Wrapping It All Up

On 27th March 2011, this blog started what was to become a remarkable odyssey. Attracting a range of very well qualified contributors from across the Scottish professional world, this blog quickly grew to become the place for informed debate on the subject of the disintegration of Rangers.  It was also behind the vast majority of the factual revelations on this sorry story until it went mainstream with the broadcast of the BBC Scotland documentary “Rangers- The Men Who Sold The Jerseys” in late May 2012.

The motivation to write this blog was fired by a fear that backroom deals would allow Rangers to escape responsibility for its actions. After Darrell King (Evening Times & The Herald) rushed to get the first stories with specifics about Rangers’ tax problems into print in April 2010, the Scottish media (including King) implemented a policy of black-out and denial. In the silence of the first few months of 2011, it was feared that this entire story might run its course and never be reported. Indeed, the First Tier Tribunal (Tax) managed to complete two weeks of sitting in October / November 2010 without meriting a mention in the mainstream media.

Looking back, the idea of a deal or that Rangers could escape the consequences of their actions seems hard to believe. We can debate the probability that the required series of dark fixes could ever have happened, but in early 2011, it was an unacceptable possibility. The goal of this blog was simply to reveal the facts of the situation- no more and no less. The reputation of this blog grew because it was obvious that it contained facts, interpretations, and explanations not available elsewhere.  Although in more recent months the replies  began to look increasingly like a Celtic messageboard, the quality of discussion has always been of a high standard. (Sincere thanks to all contributors- and a special thanks to a few people who came forward with much more than just taxi driver tales and brother-in-law rumours. You know who you are!)

In starting this blog, armed with most of the facts that are now in the public domain, Rangers’ insolvency at some point in the near future was a certainty. What could not be predicted at that time was the meltdown that followed: liquidation and a new club forced to start in Division 3. Especially pleasing was the way supporters of every remaining club in Scotland came together to demand fairness and justice. Institutional efforts to forget 11 years of cheating met with a furious reaction from the most important people in the game- the fans. The availability of the facts helped everyone involved in this saga to make informed decisions.

That Rangers were forced to liquidate, form a new club, and restart in SFL Division 3 is a fair outcome. The last remaining task is to ensure that the sporting records are adjusted to account for the 5 SPL titles, 4 Scottish Cups, and 6 Scottish League Cups won during the 11 years of paying players with money they did not have. Drastic player cuts, or insolvency, sometime in the 2006-08 period would have been a virtual certainty if Rangers had not been avoiding tax. It is worth emphasising that had Rangers paid these players the same net salaries during the EBT period of 2001-2011, their wage bill would have been almost £50m higher (unadjusted for inflation). That extra £50m would have had to have been paid by Lloyds / HBOS or a chainsaw taken to the playing squad. This is the value of the financial advantage gained prior to Craig Whyte taking over at Ibrox.

Once the First Tier Tribunal (Tax) finally rules, the SFA will have to act. If, as I expect, that the FTT finds that Rangers had been knowingly operating an illegal implementation of the EBT scheme, it would discredit every trophy ever won in Scottish football if the honours acquired by Rangers during this time are not withdrawn. It is for others to decide if new winners should be appointed, but trophies gained through illegal means cannot be allowed to stand. Please do not believe the rubbish that somehow Rangers declared what they were doing to the SFA. You can see a typical “declaration” here. It does not even say that players were using the scheme. It does not say that any payments were made outside of contracts given to the SFA or SPL. It does not provide anything that would have let a tax expert know that something was amiss let alone football administrators- who are simply not qualified to do any kind of forensic accounting analysis. So let us stop with this “it was in the annual accounts” nonsense!

Short of assisting with interpreting the FTT findings (if necessary), the work of this blog is now complete. I urge you all to keep the pressure on the SFA to ensure that the last chapter of this story sees that justice is done.

The Last Drink In The Last Chance Saloon

It is roughly seventeen months since this project started. Despite all of the revelations from this blog, and from other ‘new media’ outlets, little has changed in the world of Scottish football. This might seem a strange claim given that the largest football club in the country has become insolvent and now sits on corporate death-row awaiting its execution. However, the major institutions that feed on the blood of Scottish football fans: the SFA; the SPL; and the newspapers- appear to have learned little from events in this time.

They still believe that the people who pay their wages are imbeciles. They still dish out fatuous lies and peddle disinformation as if Sir David Murray was still in his heyday. The hysterical exaggerations and tales of impending financial doom should be transparent to the businessmen who fill most of the Chairman roles at Scottish football clubs. Anyone with even a few minutes of business experience will see through the lies of the Scottish football establishment. These scare stories are not the issue. It is the dangling of long requested changes in the structure of the Scottish game that will present clubs from both the Scottish Premier League and the Scottish Football League with a dilemma.

From their public statements, it is clear that the driving forces behind this attempt at league-rigging are SFA Chief Executive Stewart Regan and SPL Chief Executive Neil Doncaster. Despite being paid to promote the Scottish game, they have spent recent weeks trying to convince advertisers and TV companies that their product is worthless without someone representing Rangers’ legacy playing in the SFL1 next season. It is as if Sevco Ltd was a panacea and that this new club will be guaranteed promotion to the SPL within a single season.

Let us be in no doubt. Scottish football faces a period of turmoil and some financial belt-tightening regardless of what happens in any of the upcoming votes. (If Servco Ltd are forced to start in SFL3, the nattering nabobs of the mainstream Scottish sports press will doubtless blame every player transfer and setback on ‘internet bampots’ and shortsighted fans of so-called ‘diddy teams’). The Scottish game became unsustainable and unhealthily unbalanced towards just two clubs. In an era when it is easy to watch the best football from every country all week long, we need to extract the cancers that have been devouring our game for over twenty years rather than battling to preserve them. Among the assorted symptoms of the illness facing our game are:

  • Scottish football has failed to develop a single stand-out talent since the early 1980s
  • Scottish football has been spending more than it takes in for far too long
  • Scottish football has fallen far behind global standards in the quality of entertainment it offers

Scottish football had become dull and uninteresting for all but the fans of the two clubs that could entertain thoughts of ever winning the league.

There is a now a golden opportunity for creative minds to remake the game. Instead, we have intellectual pygmies telling us that everything in Scottish football is fantastic and must be saved at all costs. What is worth saving? Declining attendances? A terrible set of TV contracts that do not realise the full value of the Scottish game? A national team that cannot qualify for any international competitions? We have a game that is viewed with universal contempt for both its lack of technical quality and the lopsidedness of its top division. This is where our game finds itself almost three decades after the “Souness Revolution” started at Rangers. The false economies started by David Holmes, and placed on steroids by David Murray, eventually devastated all around it. Rangers embodied the ideas that financial might made right and reckless spending was the key to success. Their demise should be a cautionary tale to others to get their house in order. Instead, the Scottish football establishment wants to send the signal that if you are going to fail, make sure you do it on a spectacular scale: we will make everyone else carry you if it goes wrong.

Mr. Doncaster trained as a lawyer and has an MBA. If Scottish football was a case study at a business school, anyone submitting a paper that recommended crushing the last remnants of fairness in the game to prop up a failed old-order would not get a passing mark. Doncaster in particular is failing. (Funny that Messers Doncaster & Regan find it so easy to predict the effects of Sevco Ltd playing in SFL3, but could not use these same skills to anticipate Rangers’ implosion. Even when the aforementioned ‘internet bampots’ had warned years earlier of a crisis brewing at Ibrox, the men with the crystal ball today were unable to see something that was so obvious). When the dust settles on this disaster one way or another, one can only hope that Doncaster and Regan have absented themselves. It is clear that they lack the imaginations required to improve our game. Our hopes for restoring the thrill of Scottish football now rests on the men who run the clubs in the SPL and the SFL. We must hope that they have the backbone to stand-up to being bullied and the foresight to realise that all that is being dangled by Regan & Doncaster can be obtained anyway- without sacrificing the game and without the hired hands for whom this all appears to be just a job.

If fairness fails and Sevco Ltd is able to field a team in the SFL1 next season, it is for each fan to make an individual decision on whether it is worth returning to watch a game played with loaded dice. For those who do decide to go back (I am still undecided), something will still be missing in the game. An unfillable void will have opened. The men who will vote on this decision have to realise that they are not just voting on short-term revenues. They are going to irreparably alter the Scottish game whatever happens. Money will ebb and flow in football in proportion to the excitement and quality of the competition. If fans believe that there is no competition because a winner is preordained, money will leave and it will stay gone.

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Poll:

Trying something new. Bear with me if this turns out to be a bridge too far for my technical skills.

Never A Penalty!

The Scotsman today is carrying a remarkable interview with former Rangers and Scotland coach Walter Smith. It is worth noting in a couple of respects.

This is the first interview (of which I am aware) that Walter Smith has given since withdrawing his short-lived bid to purchase Rangers. Since that time, Alex Thompson of Channel 4 News has been trying to get Smith to answer a few simple questions:

– Did you receive payment from any of the EBTs Rangers / Murray Group established to make tax-free payments to employees?

– If so, when did you receive these payments?

– If you received such payments, were they significantly after your employment with the club ended?

– If you received payments long after your employment ended, for what purpose were they made?

Of course, I have no way of knowing if the journalist, Alex Gordon, has ever heard of Alex Thompson or follows my twitter feed. Scottish journalist doing research? After recent reports that 83 Rangers employees had received tax-free payments through the EBT, it would be a fairly obvious line of questioning. That another former manager, Graeme Souness, received a series of payments through the EBT scheme ten years after he resigned also raises some awkward questions. If Mr. Smith did not receive any payments, or if such payments are easily explained, I am sure that he would have welcomed the opportunity to clear any misunderstandings. Oh well. back to you Mr. Thompson.

Walter Smith’s interview can be seen as part of the PR deluge of terrifying stories about the great disaster that will befall Scottish football if Sevco 5088 Ltd is not allowed to enter a team in the Scottish Football League system with instant promotion to the first rather than the third division. This past weekend has seen many such articles and we should get used to more shrieking hysterics as we approach some kind of decision point. (Such is the bureaucratic incompetence within the organisations that run Scottish football, no one is exactly sure when a final vote might take place).

Mr. Smith might be a genius at constructing anti-futbol defences (I do admire his pragmatic approach to coaching), but he is either being disingenuous in this article or is struggling to grasp the administrative details. Smith is reported as saying: “Ten years ago Motherwell went in to administration. Four years ago Gretna went defunct. So, surely the SFA should have put sanctions in place then? That’s why I am saying they have been negligent. Now we’ve got a free-for-all around Rangers and everyone is having a kick at them”

This is a great example of the type of factually incorrect statements that the Scottish media is fond of regurgitating. As the old cliche says- an untruth repeated often enough is eventually accepted as fact. So let us refresh Mr. Smith’s memory.

The SPL introduced the 10-point penalty for going into administration during a season, or being in administration at the start of season, for the beginning of the 2004/05 campaign. Motherwell (and Dundee) were already in administration when the new rule came into effect. Both clubs were able to conclude CVAs fast enough to avoid the 10-point penalties and  to continue the life of the existing legal entities. The same rules that were introduced then have been applied to Rangers. The SFA are a bumbling shambles, but let us assail them for their actual mistakes. It is not the SFA or SPL’s fault that HMRC want to pursue investigations of what happened at Ibrox in the last 11 years and would not agree to a CVA.

The case of Gretna is actually similar to what happened to Rangers FC. Gretna owed its creditors (including HMRC) more than it could pay and the club went into administration in 2008. Unable to fund a CVA that was acceptable, Gretna FC was liquidated. That was the end of the Gretna story. Supporters formed a new club, Gretna 2008 FC and were admitted to the East of Scotland Football League. (Those of us who would accept a Sevco 5088 Ltd team entering the third division are actually still offering this club a huge advantage over every other newly formed team). If only Gretna had Duff & Phelps on the case to promote fictions such as the one that says that a liquidated company lives on so long as its assets are sold as a job-lot rather than individually.

Mr. Smith appears to be deliberately trying to confuse us and drum up sympathy for the new club. The only punishment that has been administered in the Rangers saga was to the old Rangers FC for experiencing an insolvency event. The rule that applied this penalty has been on the SPL books for eight years! (The SFA does not need to have a separate punishment).

As yet, there have been no penalties applied for the oldco Rangers FC pocketing the millions of pounds that were deducted from players’ wages to be paid in tax while other clubs paid their dues.

As yet, there have been no penalties applied for oldco Rangers paying the majority of their players through a mechanism that is, at best, in violation of SFA and SPL rules. I expect that when the First Tier Tribunal (Tax) returns with its findings in Rangers’ appeal of the Big Tax Case, that use of an illegal tax strategy will be added to the list of offences. If found to be using the EBT scheme illegally, it will prove that Rangers obtained the benefit of paying its players with money it did not have. How can Smith complain about penalties that have not been levied yet?

We all know this stuff already, as I am sure, Mr. Smith does too. There is a studied ignorance that has become fashionable in certain circles of late. They pretend to not understand the facts. In this case, Smith is trying to drum up support for the notion that people have been “kicking Rangers while they are down” and “haven’t we been punished enough”?

Let us be fully aware of the truth: The Rangers Football Club plc has not yet been punished AT ALL for its actions of the last eleven years.

There is a simple way for Sevco 5088 Ltd to avoid all talk of sanctions and punishment. Apply for entry to the Scottish Football League third division without claiming that a transfer of the oldco’s SPL membership has taken place. By not forming any ties to the old club, Sevco 5088 Ltd can avoid any historical liabilities. My guess is that all concerned- the SFA, the SPL, and the clubs would breathe a sigh of relief and would be delighted to draw a line under this disaster. However, time is not on their side. If Sevco 5088 Ltd is to field a team of any description next season, an acceptable solution must be found quickly.

What Now For Rangers?

The announcement that HMRC would oppose the CVA proposal for rescuing Rangers FC is just a few hours old, and I thought that a quick post was due. However, I do not have any new information. I just wanted to move this blog-page along.

As it starts to sink in that The Rangers Football Club plc is now destined to end in corporate failure and liquidation, the questions are coming thick and fast as to what happens next.

The simplest answer is that there are too many permutations to provide a certain path forward. HMRC had previously indicated that they would want Duff & Phelps replaced by BDO as liquidators. I expect that they will want ‘clean hands’ from this point on and that there will be fresh faces atop the marble staircase within a few days. However, it is possible that the liquidators will want to proceed with an asset sale to Green. Other bidders may emerge (or reemerge).

Given the tiny amounts that would be raised in a public fire-sale, it does appear that an asset sale to a newco is almost certain. So a new organisation purporting to represent the legacy of The Rangers Football Club plc will emerge.  However, if they are to be playing in any league next season the asset sale will have to be unopposed. If there are legal challenges to a sale, we could see at least one season without any Rangers-type team.

The focus will soon turn to the SFA and the SPL. The ruling bodies of professional football in Scotland have the responsibility to determine whether a newco attempting to transfer Rangers’ league ‘share’ and SFA membership will be allowed to join the top flight of the Scottish game- and if so- when. What must be clear is that any organisation that has bought another club’s share / membership must also face the punishments that awaited the old club. To allow a newco-Rangers to ditch its legacy responsibilities will be to set an expectation that others can do likewise. The battleground is now going to shift and we can expect a massive effort to convince us that an SPL without Rangers would be unbearable.

A Permanent Embarrassment And An Occasional Disgrace

The late, great Ian Archer wrote the famous words in the title above for an article in The Glasgow Herald in October 1976. Rangers supporters had just rioted in Birmingham following a friendly with Aston Villa. Back then, football clubs generally were shamed by the actions of fans. I doubt that Archer could ever have imagined the scale of boardroom malfeasance that now surrounds Rangers. The revelations of how the club funded its success in recent years make a mockery of our game as a fair sport. The damage done goes far beyond mere trophies. Almost every other club tried to keep pace with Rangers by throwing fortunes at often second-rate foreign players while ignoring the need to develop domestic talent.

When making claims about the damage created by Rangers previously, some accused me of exaggeration. Yet after yesterday’s events- including the court drama that overturned the club’s 12-month signing ban- few observers could avoid drawing the conclusion that Rangers are now simply a disaster for the Scottish game.

Sporting integrity has been shredded. Speaking of which- have Rangers complied with the SPL’s demands for access to the commercial documents regarding the ‘unofficial payments’ issue yet? If not- why not? There comes a point where you have to start wondering what documents were destroyed by those “Shred It” machines for which the club has not yet paid.

Scottish football creditors will get almost nothing in the proposed CVA. In the choice of paying football creditors to limit punishment from the SFA & SPL versus the certainty of HMRC refusing to sign off on the deal, Duff & Phelps have chosen to screw the clubs who sold players to Rangers the past year or so.  They will never get the money they were promised. (More on the HMRC’s conditions for a CVA later).

All manner of underhand methods appear to have been a routine part of putting in a shift at the top of the marble staircase for at least a decade.

And now, just when things seemed as if they could not get much worse, Rangers have invoked the threat of mutually assured destruction for the SFA & SPL. As has been well documented elsewhere, going to court to get the SFA’s 12-month registration ban thrown-out places all of Scottish football in jeopardy.  FIFA and UEFA will not take this lying down.

In all of this pandemonium, there has not been anything vaguely like an apology from the club or the individuals responsible for leading our game to the precipice. There has been nothing except snarling arrogance plus a stream of veiled threats and intimidation from people who should really know better.

Throughout this entire saga, I have not wanted Rangers expelled from Scottish football. I did not think that it was even remotely possible and I would have questioned whether it would have been in the best interests of the game. I did want an acknowledgement of what happened. I did want meaningful punishment. However, there comes a point where enough is enough.

Is the SPL such a roaring financial success that its current formula must be preserved at all costs? No. Is it possible that with the dead-weight of Rangers’ boots lifted from the Scottish game that attendances at many other clubs will rise along with their fans’ hopes of actually winning something? Absolutely.

Those who argue that Scottish football cannot succeed without Rangers have failed to quantify this fear-mongering. Yet posters on blogs like this one have demonstrated- in numerical detail- just how few additional home fans need to start attending at most clubs to wipe out the benefit of Rangers’ away support. The TV deal? It is not as if it delivers fabulous riches to any club as it stands.  Clubs can trim costs (as they should) and would survive fine in the short-term.  In the medium and long-run, there is every reason to believe that Scottish football would be revitalised. The last time Rangers were in “crisis”, Scottish football thrived- with Aberdeen and Dundee United regularly sharing the spoils, financial as well as sporting, with Celtic during the early and mid-1980s.

There comes a time when Scottish football must act to prevent further damage. In doing so, it has a chance of making the stain of embarrassment less permanent. Of the options available, a one year ban from all competitions would seem to be a starting point for considering apt punishment. The next penalty down the list of official sanctions- exclusion from the Scottish Cup- would be far too lenient for a club that appears to have completed the entire 2011/12 season without paying any PAYE or NIC. Other clubs had to cut costs and make tough decisions to get through the year. Other clubs had to take roughly half of their staff budget and hand it over to HMRC. Even in administration, Rangers got to avoid cutting their playing squad by screwing the British taxpayer over yet again. Allow them off with a wrist-slap and many fans will just see Scottish football as a form of professional wrestling with Rangers FC as the scripted winner.