What Spiers and many of his colleagues had failed to appreciate, however, was that the Murray Group, or MIH as it was still known, Rangers’ parent company, had itself been absolutely clobbered by the credit crunch and was now in debt to Lloyds Bank to the tune of around £900m, far more than the value of its assets, leaving the group technically insolvent. Murray’s personal fortune, meanwhile, had collapsed from £500m to a mere £110m over the previous year, and was down 85 per cent over the previous two years, rendering the Ibrox tycoon the single biggest faller on the 2010 Sunday Times ‘rich list’.
Spiers’s view that Rangers would ultimately be able to rely on Murray’s casual philanthropy was based on the general perception of the Ibrox owner as a ‘benevolent benefactor’, who had funded Rangers’ profligate spending down the years at his own expense. But the club’s track record of historical debt and MIH’s eye-watering levels of exposure to the bank revealed the stark reality that it was largely other people’s money which had subsidised Murray’s vanity project at Rangers, whether that was down to the former chairman’s talent for persuading people such as Dave King and ENIC’s Joe Lewis, both of whom lost fortunes, to invest, or his ability to convince friendly bankers to lend him the vast sums of money which were required to continue the club’s pursuit of domestic and international success.
Moreover, as details of the EBT scheme slowly emerged, it became clear that Murray himself was the single biggest beneficiary from the trust payment system, with the Rangers owner trousering a total of £6.3m in tax-free income from MGMRT, more than the combined totals received by Dick Advocaat, Stefan Klos and Barry Ferguson. All that was required was a carefully worded letter to the trustees, acknowledging their notional discretion, and sums of up to £1m would be transferred to Murray’s personal disposal, no questions asked. So much for never taking a penny out of the club. Murray later bragged that if he wanted any extra tickets for matches, he paid for them himself, but in reality, he was very far from the benefactor figure which he was often portrayed to be by his friends in the media, and with no ‘white knight’ on the horizon thanks to the toxic liabilities at Ibrox, which by now were in the public domain, it soon became obvious, especially if the tax tribunal should rule in HMRC’s favour, that Rangers were a dying club.
The most successful team in the history of Scottish football and the self-styled ‘establishment club’ was facing the prospect of bankruptcy and disgrace and still very few people seemed interested, until in January 2011 Mac Giolla Bháin came back with further revelations about Rangers offering HMRC £10m to settle the case. He appeared on a radio phone-in show and explained the details of the court action for a mass audience, after which the penny seemed to finally drop and the story went viral.
If the first Gulf War of 1991 was the making of the cable news network CNN, with their reporters on the ground and in Baghdad hotels as the cruise missiles flew over the Iraqi capital, and the second Gulf War of 2003 brought to prominence the Qatari station Al Jazeera, the Rangers liquidation story would be owned by the internet bloggers and social media newshounds of the west of Scotland, who prodded away online and, despite the acknowledged rival affiliations of some, nevertheless examined the story more accurately and in far more forensic detail than their counterparts in the mainstream press ever displayed. As well as Mac Giolla Bháin, there was Paul Brennan’s Celticquicknews, which provided business expertise, an area where the floundering sports hacks were regularly out of their depth, and Rangerstaxcase, an anonymous blogger, who went on to win the Orwell Prize for online journalism shortly before the Ibrox club was liquidated, as well as many others.
The bloggers were dubbed the ‘internet bampots’ by their mainstream media equivalents, who in turn came to be branded ‘churnalists’ by the online community, or ‘stenographers’, after an article appeared in The Guardian in which Professor Roy Greenslade, the paper’s media commentator, lambasted the willingness of newspapers, and the Daily Record in particular, to regurgitate Ibrox press releases unexamined, as if they were news. ‘The mainstream media,’ wrote Greenslade in reference to the coverage of Rangers’ collapse, ‘whether by commission or omission, failed to do its job. Rather than hold the people in charge [of Rangers] to account, it acted as a spin doctor.’ Rangerstaxcase, who started blogging in March 2011, cited the lack of proper coverage in the press as his (or her) reason for taking an interest in the case, ‘In their hurry to publish, they shamelessly rush from fax-machine (or whatever PR firms use these days) to the press without editing or critical thought. In short, readers are paying to read PR-fluff written and produced by people with agendas… Rangers fans are fed this diet of regurgitated lamb and foolishly lap it up like it is a kebab at closing time.’
In the end, the press in Scotland had been beaten to the story of the scandal engulfing Ibrox by a bunch of amateurs who, despite their professed allegiances, reported the facts of the case with far more accuracy and objectivity than their compromised mainstream counterparts could ever manage, many of whom had largely ignored one of the biggest stories in the history of British sport until it slowly and inevitably unfolded in front of them.
With the details of the tax case now public, David Murray took the club he had been vainly trying to sell since 2006 off the market because, surely, only a complete fool would want to buy a club that was cripplingly indebted to the bank and facing a potentially ruinous tax bill. Far better, one assumed, for interested parties to wait until the administration process had cleared the business of its debts and then, with the creditors having received no more than a few meagre pence in the pound, pick up the assets at a bargain price. That would certainly have been the logical way for events to unfold but, by the end of 2010/11, this story was about to become a lot stranger.
In the meantime, however, on the field the two duelling Glasgow sides played each other a total of seven times during the season, with Celtic emerging as victors after a Scottish Cup fifth round replay, and Rangers gaining revenge with a 2-1 win after extra time in the League Cup Final, during which Smith’s team demonstrated what could be achieved with a more attacking brand of football than they were typically used to showing on these occasions. After the Scottish Cup tie, which had ended with three Ibrox men being ordered off, Rangers assistant manager Ally McCoist and Celtic boss Neil Lennon became involved in a brief, but highly visible confrontation, which had to be broken up by surrounding stewards and personnel from both clubs. Lennon had been angered by a remark McCoist made to him while the pair shook hands as the benches came together at the end of the match. Lennon has since been coy about revealing details of the scuffle and claimed later that the two men were enjoying a glass of wine in his office moments after the incident, but whatever McCoist said, it clearly wasn’t along the lines of ‘congratulations, well played’, which is what his comments should have been restricted to at that particular time.
In the aftermath of the incident, it seemed that all hell broke loose; the media had a field day with the fallout, as the implications even reached the BBC’s Question Time programme, with reactive First Minister Alex Salmond subsequently calling a Holyrood summit to tackle the issue of sectarianism.
The season had begun well for Rangers on the field with wins in the first nine fixtures, including a 3-1 victory at Celtic Park at the end of October, which ended the Hoops’ similarly perfect start to the campaign under Lennon. In the Champions League, Rangers’ dreary, ultra-defensive approach continued when they earned a goalless draw at Old Trafford against a weakened Manchester United side, and with one win and three draws from the section, Rangers ultimately finished third in the group and progressed into the UEFA Cup.
In the secondary competition, Smith’s team beat Sporting Lisbon on away goals after two drawn matches, but the run ultimately ended with a defeat to PSV Eindhoven in the last 16, after which UEFA took action against Rangers fans’ sectarian singing by fining the club £36,000 and banning supporters from travelling to their team’s next away game, with a further
one match ban suspended.
Then, in November, Rangers supporters were given hope that the club’s financial woes might be coming to an end, as the longed-for ‘Whyte knight’ finally appeared on the landscape of Scottish football in the form of the hitherto unheralded businessman, Craig Whyte, who, it was revealed, was in negotiations with David Murray to buy the club. According to a report in the Daily Record, Whyte was a ‘financial whizzkid from Motherwell’ and a ‘self-made billionaire’, whose ‘wealth is off the radar’ and who now stood ‘on the brink of pulling off the biggest deal of his life’ by completing a takeover of his beloved Glasgow Rangers, the club he had supported since he was a boy.
With the ruinous tax case still hanging over Ibrox, Rangers fans were overjoyed at the imminent prospect of an end to their worst fears, but the main problem with the Record story was that it was bollocks. Whyte was interested in buying the club all right, but he was very far from being a billionaire, as any quick Google search of his record would have revealed. He seemed in fact to be a complete nobody, a spiv with a portfolio of collapsed businesses and a history of specialising in breaking up liquidated and financially stricken firms. He had even been disqualified from being a company director for seven years in June 2000, after two of his companies failed to deliver their annual accounts, at which point the prospective new Rangers owner had decamped to Monaco and become an international man of mystery.
It seems that Whyte had simply told his PR people, when journalists enquired about the extent of his wealth, to ‘tell them I’m a billionaire’ and the Record had grasped the line only too eagerly, before adding its own embellishments. The November report in the tabloid had also claimed that Whyte may have been in a position to tie up a deal with Murray in time to fund a massive spending spree in the January transfer window, but the negotiations dragged on, with Whyte’s lawyers frustrated by Rangers’ apparent reluctance to reveal the full extent of the club’s tax liabilities, and other financial issues, to the prospective buyer’s due diligence process.
Similarly, Rangers chairman Alastair Johnston, as head of the takeover approval board, the club’s vetting committee, was sceptical about Whyte’s alleged resources after engaging the services of a firm of private investigators to scrutinise the potential new owner’s distinctly unimpressive business background. Johnston eventually urged Murray to walk away from the Whyte deal, but, with the tax case looming, the former chairman was by now desperate to offload the club and he had been incentivised to do so by Lloyds, who promised to allow Murray to buy back his metals business, the original trading function of MIH, at a discounted rate if he could sell his 85 per cent shareholding in Rangers and recoup the money which the bank were still owed.
Johnston and the vetting committee lacked the power to block the takeover, and ultimately it was Murray’s decision to sell, with the owner eventually informing Johnston that it was too late to stop the deal going ahead. In the end, Murray sold the club, of which he had been the owner, custodian and majority shareholder for over 22 years, and chairman for most of that time, to Whyte’s Wavetower Limited, a company registered in the British Virgin Islands and soon to be renamed The Rangers Football Club Group Ltd, for a token £1, on 6 May 2011.
Of course, Whyte, in addition to the £1, still had to find the money to pay off Lloyds, and with the downsizing measures put in place by the bank finally taking effect, and thanks largely to two consecutive seasons of Champions League participation, the club’s debts had been significantly reduced, from £30m in 2008 to £18m by the time of Whyte’s purchase. But, not being a billionaire, the new owner didn’t have a spare £18m in loose change lying about in his Granton-on-Spey castle, so he mortgaged the club’s future season ticket sales with a company called Ticketus in London and secured the money for his takeover that way.
By paying off Lloyds, Whyte also made sure that he inherited the ‘floating charge’ which the Bank of Scotland had secured over the club in the late 1990s, allowing the new owner to become the only secured creditor of the teetering company and ensuring that, if it all went south rather rapidly, Whyte, in theory at least, would not lose out. David Murray had once bragged that he would take great satisfaction from turning Rangers into a family dynasty by bequeathing control of the club to his son, but when young David Junior showed no interest for the fray, his dad later claimed, ‘If and when I leave the club, I will make sure that it’s left with people of a similar mind and a similar nature. We’re not talking about Russians and people coming in, if I move on from Rangers, I will leave it in the hands of people that I think have got the best interests of the club.’ (sic)
It was imperative for Murray’s tarnished legacy at Ibrox that he should at least pass the club on to a competent successor, but instead he had now handed Rangers over to a man who appeared to be a liquidation specialist.
13
THE LIQUIDATION GAME
CRAIG Whyte’s takeover of Rangers was completed just in time for the new owner to witness his club clinching the SPL championship with a 5-1 victory over Kilmarnock at Rugby Park. Celtic had held the initiative in the title race after a draw at Ibrox in April, but manager Neil Lennon’s inexperience showed as his team blew up at Inverness, losing 3-2 to Terry Butcher’s side and Rangers cruised home, winning all four of their remaining fixtures.
Walter Smith bowed out from the Ibrox hot-seat on a high, soaking up the accolades before handing over the reins to his assistant Ally McCoist, his contractually designated successor, although the departing manager’s elation was difficult to detect in some of his subsequent remarks. Even as Lennon was congratulating his opposite number and offering the view that he couldn’t have lost to a better bloke, the increasingly dour and tetchy Smith was haranguing Celtic for supposedly putting pressure on referees over the course of the season.
It was unquestionably the case that peripheral issues surrounding match officials, often directly or indirectly involving Celtic, had been an unwelcome diversion over the course of the campaign, but it was hard to see how Smith’s criticisms, especially at the end of a successful season, could be justified, with even his eulogising biographer, Neil Drysdale, admitting, ‘With hindsight, this was one outburst too many.’
Perhaps the gloomy mood was understandable, even as Smith vacated his position at Ibrox with the plaudits ringing in his ears. An intelligent man, he was almost certainly aware that he was leaving the club he loved, and which he had arguably helped bring to its knees, in a decrepit, dying condition.
Smith continued to insist, even on the day he stepped down, that investment was needed from the new owner; not in order to pay the club’s bills, the immediate priority if insolvency was to be averted, but to keep a competitive team on the park and to stay ahead of Celtic. Admitting that the club had struggled on the park when compelled to operate within a more stabilised financial environment, Smith urged Whyte to immediately release funds to strengthen the playing squad, ‘Historically, if you look at Rangers over the last 20 years, they have needed a fairly large investment in the team to boost them. When the team has not had that, it has not been successful. The team now needs this boost. I think [Whyte] would be blind if he didn’t realise that.’
The pressure on Whyte to start spreading it around was immense, from departing legend Smith, from new manager McCoist and of course from the fans, whose expectation levels had been raised after reports of his ‘off the radar’ wealth in the tabloids. Whyte immediately announced his intention to make £25m available to the manager over a five-year period, a promise which turned out to be a David Murray-style moonbeam, but to his credit, the new owner also made some measured remarks about managing expectations and running the club properly. ‘We want to get the best players that we can, but in terms of paying English Premiership salaries of £100,000 or £200,000 per week, it is not financial reality for Rangers or any other club in Scotland,’ Whyte cautioned. ‘We are in the Scottish league, we don’t have television income to speak of, and so to bring the top players up here
is pretty difficult… There will be investment but the club has to pay its way.’
Nevertheless, over the summer, Whyte, at the insistence of McCoist, agreed lucrative five- and six-year contract extensions for key players Davis, Whittaker and McGregor, none of which the club could afford. In addition, over the close season, Rangers signed seven new players on permanent transfers, including American internationals Carlos Bocanegra and Alejandro Bedoya, Romanian international defender Dorin Goian and left-back Lee Wallace from Hearts, at a total cost of almost £4m, while in November, Sone Aluko bought out his own contract at Aberdeen in order to put himself in the shop window at Ibrox.
Rangers’ recent domestic title successes had guaranteed direct entry into the Champions League over the previous two seasons and now it was imperative that the new manager, having spent so much money to retain his key players and to strengthen his squad with reinforcements, guided the team into the group stages of the competition, where a welcome £17m in prize money potentially awaited the club. Without Champions League income, Rangers were running at a £10m annual deficit, and with 60 per cent of the season ticket sales now mortgaged through Ticketus for the next three years, it was vital for the club that revenue from European football was maximised.
Unfortunately, due to Scottish football’s diminishing UEFA coefficient, McCoist’s side first had to negotiate their way through two potentially tricky qualifying rounds before they could reach the group stages and claim the pot of gold. In the first game, Rangers were paired with Malmö, and lost 1-0 at Ibrox in the first leg, after a mistake from Steven Whittaker allowed Daniel Larsson to score the game’s only goal. The return match in Sweden saw the implementation of UEFA’s ban on travelling Rangers fans, after the club was sanctioned following incidents of sectarian singing during the club’s elimination from the UEFA Cup at the hands of PSV Eindhoven the previous season. It turned out to be a bad-tempered affair, with Whittaker, unforgivably in such a crucial qualifier, and then Bougherra, who was later sold, both getting themselves stupidly ordered off, as the match finished 1-1, sending Rangers out of the Champions League at the first hurdle.
Tangled Up in Blue Page 38
