So where did it all go wrong for Rangers Football Club?
Since venture capitalist Craig Whyte acquired Sir David Murray’s 85.3% shares in the Scottish champions in May 2011, the club were doomed before they knew it when he took over the club for just £1.
This is the story of Rangers downfall.
Predecessor Murray was owner of Rangers from 1988 - 2011, after a £6,000,000 takeover from Nevada-based Lawrence Marlborough. During his time at the Glasgow club, Murray oversaw Rangers win nine consecutive league championships from 1989-1997, during the period of when Graeme Souness (1986-1991) was in charge.
Walter Smith took charge (1991-1998) and a new training complex was built, an idea that Murray thought that the club would see Rangers’ mount a serious challenge in European glory. The club went on to win two more League titles and three cups. Despite their glory, the costs soon started to build up.
“For every five pounds Celtic spend, we will spend ten.” This was the statement Murray made that would soon become the avalanche of Rangers’ debt problems.
Manager Dick Advocaat replaced Walter Smith after Celtic won the SPL and he went crazy with big name signings joining the Ibrox club such as Paul Gascoigne (reported fee of £4.3m), Ronald de Boer (£4.5m) and Tore Andre Flo (£12m) during the 2000/2001 season.
Advocaat’s reign ended when Celtic won the title back in 2001, and Rangers’ were soon reaching debts of up to £50,000,000. Murray sanctioned the Employee Benefit Trusts (EBT). This was to minimise the club’s tax liabilities for employment.
The problem was with the this tax strategy was that it was meant to be used for non-contractual payments to employees.
In 2002, with doubts totalling up to £80,000,000, Murray stood down as Chairman and handed over to John McClelland.
Murray returned just two years later looking to clear off the debts that were owed, looking to pump in £57,000,000 to reduce any outstanding debts. Only £51,000,000 were raised, but underwritten however and it was transferred off Rangers’ books and into his company, Murray International Holdings (MIH).
Murray revealed in 2006 that he was considering in cutting ties with the Scottish club and was quoted saying: “It's not a 'For Sale' sign per se, but obviously I don't want to do this forever.”
Fast forward amidst the crisis the club themselves in and in 2011, Murray sold his shares to Wavetower Limited, owned by the company Liberty Capital, ultimately owned by Craig Whyte.
Who is Craig Whyte? In a nutshell, Whyte is a Scottish businessman brought up in a business orientated family, and at just 15, after taking an interest in financial markets, it is reported that the teenager made more than £20,000 buying and selling shares before he left school.
He went on to own his plant-hire company called Whyte Hire. But in the early 1990’s the business went bankrupt with debts reported to be around £300,000.
At just 26, he was Scotland’s youngest self-made millionaire. After selling off most of his businesses, he moved to Monaco. He soon returned back to the United Kingdom, returning to London as a venture capitalist.
He become the head of London based company Liberty Capital, a business that specialises in turning around distressed businesses and eventually selling them on, despite it being dangerous, he made it a successful business.
His purchase of Rangers Football Club for £1 was not taken lightly, despite then manager Walter Smith welcoming Whyte’s takeover saying that it would “bring stability to the club.”
Whyte said he would clear off the overdraft of £18,000,000 owed to Lloyds TSB but there were immediate doubts. The uncertainties of the businessman’s ability to provide funds for the football club were soon echoed by former board members Alistair Johnston and Paul Murray. The history of the Scot is misty and far from bright and his murky past was exposed by BBC Scotland’s documentary Rangers: The Inside Story, which was aired in October 2011.
The documentary claimed that Whyte had illegally been a ‘de facto’ director of a company called Re-Tax during a seven year period in which he was banned from doing so.
Convicted fraudster and a well known associate of Whyte, Kevin Sykes was the ‘fake auditor’, who looked to sell off the company before it was wound up in 2003.
The allegations were supported from a member of Insolvency Service and was revealed that he was banned after his previous company, Vital Holdings Ltd, failed to produce satisfactory accounts.
This was followed by various other acts that lead to his ban such as claiming he had made a payment to Inland Revenue, to which they say they still have not yet received the £100,000 that was owed.
Back to the takeover of Rangers FC, Whyte waltzed in to Ibrox, with his past thought to be rosy, and considered to be a saviour to the Scottish giants.
On his purchase, Whyte said at the time: “Obviously I'm a massive Rangers fan and have been since I was a boy. I'm here first and foremost because I'm a Rangers supporter. I also see a great opportunity and think that Rangers can be a great worldwide brand. I believe there are many commercial activities that can be expanded on.”
Whyte planned to clear off Rangers’ £18,000,000 overdraft to Lloyds TSB and provide a working capital, which seemed to have convinced everyone involved with the club.
Former Chairman Alistair Johnston, along with former Chief Executive Paul Murray who were booted out by Whyte, expressed their concerns soon after they were removed from the board.
Bitter? You can see where Johnston and Murray were coming from. The £33,000,000 that Whyte pledged to put in to the club to help clear the overdraft apparently went and sold the future rights for Rangers’ season tickets to a company called Ticketus.
Where was the money? The greater chances were that he never had the funds to pump in to the football club and no overdraft was cleared, plunging the club into greater financial crisis.
The growing problem had only just begun, and as we fast forward to today, and today the overall debt is monumental.
HM Revenue and Customs are owed £93,000,000. This relates to the big and small tax cases, unpaid VAT and PAYE.
Other football clubs are owed money it seems, with the likes of Arsenal, Manchester City, Celtic and Dundee United being a select group of teams that are waiting to be owed.
Reports from the BBC state that Ticketus are now owed £26,700,000, debenture owners (fans who loaned money to the club) are totalled up to £7,700,000.
Other funded bodies are also owed, such as the Strathclyde Police, Scottish Ambulance Service and Glasgow City Council being amongst just three of many that are in line to be paid back by the football club.
This shocking report has jeopardised many members of Rangers’ staff, including players, coaches and club staff and losses have been made since the club entered administration some six weeks ago, reports suggest the club have lost more than £2,500,000.
On the field, the ten point deduction has hampered the club’s hopes for a second successive League title, with Celtic running away in pole position. But the results on the field now do not seem to matter any more with the club in such a crisis and in a shambolic state, Rangers are in a very dark hole.
Administrators Duff and Phelps are doing their best to help the club out of the mess that arguably Whyte has got the club in to, but you could look further back to when Murray started spending millions and millions when Advocaat was in charge.
Whyte had not helped the cause, and the fact that he did not even take the fit and proper persons test is an outrage. How he managed to be considered a businessman is highly questionable.
The Scottish FA have slapped a 12 month transfer ban on the Ibrox outfit and the imminent lifetime ban on Craig Whyte in any future involvement in Scottish football.
As a result of this, Rangers’ woes continued as the Scottish FA fined the club £160,000. In regards to the transfer ban, the club can now only sign under 18 players in the next year. The embargo was hit after the club brought the game in to disrepute.
Whatever happens next for Rangers Football Club is vital. For a club as big as them to be in so much trouble is colossal. The club must get out of this as soon as possible or Scottish football would be in grave danger as a result of their demise.
As for Craig Whyte, it’s about time he was banned from any involvement, but for Rangers Football Club to have suffered just as much as Whyte is unjustified. Let’s just hope there is light at the end of the very, very dark tunnel the Glasgow club find themselves in.
