Rangers 10 days from financial meltdown

Imminent prospect of administration and collapse stalks club, says Robin Scott-Elliot

The future of Rangers, the Scottish Premier League champions, was cast into deep uncertainty yesterday when the club gave notice of its intent to go into administration. Such a move, which Rangers have 10 days to confirm, would incur an immediate 10-point penalty and hand the title to Celtic, who currently lead the SPL by four points.

Last night Craig Whyte, the Glasgow club's owner, insisted it was the only option. With the verdict of a tax tribunal on a £49m bill imminent, the move did not come as a surprise – Whyte raised the prospect last year – but it sent shockwaves through the Scottish game.

Rangers lodged legal papers with the Court of Session in Edinburgh at lunchtime. The club expect to take 10 "working days" before deciding whether to appoint an administrator. That gives Whyte, who significantly is the club's largest secured creditor, a window in which to negotiate with HMRC. The Revenue would be the biggest loser were the club to collapse. Rangers insisted they will make "every effort until the last moment to avoid going into administration".

Whyte said: "Decisions have to be taken to safeguard the long-term survival and prosperity of the club. The harsh reality is that this moment has been a long time coming and its roots lie in decisions taken many years ago. If we do not take action now the consequences and the risks to the club are too great. In addition to the HMRC issues, it has been abundantly clear to me the club faces serious structural and financial issues.

"There is no realistic or practical alternative to our approach as HMRC has made it plain that, should we be successful in the tax tribunal decision, they will 'appeal, appeal and appeal again'. This would leave the club facing years of uncertainty."

 

What happens if Rangers do go into administration?

The SPL confirmed a 10-point penalty and a transfer embargo would be imposed. The club signed Daniel Cousin yesterday before news of the lawyers' visit to Edinburgh emerged. The Gabon striker will be the only new arrival at Ibrox for some time. An indication of the gathering financial storm over the blue half of Glasgow came when Rangers sold Nikica Jelavic, their top scorer, to Everton last month for a profit of just £1.5m.

 

How has the club ended up in this state?

With average home gates of nearly 46,000 – higher than Liverpool and Chelsea – three successive titles and European football, there ought to be optimism. But Whyte says it costs £45m a year to run a club that brings in £35m in revenue.

The tax issue is separate from the day-to-day financial troubles. The case stems from a decision by the club's previous regime – Whyte bought Rangers last year for £1 and took on £18m of debt – to use employee benefits trusts (EBTs) to pay a number of its employees, including some players. It began in 2000, during Dick Advocaat's time as manager, when the Dutchman, backed by chairman Sir David Murray's rash promise to outspend Celtic, bought lavishly – including £12m on Tore Andre Flo – as the club sought to establish itself in the Champions League. An EBT is not illegal, but HMRC insist that PAYE tax and National Insurance contributions were due on some of the salaries that players were receiving. HMRC is chasing £49m in tax and interest. A tribunal into the claim has sat and is due to give its decision by the end of the month.

 

What happens next?

Tellingly yesterday's club statement contained this: "The majority shareholder is prepared to provide funding on the basis it is ring-fenced from the HMRC issue."

It has become something of a game of cat and mouse between Whyte and HMRC. Administration is likely, but he has long planned for this and as preferred creditor there is a good chance he will still be in control once the club emerges from any administration period.

Whyte's running of the club has been the subject of much criticism. Last month trading in Rangers' shares was suspended by the PLUS Stock Exchange over its failure to submit independently audited accounts by the end of last year. The club has also yet to hold an AGM as required by the end of December. The stock exchange and Scottish Football Association have also asked for clarity over Whyte's admission that he had been disqualified as a director for seven years from 2000.

Last week a former Rangers chairman, Alastair Johnston, asked the government's Insolvency Service to clarify "certain financial arrangements" relating to the takeover of the club.

Sport
Lionel Messi pictured after reaching the final
world cup 2014
Sport
Lionel Messi and Thomas Muller have shone brightest for Argentina and Germany respectively on their way to the World Cup final
Sport
Brazilian fans watch the match for third place between Brazil and Netherlands
Brazil 0 Netherlands 3: Dutch pile on the misery in third place playoff
Arts and Entertainment
TV The follow-up documentary that has got locals worried
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Arts and Entertainment
'Deep Breath' is Peter Capaldi's first full-length adventure as the twelfth Doctor
TVFirst episode of new series has ended up on the internet
News
Ian Thorpe had Rio 2016 in his sights
people
Arts and Entertainment
Original Netflix series such as Orange Is The New Black are to benefit from a 'substantial' increase in investment
TVHoax announcement had caused outrage
Life and Style
Swimsuit, £245, by Agent Provocateur
fashion

Diving in at the deep end is no excuse for shirking the style stakes

News
Monkey business: Serkis is the king of the non-human character performance
peopleFirst Gollum, then King Kong - now the actor is swinging through trees in Dawn of the Planet of the Apes
Arts and Entertainment
Blackman: Landscape of children’s literature does not reflect the cultural diversity of young people
booksMalorie Blackman appeals for a better ethnic mix of authors and characters and the illustrator Quentin Blake comes to the rescue
News
One Direction star Harry Styles who says he has no plans to follow his pal Cara Delevingne down the catwalk.
peopleManagement confirms rumours singer is going it alone are false
Voices
Mrs Brown's Boy: D'Movie has been a huge commercial success
voicesWhen it comes to national stereotyping, the Irish know it can pay to play up to outsiders' expectations, says DJ Taylor
Arts and Entertainment
Curtain calls: Madani Younis
theatreMadani Younis wants the neighbourhood to follow his work as closely as his audiences do
Life and Style
Douglas McMaster says the food industry is ‘traumatised’
food + drinkSilo in Brighton will have just six staple dishes on the menu every day, including one meat option, one fish, one vegan, and one 'wild card'
Sport
Mario Balotelli, Divock Origi, Loic Remy, Wilfried Bony and Karim Benzema
transfersBony, Benzema and the other transfer targets
Life and Style
Once a month, waistline watcher Suran steps into a 3D body scanner that maps his body shape and records measurements with pinpoint accuracy
techFrom heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor
News
Soft power: Matthew Barzun
peopleThe US Ambassador to London, Matthew Barzun, holds 'jeans and beer' gigs at his official residence. He says it's all part of the job
Sport
Joe Root and James Anderson celebrate their record-beaking partnership
cricketEngland's last-wicket stand against India rewrites the history books
Caption competition
Caption competition

Bleacher Report

Daily World Cup Quiz
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

Career Services

Day In a Page

Iraq crisis: How Saudi Arabia helped Isis take over the north of the country

How Saudi Arabia helped Isis take over northern Iraq

A speech by an ex-MI6 boss hints at a plan going back over a decade. In some areas, being Shia is akin to being a Jew in Nazi Germany, says Patrick Cockburn
The evolution of Andy Serkis: First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes

The evolution of Andy Serkis

First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes
You thought 'Benefits Street' was controversial: Follow-up documentary 'Immigrant Street' has got locals worried

You thought 'Benefits Street' was controversial...

Follow-up documentary 'Immigrant Street' has got locals worried
Refugee children from Central America let down by Washington's high ideals

Refugee children let down by Washington's high ideals

Democrats and Republicans refuse to set aside their differences to cope with the influx of desperate Central Americas, says Rupert Cornwell
Children's books are too white, says Laureate

Children's books are too white, says Laureate

Malorie Blackman appeals for a better ethnic mix of authors and characters and the illustrator Quentin Blake comes to the rescue
Blackest is the new black: Scientists have developed a material so dark that you can't see it...

Blackest is the new black

Scientists have developed a material so dark that you can't see it...
Matthew Barzun: America's diplomatic dude

Matthew Barzun: America's diplomatic dude

The US Ambassador to London holds 'jeans and beer' gigs at his official residence – it's all part of the job, he tells Chris Green
Meet the Quantified Selfers: From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor

Meet the 'Quantified Selfers'

From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor
Madani Younis: Five-star reviews are just the opening act for British theatre's first non-white artistic director

Five-star reviews are just the opening act for British theatre's first non-white artistic director

Madani Younis wants the neighbourhood to follow his work as closely as his audiences do
Mrs Brown and her boys: are they having a laugh?

Mrs Brown and her boys: are they having a laugh?

When it comes to national stereotyping, the Irish – among others – know it can pay to play up to outsiders' expectations, says DJ Taylor
Gavin Maxwell's bitter legacy: Was the otter man the wildlife champion he appeared to be?

Otter man Gavin Maxwell's bitter legacy

The aristocrat's eccentric devotion to his pets inspired a generation. But our greatest living nature writer believes his legacy has been quite toxic
Joanna Rowsell: The World Champion cyclist on breaking her collarbone, shattering her teeth - and dealing with alopecia

Joanna Rowsell: 'I wear my wig to look normal'

The World Champion cyclist on breaking her collarbone, shattering her teeth - and dealing with alopecia
Bill Granger recipes: Our chef gives raw ingredients a lift with his quick marinades

Bill Granger's quick and delicious marinades

Our chef's marinades are great for weekend barbecuing, but are also a delicious way of injecting flavour into, and breaking the monotony of, weekday meals
Germany vs Argentina World Cup 2014 preview: Why Brazilians don't love their neighbours Argentina any more

Anyone but Argentina – why Brazilians don’t love their neighbours any more

The hosts will be supporting Germany in today's World Cup final, reports Alex Bellos
The Open 2014: Time again to ask that major question - can Lee Westwood win at last?

The Open 2014

Time again to ask that major question - can Lee Westwood win at last?