caused by overpaid, average players bought in to the club. We need to really be creative to develop Scottish players for Scottish clubs at all levels and give the boys a chance.

    The next thing I’d do is scrap the tv deal. Get games back to a Saturday 3pm kick off wherever possible. Get a proper highlights programme on a Saturday night & help to re-invigorate the game. Build the interest in the game, don’t keep knocking it.

    Get the kids to the game. My son’s ST is only £50. Ideal.

    Treat supporters properly. What other past-time would people pay so much for while being treated with complete disdain by the clubs, the football authorities and the police? It’s madness and I genuinely don’t know why we put up with it.

    Move the season to March – November. If we are going to be stuck with a game on the tv then make sure we’re not competing for crumbs from the table of Sky. Provide an alternative to garbage summer friendlies when Sky / ESPN / BBC / ITV want to show proper football. If we are going to dance to tv’s tune and get paid adequately for it, let’s find a differentiator that works for all.

    I’m not convinced that the financial rules should be so specific as to say wages to t/o ratio must be <60%, for example, but there does need to be open disclosure that Crown debts and trade creditors are being paid properly.

    Football is supposed to be the game of the people but sadly it's becoming more and more detached from the paying public. If the RFC situation does end up with an Insolvency Practitioner calling the shots and administering a phoenix then then the ramifications will kill the game.

    Who would want to be pay to watch a game where cheating is tolerated with sanctions of little more than wrists slapped? Fewer people watch the Tour de France and have confidence in the Olympic athletes because of the culture of cheating in these sports; Scottish football cannot afford to become futher besmirched or there will be a lot more gaps in terraces across the country next season (including my 2 at Celtic Park).

  37. Apologies- for not being on for a while. I have had a busy weekend.

    I gather that there have been some concerns about bigotry and abuse being thrown around.

    If anyone has concerns, just copy the link underneath the name of the poster and include it in a posting. Best way for me to see it is for you to add F*ck or H*n (add the letter u) and it will get moderated. I will take a look at the context of the posting and simply ban anyone indulging in inappropriate commentary.

    This is becoming larger than I can apply a post by post moderation upon, so anyone trolling will just have to go. I have issued polite warnings before, I will not be doing so again.

  38. Jean says:

    Paulsatim says:
    30/10/2011 at 10:55 pm

    Oh my goodness I had never heard of that! Apologies once again.

  39. andy Fitzpatrick says:

    MEDALS,,, ffs,,, I want to see tears streaming down the copeland road.
    Die die die ya,,,,

  40. Starting to look through comments… this is not the place to discuss the rights and wrongs of Scotland since the reformation. I know that it is difficult to discuss both Rangers and Celtic without the subject coming up, but I do not want it on my blog. There are plenty of messageboards on which to do so.

  41. TheBlackKnight says:

    Remember remember the 5th of November, gunpowder, treason and plot!

  42. Jean says:

    rangerstaxcase says:
    30/10/2011 at 10:58 pm

    Well said RTC good thing I’m as thick as a plank where all that stuff is concerned lol.

  43. iain mcg says:

    If I may be so bold, you guys are going round in circles and tying yourselves in knots, parent co insolvency? Dissolution of companies So what?

    Paulie walnuts, I respect your posts. You said earlier that CW making funds available to pay month end salaries was throwing money away. Why? The circular to shareholders makes it clear that any funds advanced by CW to rangers would be by way of loans, ergo covered by his fc and cash-neutral? Am I mistaken?

  44. droid says:

    twitter has erupted get on the #rangerstvshows

  45. Paulsatim says:

    Here’s an updated version of DR front page, http://i42.tinypic.com/hvq637.gif

  46. Stevie says:

    Bhramblejelly says:
    30/10/2011 at 10:56 pm

    I agree with most of that mate.

  47. Mark says:

    \paulsatim working for the DR ? brilliant

  48. Paulsatim says:

    Nope, just copying and pasting!!

  49. droid says:

    twitter has gone viral on #rangerstvshows

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