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Rangers Football Club plc, an entity with a history going back to the 19th century, is no more having been liquidated in June this year.
The administrators sold its only tangible assets, Ibrox Stadium and the Murray Park training ground to a newly formed company Sevco Ltd. for a paltry £5.5m.
Sevco, after announcing that they would henceforth be called ‘The Rangers FC’, applied for and were accepted as members of the Scottish Football League and subsequently entered the SFL’s Division 3 (Fourth Tier).
The flesh and blood reality: This season for the first time in 122 years of professional football in Scotland there will be no top-flight football at Ibrox.
The club with a 140 year history and who holds the record for the number of domestic league titles won by any professional football club in any code on the planet is now playing in the 4th tier of Scottish football.
Words like “downfall”, “ruin” and “fall” simply do not even begin to hint at what has happened to the club that was once known as Rangers. Before the start of last season they were the reigning champions of Scotland.
They were Scotland’s establishment football club, possessing all the grandeur, disdain and entitlement normally associated with any aristocratic lineage. Rangers, properly run, ought to be worth around £50m.
This club, though, hasn’t been run properly now for anything up to 20 years. The mismanagement in this period resulted in gargantuan debt, tax avoidance on the grand scale and its forced sale.
They also stand accused of breaking almost every one of the Scottish Football Association’s membership rules.
How it all came to this is yet another cautionary tale of greed and hubris bringing about the downfall of a great football club that chose to live beyond its means.
The story goes back to 1988 when a stagnant Rangers were trying to rouse themselves from torpor after a ten-year period in which they had won only one League title.
David Murray, a charismatic steel magnate then aged 36, bought the club in August that year by agreeing to wipe out its debts with a £6m loan from the Bank of Scotland.
His vision for Rangers was simple: to turn the underachieving giants of Scottish football into one of Europe’s premier clubs.
In chasing this unlikely dream, he began to spend astonishing amounts in transfer fees and wages for England internationals such as Terry Butcher, Mark Hateley, Trevor Steven and Paul Gascoigne, as well as a host of European stars that included the Danish forward Brian Laudrup and the Netherlands quartet of Ronald and Frank de Boer, Artur Numan and Giovanni van Bronckhorst. Murray boasted that Rangers would spend £10 for every £5 spent by Celtic.
The Bank of Scotland bankrolled Murray’s mission with the sort of largesse that was more suited to OPEC rather than a football club of limited means. Eleven League titles and 12 national cups were duly delivered in the 13 years before 2001.
Yet meaningful success in Europe continued to be elusive for Rangers notwithstanding that they reached the semi-final of the inaugural European Champions League in 1993.
By then, the financial stakes had been raised by the birth of the English Premier League, powered by Rupert Murdoch’s Sky. Not even the Bank of Scotland’s fabled elastic overdraft could stretch enough to match Murray’s ambitions in these circumstances.
Fuelled by unprecedented expenditure, the club’s debts rapidly increased. Anticipated television revenues failed to materialise and the club’s income was unable to offset the growing cost of transfer fees and player salaries.
Like most clubs that are not subsidised by a profligate owner, Rangers had consistently spent more on payroll than they could afford in order to keep pace with Celtic.
In the 11 years to 2010, they lost an average of £13m a season. They managed to stay in business only by borrowing money and by doing well enough in the SPL to qualify consistently for the Champions League and its generous payouts.
Rangers’ problems were exacerbated with the advent of the global financial crisis leading to Britain’s economic recession and its toll on their attendance and income. The final blow was the unravelling of an ill-advised scheme intended to reduce the club’s tax liability.
This involved the payment of players and managers through offshore Employee Benefit Trusts, on which tax wasn’t paid. The British tax office (HMRC) ultimately issued a bill for unpaid tax on the schemes, believed to be in the region on £49m, including interest and penalties.
Under heavy pressure from the Bank of Scotland, Murray was forced to sell his 85% controlling stake to Craig Whyte for £1 in May 2011.
Whyte funded the takeover of the club by mortgaging four years’ worth of season-ticket revenue, amounting to £24m, with a factoring company called Ticketus.
In effect, he bought one of Britain’s biggest clubs by trading on its future income. Whyte had pledged both future investment and to pay off Rangers’ £18m debt to the Bank of Scotland. The administrators subsequently revealed the debt had been paid with the money received from Ticketus.
Whyte ran Rangers into the ground during his nine-month tenure. In February, running out of cash and under pressure from HMRC, he put Rangers into administration having finally accepted that its huge and accumulating debts could not be serviced by an annual income of £45m.
In June 140 years of Scottish sporting history ended with the liquidation of Rangers Football Club. A list of 332 creditors is owed amounts ranging from millions of pounds to a few hundred. The overall debt mountain is potentially more than £140m.
How this club, with a huge supporter base that translated into a lucrative game-day income, along with broadcasting and sponsorship rights, could have misspent to such a withering degree is a story that is yet to be fully told.
The sheer scale of the club’s corporate failures is such that, not until a few more years have elapsed will the whole saga be exhausted.
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