Rangers 2011 Financial Results: What Mr. Whyte has not told you


I have been sitting on Rangers 2011 financial results for several weeks.  The decision to not post them on here was partially in the hope that Mr. Whyte would grasp the opportunity to have a massive creative accounting party with the numbers.  Releasing my figures after the fact could help expose any slipperiness.  Alas, the numbers in both documents are pretty closely aligned.  The few numbers which are not in complete agreement are only off by margins that are consistent with the polishing and refinement process that will take place during the preparation of financial statements for any company. The biggest difference is the charge for the “wee tax case” (Discounted Options Scheme) in the official Rangers data.

You can read and compare the data for yourself here.  One benefit of using my copy of the accounts is that you get to read the numbers against the traditional Rangers’ graphic layout. I am sure that we will all agree that this presentation is much more dignified than the tawdry Times New Roman affair available on the club’s website.

The differences in this file and the unaudited numbers released by Rangers can be discussed in more depth in the blog replies, but I do not see anything materially amiss. Curses! Foiled again.  The meaning behind the numbers is more important.

    • Plus ça change

It is seven months since Whyte completed his purchase of Rangers. Yet reading the Chairman’s Statement accompanying the unaudited numbers was like a trip down memory lane. You could be mistaken for hearing the mellifluous voice of Sir David Murray as you read. No financial disaster was too great to be spun as a period of great opportunity and success. Data is cherry-picked to emphasise any good news that can be found and a jaunty, upbeat tone is always appropriate. For example, the weight placed on heralding that the club is now free of the yoke of bank debt and interference. Overlooked is the fact that Rangers still owe this money to their parent company and that far from delighting in being ‘bank-free’, Rangers’ board spent a lot of effort after the takeover to try to find a bank that would lend to them. (I have the documentary evidence to prove it too). Of course, Whyte is hardly unique among corporate Chairmen in this regard, but he has, yet again, missed a golden opportunity to level with the very people whose support he will need in the coming months if he is to see Rangers safe.

    • What was missing

The superficial good news for Rangers was the reduction in net debt and the impressive cash balance reported at 30 June 2011. However, Mr. Whyte appears to have embraced a technique long favoured in the east end of the city for generating soothing headlines and low net debt figures. As we have discussed in the replies section of this blog many times, net debt is a meaningless number- especially for a football club. It is simply “bank debt minus cash” on just one day in time. However, it does not include money owed to other creditors. If you stop paying your bills before the end of the season, you will end up with more cash. The bank debt will stay the same and the increased cash will result in this “net debt” figure dropping. The day after your reporting date, you can pay your bills and watch your cash pile evaporate, but you do not have to report those numbers to the public. It is like skipping a lease payment on your car. You will have more cash in the bank. Your personal “net debt” will have dropped, but you are deluding yourself if you think that you have achieved anything.

To get an accurate picture of Rangers’ real debt, we need to include negative working capital (the difference between what others owe you and you owe others in the short-term).
The following information was not included in yesterday’s announcement and is needed to understand the real debt picture:

The meaningful debt (click here for a calculation) is actually about £22.7m and not the £14m claimed.

More interesting is the verification of what this blog has been telling you in recent weeks.  Once the increases in trade creditors and social security/ taxes (i.e. bills that they had chosen to not pay to allow the cash balance to rise) are  accounted for, Rangers actually had only £644k more cash at 30 June 2011 than they had on the same day in 2010.

We have been telling you about this: Rangers have not been paying their trading partners nor HMRC as a matter of deliberate policy.

    • The big picture

Other than for those who enjoy financial navel-gazing, these accounts do not tell much about Rangers’ future. Until the FTT(T) returns with its findings, Whyte has to sustain the club by whatever means he can muster. Had the club been paying its bills as they fell due, they would have exhausted the cash from normal operations about now. By delaying every bill, Whyte gets to extend the life of the club incorporated in 1873 a bit longer. To survive until a “death with dignity” can be arranged following the crystalising of the Big Case bill Whyte will have to access external funds. Perhaps he is a man of fathomless wealth and can do so with his spare change. If Whyte cannot arrange external financing, he is going to have to sell off a lot of family silver between now and May just to avoid the blame for any insolvency.

With Whyte’s financial results appearing as a reasonably credible representation of Rangers financial performance last season, we are left to ponder the question: why are they unaudited?

The Glasgow rumour mill has been rattling away for a couple of weeks about discord in the relationship between Whyte and Grant Thornton.  I cannot say more than that, but I think that Rangers’ accountants will have finally ran out of patience with the risks associated with the Rangers audit.  (Whyte does not have the ability to dangle the MIH work in front of them either).  There will be one issue that is causing more trouble than any other: the inclusion of a going-concern warning.

It is the client management / board of directors’ duty to provide a statement on the validity of the assumption that the business is a going-concern i.e. it is not expected to fail anytime soon.  The auditor is expected to review that statement and if he has material concerns, to provide a qualified or modified audit opinion.  If the client and the auditor cannot agree?  In the old pre-Arthur Andersen / Enron days it was much like a protection racket (or an insurance policy if you like).  The fee could be increased to compensate the auditor for his increased risk for signing off on the accounts without raising the alarm.  In recent years, conflicts like this are more common and chartered accountants are less likely to yield to client pressure.  There is no obligation on Whyte to use Grant Thornton.  He could just as easily get a “single shingle” chartered accountant to sign off.  To be frank, I am surprised that he has not already done this.

One of the practical problems of a qualified or modified audit opinion is that Rangers would have to move to quarterly reporting i.e. producing financial statements every three months.  For a man with a less than stellar record of filing corporate documents on schedule, Whyte is unlikely to want to provide such frequent insight into his affairs.

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.

481 Responses to Rangers 2011 Financial Results: What Mr. Whyte has not told you

  1. craig says:

    altim
    Whyte is gearing up for a pre pack administration. He is avoiding paying creditors wherever possible as when he does press the button he knows that the Administrator will strike a deal for all creditors, including HMRC, to be paid something like 20p in the £. Whyte is the secured creditor and he knows the HMRC know there won’t be much left in residual assets over and above Whyte’s call on the first £19m of assets, at least in the medium term. Therefore, if RFC lose the tax case the HMRC will have 2 choices – settle for circa £10m or be paid 20p in the £ – both outcomes resulting in a tax bill of around £10m. That’s the reason for the delay, Whyte is just about keeping the club going as long as he can – the longer he waits the more he saves and the more likely HMRC will be to back down in the hope of getting any sort of return. That’s my view anyway.

  2. TheBlackKnight says:

    http://www.dailymail.co.uk/sport/football/article-2066265/Alex-McLeish-told-deliver-European-football–Randy-Lerner.html

    I stand corrected. 🙂

    What about other Rangers allies? Derek McInnes at Bristol City? Will Leicester put in a ‘not of this world’ bid for Jelavic? (again)

  3. altim says:

    This is what I meant in the event of having to sell assetts/players if needed. Reduced values for immediate payment etc. But can anybody answer my original question of “is this the course of action with regards administration and liquidation”?

  4. MDCCCLXXXVIII says:

    Try again TBK – Didn’t Bristol City recently announce £11 million losses for last season?

  5. MDCCCLXXXVIII says:

    Derek won’t have big bucks to spend….

    http://www.bcfc.co.uk/page/AnnualAccounts

  6. altim says:

    Can’t see leicester buying Jelavic. Different manager and have started charging 10p to access their website. Also asking you to sponsor players from £19.99. Might get them 2 Lafferty’s and an Edu.

  7. jonny says:

    altim says:
    Bet they wished Souness was still in management

  8. TheBlackKnight says:

    MDCCCLXXXVIII on 02/12/2011 at 5:24 pm said:
    “Try again TBK – Didn’t Bristol City recently announce £11 million losses for last season?”

    Sorry MDCCCLXXXVIII, I couldn’t do the Tongue in cheek emoticon 😉

  9. MDCCCLXXXVIII says:

    TheBlackKnight says:
    02/12/2011 at 5:51 pm
    MDCCCLXXXVIII on 02/12/2011 at 5:24 pm said:
    “Try again TBK – Didn’t Bristol City recently announce £11 million losses for last season?”

    Sorry MDCCCLXXXVIII, I couldn’t do the Tongue in cheek emoticon 😉

    ———————————————————————————————————————-

    Ah got you 😉

  10. Burton says:

    If RFC last long enough to have a January fire sale, wouldn’t HMRC be able to have any transfer fees impounded?

  11. Davythelotion says:

    Jelly boy will go for £2m max, he’s not consistent enough for English football, an expensive sub. Davis and McGregor would be foolish to go before summer/insolvency, they stand to gain much more by sitting tight. As for the rest….

  12. Lord Wobbly says:

    MDCCCLXXXVIII says:
    02/12/2011 at 5:24 pm
    Try again TBK
    ~~~~~~~~~~~
    What about Corinthians? 😀

  13. StevieBC says:

    For RTC, [or anyone else who has heard anything];

    Do you know what the working atmosphere is like at RFC ?
    [Is the Christmas Party still on, or can they not book a venue ? :)]

    And especially in the Finance Department.
    Are there any dissenters amongst the workers – or amongst the Board even ?

    I thought we would have heard something leaked by now, criticising the MBB methods.

  14. Lord Wobbly says:

    or Hamburg? 😀

  15. longtimelurker says:

    Apols if this has been posted.

    Lifted from KDS.

    The guy posts on here BTW and is responsible for turning over a lot of stones wrt whyte.

    *Starts*

    Thanks to the lads who forwarded me on details about Willow International Limited.
    This was a company registered in the 1990s at the same address in Bellshill as an office of GM Mining, a joint venture between Sir Minty Moonbeams and the feuding Gillespie brothers.
    Just a few streets away were the registered addresses of several of Craig Whyte’s firms.
    These guys moved in the same circles. Mining firms need plant hire. Wee Craigie and his dad supplied it.
    In 1999, GM Mining were rumoured to be launching a takeover of Waverley Mining.
    Instead a little-known company, Corporate Resolve (effectively controlled by Craig Whyte) launched a bid that failed dismally.
    Waverley Mining Finance then became Palmaris. And their first purchase? Custom Services Group, owned by wee Craigie’s dad Tom.
    Mind you, that ended in acrimony when, two years later, Palmaris attempted to sue Tom Whyte for effectively selling them a “pup”.

    So far, so what? Well, it indicates that Whyte and Murray have been known to each other for decades.
    Then, three months ago, it was announced that Whyte’s Liberty Capital had transferred £104,000 in Merchant House Group shares to a firm registered in the Seychelles.
    Its name? Willow International Limited.
    Heck of a coincidence there.

    Since Whyte appeared on the h@ ns scene last year his past has been guarded by some very expensive PR goons, not least Mediahouse boss Jack Irvine and some of his old pals, who have “persuaded” Scotland’s biggest-selling newspapers to ditch any attempts to research the Googly-Eyed Fud’s chequered past.
    Is Whyte paying for all of that? Hmmmm . . .

    And then there was Alistair “Surrender No” Johnston revealing that when he tried to halt the Whyte takeover, Murray said: “Too late.”
    He was then threatened with the club going bust by “the bank’s man” – almost certainly Muir who, of course, was also working for Murray.

    Conclusion: I am now more certain than ever that Sir Minty Moonbeams is behind this whole “fakeover”.
    If someone revealed he had supplied the £18m to buy out Lloyds, or was paying Mediahouse’s bills too, I would be less than surprised.
    Whyte is simply the “useful idiot” required to take Rangers to the edge of the abyss.
    Until Sir Minty Moonbeams arrives on his white charger to “rescue” the club he has done so much to destroy.
    Terrorists, nightclub owners, former Celtic directors, Russians? Naw, it’s Minty.
    Within the next month he will re-emerge from his hibernation, just as Whyte is propelled towards eternal exile.
    Never underestimate this guy’s low cunning or massive ego.

  16. Lord Wobbly says:

    ….it’s all about networking 😀

  17. StevieBC says:

    longtimelurker says:
    02/12/2011 at 6:08 pm
    Apols if this has been posted.
    Lifted from KDS.
    …Naw, it’s Minty.
    Within the next month he will re-emerge from his hibernation, just as Whyte is propelled towards eternal exile.
    Never underestimate this guy’s low cunning or massive ego.
    ====================
    Shirley not ?
    I can’t believe that Sir Minty would want to come back – or that the fans would want him back ?
    Too much has been exposed – here of course, but not in the MSM, yet.

    The only way he could get back – IMO – is if he was guaranteed blanket positive spin from the MSMM…oh hang on – what have they being doing for last 20+ years ?!

  18. TheBlackKnight says:

    Lord Wobbly on 02/12/2011 at 6:08 pm said:
    “….it’s all about networking”

    PMSL !!!!!! 😀

  19. longtimelurker says:

    That post might be highly speculative and indeed a load of shite but one things for certain and that is there is someone pulling the strings behind whyte’s back.

  20. StevieBC says:

    ====================
    It’s an interesting post.
    We have had lots of debate in recent days/weeks about whether there is a backer or not, so don’t want to go over old ground again here.

    But, being relevant to this particuar Post, I still think that the MBB is operating on his own and the release of ‘Final unaudited’ accounts is consistent with this view – IMO.

    I think he has mismanaged the issue of the accounts, because alongside them he has also issued a lengthy, personal and bullish statement on the future of the business.

    IMO – his opinion is worthless in the absence of an audit opinion.

    He is continuing to attract negative attention – and I just cannot imagine that a wealthy backer would be quietly sitting on the sidelines, waiting to pick up the pieces.

  21. StevieBC says:

    [For clarity: I had missed off initial Comment.]

    longtimelurker says:
    02/12/2011 at 6:32 pm
    That post might be highly speculative and indeed a load of shite but one things for certain and that is there is someone pulling the strings behind whyte’s back.
    ====================
    It’s an interesting post.
    We have had lots of debate in recent days/weeks about whether there is a backer or not, so don’t want to go over old ground again here.

    But, being relevant to this particuar Post, I still think that the MBB is operating on his own and the release of ‘Final unaudited’ accounts is consistent with this view – IMO.

    I think he has mismanaged the issue of the accounts, because alongside them he has also issued a lengthy, personal and bullish statement on the future of the business.

    IMO – his opinion is worthless in the absence of an audit opinion.

    He is continuing to attract negative attention – and I just cannot imagine that a wealthy backer would be quietly sitting on the sidelines, waiting to pick up the pieces.

  22. Slim shady says:

    There is a lot of nonsenses in here about Murray being behind this whole thing.
    The truth is he is in serious trouble with Lloyds on MIH and may lose it all, particularly if the tax case is lost. The exposure of the rest of the group apart from RFC is an 8 figure sum too.

    He has understood to have given a substantial personal guarantee to the bank.

    So he has enough on his plate & would not be allowed back in by the bank, by hmrc or probably by an all new, testosterone-charged SFA.

  23. Ian Ferguson says:

    Auldheid says:

    02/12/2011 at 9:42 am

    Adam says:

    02/12/2011 at 8:16 am

    So the “cheating Celtic” only started in 2009 in your mind Auldheid? Again I raise you a “William” who actually believes that since the sporting integrity nonsense spouted by Peter lawwell that the SFA have been “infested by Celtic sympathizers” including referees and linesmen who are hell bent on cheating rangers.

    Now you both can’t be right so one of 3 options prevails.

    1). He is right and you are wrong.
    2). You are right and he is wrong.
    3). You are both wrong.

    The laws of probability and all that…….
    ———————————-

    The only mention I made of cheating was in an earlier post when I said there was no point making that claim as there was no proof. What I did say was that officials in charge of officiating at a game involving Celtic, including their top supervisor, whose job in that position depends on being trusted, lied. Broken trust does not mean cheating, it means trust is broken and needs rebuilding.

    What I also said was the SFA were possibly corrupt but that was unprovable but they were self evidently incompetent. I said that the way to avoid all suspicions (and restore trust) was a more transparent and accountable SFA.

    I asked if you agreed with that but have seen no reply.

    I’m not your paranoid Rangers counterpart and I would be obliged if you and CO would refrain from trying to portray me as such.

    Do you agree that the objective of having a more transparent and accountable SFA is a good thing? If so does it matter how it was brought about, that something wrong was used for rightful purpose?
    ++++++++++++++++++++++++++++++++++++++++++++++++++++++++
    Auldheid, You hit the nail right on the head & articulate the situation well, both past & aspiration for a fairer future.
    Unfortunately I don’t think Adam will listen, he has his peculiar trait of loving stats but ignoring facts which do not tie in with his agenda.

    Keep up the good, factual posts & keep pushing for the level playing field.

  24. danglywangerspanker says:

    play the ball, not the man. only when it suits.

  25. danglywangerspanker says:

    let’s take this analogy further. rangers playing football. rangers playing taxes. rangers playing the scottish league. rangers playing the media. rangers playing the sectarian card. rangers playing the ‘ball’, not the man.

  26. Ian Ferguson says:

    Auldheid says:

    02/12/2011 at 10:22 am

    Adam says:

    02/12/2011 at 9:56 am

    Adam

    I have been very careful right from the off to avoid that emotive term. It generates heat and little light, it was a barrier to making any progress. If I have used it other than as I explained I have gone against my own rule. To say cheating took place would be to infer all sorts of motives that are at the end of the day unprovable, unless of course evidence of motives came out.

    As to reforming the SFA it requires culture change, but I have experienced that in my old work environment and it can be made to work. A feature of the process was fear on the part of those at whom change was aimed and a couple of years later wondering why it had not been done sooner. If I can go back to my original point using the Tait story, lets stop playing the old game and start playing a new one that eschews all that was wrong (in the sense of not working) about the old game.

    The problem is the pace that football administration works at but I am encouraged that
    a) The SFA voted for reform
    b) The speed that the new Disciplinary process was introduced and the work that went into seling both by Stewart Regan.
    ================================

    Again Auldheid you have nailed the requirement for change exactly.
    It must come come from both sides, in the poll for Celtic fans singing, I voted that we don’t need any IRA old or new songs, although they are not illegal, they can cause offense & we have a big enough Celtic song book.

    I said at the time the new legislation was designed to create a level playing field by criminalising us & reducing the situation to a “they are both the same” situation..

    This has proven to be true, the same Police Force who praised RFC fans for creating a great atmosphere while singing illegal songs have decided to try & criminalise non illegal songs & to escalate the issue by reporting these directly to UEFA .

    If it is acceptable for the Police to report directly to UEFA about singing why did years of illegal Racist ,Fascist singing go unreported?

    Adam is famous for his love of stats but they are bullshit,

    example: Boughy gets booked, goes on to commit SEVEN bookable offences including one in the penalty area with no reaction from the ref & a WINK from Boughy, I will not cover the rest of the inequality in this game , this example will do. The stats say ONE foul.

    Examples where wrong decision making have caused League wins in RFC favour are there to be seen, as are punishment for offences applied to others but not Rangers players. For example RFC won the league by a goal in 2003?, non penalty awarded against Hearts which saved Rangers season, Hearts player pushes linesman… compare HIS punishment to the RFC duo whose misdemeanours caused the ongoing bull from the Gov, which again became a both to blame issue.

    Rant over, you are right, if things are to improve a proper level of justice must exist for all & it must be seen to exist & be fair or football will die.

    I voted for a 10 point penalty against RFC in the poll but have changed my mind, the denial & whataboutery of Adam & the general we arra peepel attitude of RFC fans makes me think they deserve all they SHOULD get, but probably won’t.

    Auldheid sums it up, it’s a bit like apartheid, two sides which need a common ground & it can only come through a total reform of the existing governing body to make ALL their decisions transparent & open.
    .

  27. Ian Ferguson says:

    calderon says:

    02/12/2011 at 10:37 am

    Adam says:
    01/12/2011 at 11:35 pm

    Tbk – I honestly can’t think of any. What I find crazy though is that people actually believe that Celtic Directors with in the region of 25 years service in the SFA sat back and allowed their club to be prejudiced against by fellow officials with no connection to the club they were apparently helping all along.
    _________________________________________________

    So, you are saying that these Celtic directors should have been able to see into the future when Rangers’ use of employment benefits trusts and non tax payments became apparent in 2011 and taken action?

    It looks like the responses to the blog have settled into that routine where Adam feels that he is in the driving seat.
    ================================================
    It is also bullshit on a basic level, according to Adam any Celtic Rep at the SFA should be able to influence or even get areport on committee meetings.

    What a crock of shit, that committee makeup is exactly what has made the SFA unfit for purpose & badly in need of reform, or am I being, in the words of PEAT “TIRESOME” for raising the issue?

  28. Ian Ferguson says:

    Justinian says:

    02/12/2011 at 12:40 pm

    Adam says:
    01/12/2011 at 11:35 pm

    I’ve emailed Mulder and Scully though. If anyone can understand these thoughts. It’s them.
    *************************************************************************************
    Well, you keep mailing them, my son.

    You may find evidence such as I possess.After graduating from GU I was apprenticed to a Lawyer who was a noted Celtic personality, indeed a Board member. The titbits which came my way at morning coffee breaks would shake to bits your confidence in the glorious institution which you place your faith in.

    A scourge on Scotland all of my life and, sadly, I do not see much changing when the likes of you continue to offer up some kind of defence.
    ===================================================
    Unfortunately it is more DENIAL than DEFENCE, the defence seems to be a complete mix of whataboutery, flawed stats, denial & as a last resort ignore the pertinant point.

    His favourite tactic is mass posts to deny & deflect, then agree a wee bit, then what about this or that & as a last resort PARANOIA.

    But hey, we are as bad & as skint cos his stats prove it……. YAWN.

  29. altim says:

    Craig
    Sorry missed your comment, but thanks for the info. Is it not the case that the criditors have to sanction the offer of say 20p in the pound. I can remember a few years back a company owed my business a small amount of money but went into admin and subsequently liquidation. I was of the opinion that they liquidated at 12p in the pound or something because the administrators could not agree a figure with creditors. They sold everything from stock to the kitchen sink(literally). Does this not then involve the property portfolio or is it possible that this is also mortgaged and therefore not assett.

  30. YANK says:

    Rangers Tax Case
    “What they are saying is 99 percent crap” Craig Whyte

    It appears to me that is what Whyte and Murray,before him, feel about Ranger supporters.

    Occupy Ibrox!!!!

  31. Alright folks- I am tired and bored with having to remind people that this is not the forum to debate the reformation. Whatever legitimate points either side might like to make, please make them on a different website

    I know that it is a bit arbitrary- and I am probably more concerned about style designed to inflame than I am about substance- but just give it a rest.

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