Tangled Up in Blue

by Stephen O'Donnell

  In November, Tore André Flo scored on his Rangers debut as the Ibrox men routed their Glasgow rivals 5-1 on home soil, with the club gaining a measure of revenge, if only fleetingly, for the 6-2 defeat at Parkhead in August. Advocaat’s side subsequently embarked on a run of eight wins and a draw, until, facing Celtic once again in mid-February, they lost 1-0 at Celtic Park, with Fernando Ricksen sent off, four days after they had been eliminated from the League Cup, in the semi-final at Hampden, by the same opponents.

  By now the manager’s decision-making, for the first time, was starting to be called into question publicly and it almost seemed as if Rangers were willing to try anything when they signed Marcus Gayle from Wimbledon for £1m in early March, with Advocaat admitting that he had never seen the striker play live. Gayle, who managed a total of four appearances following his move to Ibrox, spoke vaguely at his initial press conference about Rangers being ‘the only club up here’, but within days his new team’s season was effectively over after a deserved 1-0 defeat in the Scottish Cup at the hands of Dundee United. Following on from Ricksen’s dismissal against Celtic in the league, this time it was the other Dutch enigma, the mercurial Konterman, who was ordered off.

  A few days later, the Tannadice club’s city rivals, Dundee, turned up at Ibrox and came away with a 2-0 win, and then United completed a successful month for the Tayside clubs when they also left Ibrox with a handsome 2-0 victory in the league. Celtic, having already wrapped up the title with six games to spare, were next to come calling to Ibrox, and the Parkhead men claimed a decisive 3-0 win, orchestrated by Larsson and Moravĉik, leaving Advocaat to ponder the implications of three home defeats in a row.

  For the first time under the Dutchman’s stewardship, Rangers finished the season without a trophy, while Celtic, by contrast, completed their first Treble since 1969. The transformation at the top of the Scottish game, effected in under a year, was remarkable. As an outsider to the Scottish game, O’Neill had imported an infectious enthusiasm to his management of Celtic, often describing his team’s performances, particularly in Europe, with repeated usage of words like ‘extraordinary’, ‘immense’ and even ‘astonishingly brilliant’, leaving Rangers’ and Murray’s cohorts in the media utterly flummoxed.

  Having maintained a distant personal relationship with the press, Advocaat was now no longer invulnerable to criticism, as had appeared to be the case during his first two years in Scotland, and in fact, by the end of his tenure at Ibrox, his relationship with the media had broken down completely. Journalist Graham Spiers told The Advocaat Years authors, ‘Dick has an arrogance about him and he thought he was impervious to criticism after the first two seasons because they went so well. At the beginning of their third season Rangers had disastrous injuries and he couldn’t handle it – he began to rage against the world, flailing like a blind man.’ Tabloid scribbler Bill Leckie agreed, ‘Dick couldn’t cope with it [Celtic’s revival under O’Neill], he couldn’t get his head round it. The 6-2 game was the turning point and that gave Celtic so much confidence that they went on a great run… Rangers didn’t respond. Advocaat couldn’t reverse it.’

  Over the summer, Rangers unveiled their new Murray Park training complex, named with characteristic immodesty, after the club chairman. Advocaat had persuaded Murray that the facility, which cost £14m to complete, was the key to Rangers’ future success, even threatening to resign at one point if the project didn’t become the club’s main off-field priority, with putative plans for a museum, the ‘Blue Café’ and an extra 1,200 seats inside the stadium having to be shelved at the Dutchman’s insistence.

  In the meantime, while their batch of intended young stars of the future were supposedly incubating at Murray Park, Rangers’ spending had to continue and by the end of the summer the outlay under Advocaat’s three-year regime was nearing the £80m mark, following the recruitment of Georgian forward Shota Arveladze, who cost £2m from Ajax, German midfielder Christian Nerlinger, £1.8m from Borussia Dortmund, English youngster Michael Ball from Everton for £6.5m, Russell Latapy on a free from Hibernian and Claudio Caniggia for £900,000 from spendthrifts Dundee, the long-haired Argentinian forward who had lit up the Italia ’90 World Cup as a 23-year-old, but who now, 11 years later, was lured to Ibrox by the prospect of a crack at the Champions League.

  Unfortunately for Caniggia and Rangers, after breezing past Maribor of Slovenia, 6-1 on aggregate, Rangers were eliminated in the final qualifying round by Fenerbahçe after a goalless draw at Ibrox was followed by a 2-1 defeat in Istanbul, with Advocaat’s side subsequently relegated into the UEFA Cup. Rangers were, however, in the black over player sales, as van Bronckhorst, Albertz, Tugay and Reyna all left Ibrox during the course of the season, recouping the club over £13m.

  Domestically, the new season picked up from where the previous one left off as Rangers, unbeaten but having already drawn three of their opening eight fixtures, welcomed Celtic to Ibrox at the end of September and suffered a 2-0 reverse. Advocaat’s side subsequently won five successive games before the next scheduled meeting between the teams at Celtic Park in November, when the Parkhead men secured the points with a 2-1 win, consigning Rangers to a fifth consecutive defeat in the fixture. After Larsson scored from the penalty spot to give the home team a 2-0 lead, Advocaat substituted left-back Michael Ball and the young Englishman, clearly unhappy with the decision, publicly berated his manager as he left the field, much to the amusement of the home crowd. Ball’s folly was compounded when his replacement, Lovenkrands, scored in the 77th minute to bring Rangers back into the game, but an equaliser ultimately eluded the Ibrox men. Responding to questions about the incident with Ball, Advocaat retorted, ‘Maybe at a club like Everton you can do that but with a manager of my stature you can’t,’ before fining the player £10,000.

  By now it seemed clear that the writing was on the wall for Advocaat and over the course of the next couple of weeks he effectively sacked himself. In another one of those uniquely Rangers arrangements, a reluctant Advocaat, who would have preferred a clean break, was persuaded by Murray to move upstairs and become the club’s director of football, although his remit seemed unclear, with the Dutchman soon taking over once again as the coach of his country’s national team. The tabloids reported the move, inevitably, as some sort of Murray masterstroke, but in reality it was a preposterous contrivance designed to save face and when he left the club altogether a few months later, to almost no publicity, the position which had been summarily created for Advocaat was quietly made redundant.

  The timing of his departure left Advocaat vulnerable to criticism that, in the face of Celtic’s resurgence, he was simply running away from the job, but with one of his last acts as manager, he engineered a goalless draw in Paris against PSG in the UEFA Cup and, after a similarly scoreless first leg at Ibrox, the tie went to penalties. Rangers eventually won the shoot-out 4-3 after PSG’s Argentinian defender Mauricio Pochettino struck his sudden-death kick against the crossbar.

  Against the odds, the Ibrox side had secured participation in European football beyond Christmas for the first time since 1993, and Advocaat was so overjoyed that the usually impassive manager ran on to the pitch, arms aloft, to embrace his relieved and celebrating players. The Dutchman had left Ibrox on a high.

  11

  AGENT McLEISH

  IN March 2000, the dotcom bubble burst, leaving Rangers, in the words of Rowan Atkinson’s Blackadder, ‘up a certain creek, without a certain instrument’. To be fair, the Ibrox institution was already fairly deep in the brown stuff by the time the prevailing economic winds shifted and the bear market started becoming antsy over its tech stocks, but Rangers found themselves in a particularly vulnerable position because chairman David Murray, in a sanguine and misplaced belief that the boom years would never end, had recklessly allowed the club’s financial position to become exposed to the slow-burning effects of an economic downturn and consequently the downsizing which they had been trying to avoid for years would now be force
d upon them. One thing seemed certain, however; Rangers were not going to go quietly into the night.

  The extraordinary story of the eventual loss of the Ibrox club’s grip on financial reality can be dated back to 1998 when a pipe-smoking pornographer by the name of Paul Baxendale-Walker first suggested to Murray that the use of Employee Benefit Trusts (EBTs) might provide a convenient means of mitigating the considerable tax burden which a bloated squad full of extremely well-paid footballers was starting to place on his club. The difficulty for Rangers that summer, after seeing rivals Celtic walk off with the league title for the first time in ten years, was that the Parkhead institution, having finally got their ducks in a row off the field, now appeared to many impartial observers to be the better placed of the two clubs.

  For all their misfortunes in the early ’90s, Celtic, after the success of owner Fergus McCann’s departing share offer, were now in an extremely sound financial position in comparison to Murray’s improvident club, and with gate receipts proving such an important revenue stream in Scottish football due to the relatively meagre value of the broadcasting rights and sponsorship deals, the Parkhead side now had a new stadium which was 20 per cent larger and more modern than the once-revered Ibrox Park. Over the next few years, once their ground was fully rebuilt, Celtic enjoyed an average home attendance of over 58,000 paying spectators, including 53,000 season ticket holders, up from 7,500 in 1994.

  During this period of growth in the game’s global reach, which coincided with the proliferation of satellite and cable television coverage, it was Celtic who appeared to have the more recognisable and fondly regarded brand, with an extended community of supporters from the diaspora of Scottish and Irish expatriates, who could now pay to watch the club’s matches in their homes, wherever they were in the world. In addition, the Parkhead club was a properly constituted plc, majority owned by supporters, with a cast list of financial heavyweights on its board of directors, including Brian Quinn, former deputy governor of the Bank of England, Sir Patrick Sheehy, former chairman of BAT Industries, and Frank O’Callaghan, former chairman of MacDonald Hotels, alongside moneybags Dermot Desmond, the company’s new majority shareholder whose personal wealth dwarfed that of his Ibrox counterpart. By contrast, Rangers seemed relatively impoverished, even as part of the wider, increasingly debt-ridden Murray Group, with only Murray himself carrying any clout, as over the next few years, the Ibrox chairman found himself scurrying about desperately cutting corners in a bid to try and keep up.

  Baxendale-Walker, at 34, seemed an unlikely saviour for Murray and Rangers. Brought up as an orphan in a Church of England home, he attended Hertford College, Oxford, and trained as a barrister, before switching to a solicitor and setting up his own practice in Mayfair, London. However, the erstwhile playboy and self-confessed sex addict later turned to producing and starring in his own pornographic movies, while reinventing himself as an ‘adult entertainment magnate’, after he was struck off as a lawyer in 2005. His original vocation though was as a tax adviser and Murray, in his desperation and his vulnerability, saw an opportunity in Baxendale-Walker’s schemes for ‘increased tax efficiency’ and a potential advantage over rival clubs in the more challenging financial environment. Initially, the new fiscal arrangements were limited to a few key individuals, such as manager Dick Advocaat, who, in addition to his standard pay, benefited to the tune of £1.5m in tax-free income over the four and a half years of his involvement at Ibrox, and Champions League winner Stefan Klos, signed in late 1998, although the £2m the German goalkeeper received from his EBT trust between 1999 and 2003 represented only a fraction of his overall income, which totalled more than £8m in little over four years.

  At first Murray’s preference was for the more intricate and complex Discounted Option Scheme (DOS), which involved offering options on shares in a ‘money-box’ company to beneficiaries, who could then, once the share options had been exercised, extract cash from the company in the form of a dividend, an aggressive form of tax planning which was popular with bankers trying to avoid paying tax on their bonuses. It also particularly suited foreign and non-UK domiciled footballers, who could minimise their exposure to the taxman provided they didn’t bring their earnings from the putative company, set up in an offshore tax haven, into the UK.

  The arrival of Ronald de Boer, signed a few days after the pivotal 6-2 defeat at Celtic Park in August 2000 and paid substantially through the Discounted Option Scheme, signalled the first escalation in Rangers’ policy of aggressive, and ultimately unlawful, tax avoidance. Over the next few years, Murray switched to a simpler form of EBT arrangement and, having initially dipped his toe in the water, the chairman now went all in for the scheme, as over the course of the next few years, the use of EBTs escalated and took hold of Rangers’ entire recruitment strategy, with 40 per cent of all players eventually enrolling in the scheme, many of them receiving as much as half their income from the club in this way.

  The idea of the EBT was simple; the employer, in this case Rangers’ parent company Murray International Holdings (MIH), paid money into an offshore trust, called the Murray Group Management Ltd Remuneration Trust (MGMRT), and, in addition to his fully disclosed salary, a player or other employee would be able to take out loans from his individual sub-trust, of which he was the nominated ‘protector’, to an amount that was already agreed and stipulated in the secretive side letters. The nature of these loans seemed controversial, however; initially, they were supposed to be paid off after ten years, but the player could apply for an indefinite deferment, until in fact he eventually died, at which point the amount owed could be written off against inheritance tax. One journalist described the loans, ironically, as ‘a bit like the ones you would offer a hard-up friend on a night out – here’s £20, pay me back when you can but I’m not going to remember this so don’t worry about it’.

  Theoretically though, because they were loans, this extra remuneration was not subject to income tax and national insurance contributions, an arrangement which seemed to suit all parties, but here’s the onion – if it could be proved that the money obtained from these sub-trusts was never intended to be repaid and was effectively contractual pay, or ‘disguised remuneration’, then the ruse would be exposed and Her Majesty’s Revenue and Customs (HMRC) would be on the case. A lower tax bill at Ibrox would relieve some of the mounting pressure on Rangers’ overall costs, meaning that the club could continue to sign better, more expensive players and afford to pay the wages that these top players demanded, and thus it was hoped that Rangers might be able to stay ahead of the pack and, most importantly of all, see off the threat from their rejuvenated rivals on the other side of the city.

  The problem for Murray and Rangers, however, was that no self-respecting foreign mercenary was going to play for the club on the promise of a questionable loan, so the additional income had to be promised through side letters in order to guarantee to the player the non-standard element of his pay. These secretive letters were potentially the smoking gun, because they suggested that the trust was not being used properly, to provide discretionary loans, but was in fact shelling out contracted salary to footballers, who fully expected to receive a fixed amount from their MGMRT sub-trust along with their regular wage. The side letters were kept hidden and not revealed even to the SFA because to disclose them would alert HMRC. However, Rangers found themselves caught in a seemingly impossible position, between a legal Scylla and Charybdis, as not to disclose the letters to the proper sporting authorities was potentially even more serious for the club, with SFA rule 12.3 stating clearly that all payments for footballing activities must be stipulated when players are registered with the governing body and ‘fully recorded within the relevant written agreement’.

  This failure to disclose the full details of many of their players’ remuneration called into question whether Rangers were taking to the field and fulfilling their fixtures with a team full of improperly registered footballers. The penalty for fielding just one inelig
ible player in any given match was a scratched game recorded as a 3-0 defeat against the offending team, a potential forfeit which held obvious implications for the validity of the numerous trophies won by the Ibrox club over this period. Rangers were playing with fire, walking the thin line between SFA rules and HMRC compliance, with the risk that in the end they would fall foul of both.

  One of the main beneficiaries from the EBT scheme was the new Rangers manager, Alex McLeish, whose salary was topped up with an additional £1.7m from MGMRT over his four-and-a-half-year spell in charge of the club. With Dick Advocaat teetering on the brink, the Dutchman nominated the Hibernian manager as his successor in the Ibrox dugout and on 12 December, Murray made his approach to the Edinburgh club. ‘I bet you never expected to get this phone call,’ the chairman quipped to his prospective new head coach.

  To many fans, who may not yet have been fully conversant with the new financial reality at Ibrox, it seemed that Rangers were going for the cheap option, and there was apprehension on McLeish’s appointment about the prospect of a new era of austerity at Ibrox. Under Advocaat, the overspending at the club had reached epic proportions, and while it’s certainly true that the new manager was made aware from the start that he wouldn’t have access to the same level of resources which his predecessor had enjoyed, it would be wrong to think that Rangers were now suddenly broke. McLeish still had available to him full usage of Advocaat’s expensively assembled squad, while the EBT tax avoidance ruse allowed him a great deal of flexibility and increased his options in the transfer market.

  Besides, McLeish didn’t care about the prospect of operating within a more restrictive financial environment, and he was delighted to accept the job. As a youngster, he had been taken to see Rangers by his father, but perhaps because his mother was a Catholic, and with a Celtic-supporting side to his family as well, McLeish lacked the hatred for all things concerning the Parkhead club which was so common among many of his peers. As a teenager, he was spotted by scouts from Aberdeen and taken to the Pittodrie club, then managed by future Scotland boss Ally MacLeod. He was given his debut by Billy McNeill in early 1978, before establishing himself and then flourishing under Alex Ferguson in the centre of defence alongside Willie Miller, another Glaswegian transported north to the Granite City, who had been playing for Aberdeen since 1973.