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.
Ian Whitchurch
Guest
Speaking of ambition ... Getafe stuck it up Real two goals to one ! Abdel got the winner 15 minutes from time - good effort from the ex-PSG Reserves player who was transferred to Getafe in August 2010 for the princely sum of nothing !
peeeko
Roar Guru
Scottish football gets far too much coverage in this country compared to much better leagues.
Football United
Guest
Utter lies. Leeds got a CVA at the last minute. In the UK if and when you are LIQUIDATED you have to proceed under the Insolvency Act (1986). LIQUIDATION means the end of that organisation, business entity, call it what you will. Rangers Football Club formed in 1872/73 grew and became a Limited Company in 1899. It was still the same legal entity in the same way Celtic were when they grew and modified their name in 1994. But Rangers have been LIQUIDATED. That is the club and the business. They shared the same company number and the same set of accounts. The simple answer is if you keep the history then you keep the debt or you offload it via a CVA, which Rangers did not get approved. So the fact that the new club will play at Ibrox in blue is irrelevant. The huns can dress it up all they want but no amount of spin or twisting the truth by the media can take away the cold hard facts of LIQUIDATION. That is the heavy price Rangers and their owners have paid for living beyond their means for at least a decade and potentially illegally if the EBT case comes out against them.
Jack Russell
Roar Guru
Who knows what structures Australian clubs use? They may well be doing something a bit dodgy - the salary cap provides plenty of incentive to.
Hibee Hibernian
Guest
Wah wah wah. In fact, they are in Division Three because Rangers FC are in liquidation proceedings, and the newco, which is NOT Rangers FC, then bought the assets of the old club and changed their name to 'The Rangers FC' (in fact, they could have named themselves Little Celtic or the Hun Squad if they wished.) This new club applied to join the SPL and were rejected, hence the SFL application and due to it clearly not being an old club in administration which had been relegated they were forced to join from the bottom tier. If the clubs were the same, why is Sevco not encumbered by the debts of the old Rangers? And don't try to argue the club and the business are separate, that has not legal basis whatsoever (since 1892 there has been NO separation of Rangers FC and its plc) and is just wish-fulfillment propagated by Rangers fans.
nordster
Guest
Yeah i think we are on the same page...time and place...league regs first decade, free it up more for the second. The cap and other regs have been a blessing for the opening years of the league. Totally agree there. Laissez-faire or Austrian ...i guess i am a von Mises and Hayek guy at the minute...RP of course. I think there is plenty of cross over between sport and open market theories.
Kasey
Guest
Nord, I gather you are a proponent of the laissez-faire school of thought. In general I am against most forms of govt. intervention (aka: over regulation) in a lot of areas, but I can accept the regulations currently in place for the HAL for the time being until the league is able to stand on its own two feet. You might not be able to structure good business sense via restrictive league policies, but you can do your best to avoid clubs going broke by doing stupid things. Sydney for example lost a bucket load of money when they were the Bling FCin season 1- heck they still lose a lot of money, I don’t imagine that they’d still be around if they’d been able to take Bling FC to its extremes for a further 2-3 years after Dwight Yorke left. In the same way the AFLPA accepts restraint of trade in their industry because they can se the greater good of the collective is being served by adhering to the AFL business model/structure, I can see that a start upleague is being prevented from obliterating itself by the current tight controls imposed by the FFA. It is easy for me to imagine Clive Palmer starting an A-League 'arms race' when he brought into the league. The other clubs would have been forced to borrow(or take more from sugar-daddy) to even keep up. As it is I still have tiny fears our league might not last long enough for me to pass my passion for the Reds on to any offspring I might have:(
nordster
Guest
I dont know that more control from fifa or ffa is the answer... I say less... With a-league they have sugar daddies which acts as the equivalent of debt or tax minimisation in rangers case. So take away the external 'investments' the clubs individually are not able to structure like a more self sustaining business. Too much intervention and 'control' is a problem imo. People assume it is the opposite... not enough rules....when in fact u cant structure good business sense via restrictive league regulations.
nearpost
Guest
Tigranes granted some difference but point remains. local clubs A-League, NSL and State League Clubs continue to pay out way more than they earn. Salary Cap or no - look at how many investors from Con Constantine, the guys in NZ, Townsville, Gold Coast, Perth Adelaide and Sydney have lost lots of money. Clubs might not go "nuts" overpaying players - I'd argue they have in the past, relatively - hence no more Juninho, Romario's Jardel, Kewell, Yorke. A lot of money has been lost to the game both in the A-League, NSL and locally. The club I used to play for in a local league paid me and the whole squad 20 years ago - a budget of around $100,000, twenty years later their budget is down to $20,000 they've been paying all that time. They don't have a ground, or oval to call their own. In the A-League the Jets if they'd gone under last season would have nothing, no legacy to leave despite spending Con's millions and maybe some of Nathans. Clubs might not be Rangers in tax avoidance, but football in Australia is a financial basket case waiting to collapse. Where will we go to get the next Tinkler, Sage, Palmer Constantine etc etc. We've run out and there is little evidence the current model is any good. Rangers has 50,000 fans prepared to sit in their stadium and watch them against Div 3 teams. Aussie clubs have no stadiums, no offices, no development centres, nothing. Once the investor gives up..a la Palmer what is left for a club in that region. Nothing! Palmer must have put a ton of money into the club. Did he waste it? Or did the FFA's model waste it? I'd argue the latter. Palmer should have had to adhere to a better model, more financially prudent, more sustainable. What have the Gold Coast and football in that region got now! Don't even get the chance to have a didgy tax structure:)
Tigranes
Guest
nearpost the Australian soccer clubs dont engage in questionable tax structures like Rangers did. And a thing called the salary cap prevents australian clubs from going nuts with overpaying players.
nearpost
Guest
Ambition - more like Greed. Football clubs are their own worst enemy. Would like to see FIFa take further control of club revenues through tighter guidelines. On a lesser scale sooo many NSL, and A-League clubs simply spend more than they earn - are they Rangers in disguise? Even local state league are the same. Problem doesn't just belong to Rangers; the game at all levels has been ruined by money pouring into players pockets at the expense of developing resources, sustainable models of finance. Rangers Div 4! Great sight for all Celtic fans
Kasey
Guest
+1 thank you for explaining it all simply. Should be a boon for the third division clubs with huge Rangers away support to fill their coffers. This whole debacle could end up helping Scottish football in the long run.
Kasey
Guest
What is Scottish football?
HardcorePrawn
Roar Guru
JOKE!
HardcorePrawn
Roar Guru
Good article, I've been looking for one to fully explain the recent financial mess that is (was) Rangers for a while. As for there being no top-flight football at Ibrox, at least Rangers fans don't have far to go to get to Parkhead to cheer on Glasgow's remaining SPL team should they so wish... ;)
nordster
Guest
The debts are massive but a symptom of how the wider economy runs. Now their tax avoidance sorry minimisation ...that is something worth celebrating. The tax burden on business ....which is how football is expected to run ....is of course too high and only used to pay for structural choices govt makes to be involved in things they shouldnt. Haha off topic alert.... Anyhow they have been made to suffer by being dropped down ...now if only govts applied the same Not too big to fail logic back in '08. I was worried rangers would get a somewhat free pass "for the good of the league" but then theyd be making the same moral hazard mistakes as others.
Kasey
Guest
WANTED:One GSOH, please apply to Ibrox with laugh track in tow;) http://www.guardian.co.uk/football/blog/2012/aug/21/rangers-falkirk-apology-fans
MV Dave
Guest
The fans have stuck with them, over 49,000 for a 3rd division game at Ibrox on the weekend. They have the same name (almost but they will just be known as Rangers), the same stadium, the history, the jersey/colors and most importantly...the fans.
gawa
Guest
Try telling a Leeds Utd fan that their team has never won the English title or European Cup, or maybe try the same with Man Utd, Chelsea simply because the business entity has changed it's name. Rangers are in the SFA 3rd Division (4th tier) for going into administration not because of anything else. Rangers have not yet been found guilty by the Inland Revenue of tax avoidance. It's taking an eternity for the Inland Revenue to settle on a judgement because there are hundreds of major companies across the UK that have used the same or very similar syatems to "pay loans" to their employees.
Conor
Guest
The title of this article is very misleading. No-one would headline an article about an athlete, swimmer or cyclist caught using drugs to imply how they were 'undone by their own ambition'. What Rangers participated in was nothing more than financial doping. Would they hold the record for winning so many titles if they hadn't have spent all the cash they never had? "Murray boasted that Rangers would spend £10 for every £5 spent by Celtic." Whatever pride you think they are entitled to should be discredited by that line alone. The majority of their history is overshadowed by discriminatory selection pratices and the modern era overshadowed by a financial deception that has disgraced the fairness of competition in Scotland over the previous 25 years. You reap what you sow. I have no sympathy for them or their 'ambition'.