Tangled Up in Blue

by Stephen O'Donnell

  At the same time, a statement from Duff and Phelps in response to the verdict declared that they were ‘utterly shocked and dismayed’ at the ‘draconian’ punishment handed down to the club and, requesting ‘an immediate, expedited appeals process over the sanctions’, called for ‘pragmatic and commercially sensible penalties’ to be imposed instead. But McCoist went further, accusing the SFA of trying to kill off Rangers and targeting in particular the governing body’s three-man judicial panel. ‘I found out the decision last night and I was shocked and absolutely appalled by the way this supposedly independent judicial panel was coming down on us in this form,’ the Rangers manager fumed on the club’s in-house television channel. ‘Who are these people? I want to know who these people are. I’m a Rangers supporter and the Rangers supporters and the Scottish public deserve to know who these people are, people who are working for the SFA. Make no mistake about it, this is an SFA decision. They have appointed the panel so therefore they are working for the SFA, but who are they? I think we have a right to know who is handing out this punishment to us, I really do. This decision could kill our football club, simple as that. Make no mistake about it.’

  McCoist’s ranting indignation seemed curious, because he knew fine well who the tribunal members were. Rangers’ head of football administration, Andrew Dickson, had attended the hearing and sat across the room from the three-man board, so if McCoist was really concerned about SFA transparency and the names of the panel members, Dickson could easily have provided him with the information. It wouldn’t be long before Strathclyde Police were investigating ‘abusive and threatening communications’ made against the trio, including Raith Rovers director Eric Drysdale, after their identities had been ‘compromised’ on the internet.

  A defiant McCoist later emphasised that he had no regrets over his call for the SFA panel members, who had been randomly selected from a ‘cab-rank’ system of 100 or so names, to be publicly identified, despite his belated admission that he knew their names all along, and he claimed that the ‘lunatic fringe’ who had been responsible for the threats and intimidation against the board was not his concern. It was arguably the case that the sanctions imposed on the club may have had a discouraging effect on some of the more airy-fairy parties interested in acquiring Rangers, but it seemed that McCoist’s real fear was that a Newco Rangers, hampered by a signing embargo and possibly playing out of the Scottish Football League’s Third Division, might not be able to flex its muscles in the transfer market and deal with its opponents in the traditional manner.

  The case inevitably went forward to a hastily convened appeal, where a new three-man judicial board, who were openly named, found that there were no grounds for reversing the original decision and ruled that the transfer embargo should be upheld. Suggesting that the potential impact on the club of the ban on new signings had been exaggerated, given that Rangers still had over 40 professional footballers on their books, the appellate panel noted, ‘This sanction was proportionate to the breach, dissuasive to others and effective in the context of serious misconduct.’

  In addition, the SFA published a 167-page document, which outlined the findings of the original panel, allowing the deliberations and the rationale of the tribunal to be made public. In consideration of Rangers’ failure to withhold PAYE and VAT payments in the first half of the season, the three-man board felt that ‘only match fixing in its various forms might be a more serious breach’, and contemplated suspending or ending the Ibrox club’s SFA membership. The reason stated for the imposition of a transfer embargo on Rangers was that ‘the punishment should relate in some meaningful way to the unpaid taxes arising from high wages and salaries among certain players’, while the panel also rejected the idea that Craig Whyte alone was at fault with regard to the non-payment, finding instead that ‘directors and employees must have known that what was happening within Rangers FC was entirely wrong and illegitimate but they chose to do nothing to bring it to the attention of the public’, a verdict which scuppered the notion that one individual alone was responsible for all of Rangers’ crimes and misdemeanours.

  Channel 4’s Alex Thomson, one of the few English journalists to retain an interest in the Rangers saga, noted on his blog, ‘That [verdict] strikes a blow to the heart of Rangers’ notorious culture of passing the buck whilst winning glory with money it did not have and potentially millions which should have gone to the taxman… People knew it was happening and did nothing about it. All of which makes the simple and childish scapegoating of Craig Whyte wrong in principle, wrong in fact and wrong in law.’

  The embargo was, however, later overturned at the Court of Session, as Rangers continued the appeals process through the legal system, before it was eventually accepted by the club as part of a compromise deal prior to the start of the new season, which allowed Newco Rangers to receive a licence to play football, after a transfer of membership from the liquidated club was approved by the governing bodies.

  Charles Green’s stated objective was for Rangers to exit administration via a CVA and to that end he offered the club’s creditors a total of £8.5m, a fraction of the total £55.4m debt and considerably less than the £11.2m Bill Miller had put on the table. The alternative to accepting Green’s CVA proposal, however, was liquidation, which, according to the Yorkshireman, would result in, ‘the history, the tradition, everything that’s great about this club [being] swept aside’. On 12 June, at a meeting of Rangers’ creditors, Green’s CVA offer was formally rejected, and the club founded in 1872 and incorporated in 1899 was consigned to liquidation.

  HMRC had been offered roughly £1.9m of their established £14.4m liability, which consisted of the ‘wee tax case’, now with interest accruing standing at £4m, plus the withheld PAYE and VAT contributions, a total which marginally exceeded the 25 per cent threshold, confirming that with HMRC’s rejection, the possibility of an agreement was precluded. Even just a few days before the vote, Green had remained optimistic, publicly at least, about his offer being accepted, when he stated, ‘HMRC have had the documentation for over a week, so with each day that passes we have to assume that they are on board. It would be awful if they were to announce on the day that they were turning it down.’

  All of this was wishful thinking; HMRC had given no encouragement to the idea that they would vote to accept a CVA, with their website making clear the official policy in such cases, ‘We are likely to reject a voluntary arrangement where there is evidence of evasion of statutory liabilities.’ There was simply no motivation on the part of HMRC to agree to a settlement which may have incentivised other companies, including other football clubs, to disregard their financial responsibilities and obligations in the hope that they might ultimately be able to barter with the agency to accept a few pence in the pound of what they were owed, once liquidation was looming.

  Explaining their decision to reject Green’s offer, HMRC announced, ‘A liquidation provides the best opportunity to protect taxpayers, by allowing the potential investigation and pursuit of possible claims against those responsible for the company’s financial affairs in recent years.’ At the time of writing, the inquiry of the liquidating firm, Binder Dijker Otte (BDO), into what happened at Rangers in the years prior to insolvency, including the conduct of the club’s directors, has yet to be published.

  The club’s other substantial creditor was the finance firm Ticketus, who were still owed £26.7m of £30.5m borrowed, after Whyte mortgaged a fourth year’s worth of season ticket sales when he couldn’t pay back the first instalment on the other three. There were also outstanding bills to other football clubs, including Celtic, Dunfermline and Dundee United, and further afield Arsenal, Chelsea and St Etienne, as well as Rapid Vienna, who were still due more than £1m over the purchase of Nikica Jelavić. The Scottish Ambulance Service, Strathclyde Police and Glasgow City Council were all owed tens of thousands of pounds, while others who lost out as the Rangers edifice crumbled included taxi firms and catering companies, as well as face
painters and local garages.

  In fact, a glance through the list of creditors confirmed the impression that Rangers owed money all over town: there were a total of 276 unsecured creditors, including Bhutta’s Newsagents, Glasgow (£567.45); Joe Lennon Picture Framing, Bearsden (£840); Posh Deli, Glasgow (£260) and, intriguingly, given former chief executive Martin Bain’s history of destroying evidence of the club’s use of EBTs, Shred-It, Glasgow (£444).

  Rangers had died, and the media buried them. ‘Rangers Football Club Born 1872, Died 2012’, lamented The Herald over its entire front page; the tabloid Scottish Sun carried a picture of a coffin, tastefully adorned with a Rangers wreath, being lowered into a grave; the Daily Record’s page one spread featured a photo of Tom Vallance’s Gallant Pioneers, the Rangers team who had taken on Vale of Leven in the Scottish Cup Final of 1877, under the headline R.I.P. RFC, with the paper declaring, ‘Rangers football club were plunged into liquidation yesterday by the taxman – bringing the curtain down on 140 years of history’; while the headline story in the Glasgow Evening Times focused on how short the creditors’ meeting had lasted, ‘140 years of Rangers ends in eight minutes’.

  Of course, there was still a viable football club in Govan, with a stadium and a state-of-the-art training facility, provided the punters could be persuaded to come out and support it, and following the decision to liquidate, the sale of Rangers’ ‘basket of assets’ to Charles Green’s Sevco Scotland consortium now proceeded as expected. Green complained about HMRC’s decision to turn down his CVA offer, but he was playing to the gallery. In the end, HMRC spared Rangers by not contesting Green’s stripped-down asset purchase, despite debts to the taxman which were now predicted to reach, depending on the verdict in the ‘big tax case’, an epic £75m. Precluding the possibility of selling off Ibrox and Murray Park, a statement from the revenue and customs service explained, ‘The intention is not to wipe Rangers off the face of the map.’

  Sevco 5088, now renamed Sevco Scotland Ltd, acquired the bones of Rangers for £5.5m, an amount which barely covered the administrators’ fees. Green paid £1.5m for the ‘heritable properties’, namely Murray Park and Ibrox Park, which had been valued at £119m in 2005 when the club was trying to fight off insolvency by overstating the value of its assets. Half of the purchase price, a total of £2.75m, was for ‘player registrations’, which, given that the club would soon be liquidated and the players’ contracts would be null and void, didn’t augur well for those concerned about Green’s competence.

  The new owner insisted that all contracts held by Oldco Rangers had been automatically transferred to his Newco, but several high-earning squad members, including Allan McGregor, Kyle Lafferty and the three Stevens – Whittaker, Davis and Naismith – all disagreed and declined to join Green’s new entity, citing their right to have their contracts cancelled under the Transfer of Undertakings (Protection of Employment), or TUPE, code of practice. TUPE regulations were designed to allow employees in such circumstances to join a new company on the same terms as they had previously enjoyed, but there was no obligation to do so. Refusing to accept that Green’s club was the same Rangers and instead referring repeatedly to the new entity as ‘Sevco’, Naismith insisted, ‘I am disappointed and angry that Rangers Football Club no longer exists in its original form… My loyalty is with Rangers, not with Sevco, who I don’t know anything about,’ while Whittaker concurred, ‘We owe no loyalty to the new club. There is no history there for us.’

  Green’s company, which later changed its name from ‘Sevco Scotland Ltd’ to ‘The Rangers Football Club Ltd’, a subtle but important difference from the original ‘The Rangers Football Club plc’, eventually received a small fee from Southampton for the expedited transfer of Steven Davis, while the two Lees, Wallace and McCulloch, agreed to stay on, despite not yet knowing what division the new club would be playing in.

  The initial proposal was for Green’s Newco, despite the failure of the CVA, to be allowed to assume the liquidated club’s position in the SPL through a transfer of membership, which would see a new ‘Rangers’ parachute directly into Scottish football’s top flight ahead of the new season. The Ibrox institution had provided a valuable source of income for cash-strapped SPL clubs, who were used to benefitting from up to four home games per year against the Old Firm sides, fixtures which brought increased gate receipts, thanks to the Glasgow clubs’ large travelling support, and broadcasting revenues, with the games against Celtic and Rangers regularly selected for live transmission by the television companies. With Rangers now gone, there was concern among many about further reduced circumstances in Scottish football and the potential impact of yet another financial blow to the national game, so the proposal to retain the Ibrox franchise within the top division was widely assumed to be a fait accompli.

  However, before the vote, supporters of the other SPL clubs, who for months had been gaming out such a scenario on websites and on social media, began making clear their objection to the plan, with fans mobilised through a campaign to say ‘No to Newco’, and bombarding chairmen and directors with messages expressing their opposition, on the grounds of sporting integrity, to the idea of a liquidated Rangers being treated as a special case and permitted to play in the country’s top division. A spokesman for Aberdeen FC confided to the BBC, ‘The consequences of not voting no would be overwhelming from a supporters’ perspective. There is now an avalanche in terms of fans’ feelings here,’ while Motherwell, whose supporters had gained an influence over the Lanarkshire club’s board after their own painful administration in 2002, balloted their fans directly on the proposal, with 82 per cent of respondents opposed to the idea.

  Suddenly, ‘sporting integrity’ became the new catchphrase of Scottish football, and with an 8-4 majority required for the motion to be accepted, the outcome was already known in advance, as one by one, almost every club in the division lined up to publicly state their voting intentions ahead of the meeting at Hampden on 4 July, with only Celtic choosing to keep their counsel on the matter. Faced with the prospect of isolating their own customers, the SPL clubs voted overwhelmingly to reject the application to transfer Rangers’ SPL membership to Newco, by a margin of ten to one, with only Kilmarnock abstaining and Rangers voting in favour.

  The eventual decision to deny Newco Rangers immediate access to the SPL offered a timely reminder of where the real power in football lay; not with the media, not with the moneymen or the directors of clubs, but with the fans themselves, so often the forgotten constituency in modern football, who in the end had reminded those running the game, in the face of much sneering commentary in the popular press, of the importance of fair competition and integrity in sport, over short-term financial considerations.

  Almost inevitably, however, the vote to reject Newco’s application to join the SPL only increased the pandemonium in the Scottish game caused by Rangers’ disintegration. The immediate problem of where Green’s club would be playing next season had only been kicked into the long grass for a week, with the 30 clubs in the lower divisions of the Scottish Football League now finding themselves obliged, somewhat reluctantly in the case of many, to decide on the new club’s immediate future. As Green and his people made a tactical withdrawal, SFA chief executive Stewart Regan, and his counterpart at the SPL, Neil Doncaster, went into bat for Newco, taking on the responsibility of persuading the lower-league clubs that a relaunched Rangers should be allowed to start out in the SFL’s First Division, with either Dundee, who finished second behind promoted Ross County, or Dunfermline, the 12th-placed team in the SPL, taking the available place in the top flight for the start of the new season. Despite there being no precedent for a new club to be elected to the First Division, and no apparent mechanism within the existing rules for such an arrangement, Regan and Doncaster went to town on the lower-tier clubs, leaving them in no doubt about the consequences if they should ignore the executives’ entreaties and consign Newco, still a vacuous entity of a football club with no SFA membersh
ip, to the relative wilderness of the Third Division.

  On top of exaggerated warnings about ‘Armageddon’ and a ‘slow lingering death’ for Scottish football, threats were issued about invalidated sponsorship and television deals, which would reportedly see the total revenue of the SPL drop from £17m per annum to as low as £1.5m, with the trickle-down effect resulting in the likelihood of as many as ten of the smaller clubs in Scotland going out of business. Regan even suggested that there might be an outbreak of ‘social unrest’ if Rangers fans were left without a viable team to support, an odd argument which seemed to make the case for giving in to mob rule and public intimidation, rather than standing up against such forces in society.

  In fact over at Ibrox, by contrast, there seemed to be an acceptance that Newco would be starting off the new season on the bottom rung of the Scottish game, with manager Ally McCoist telling the club’s website, ‘We have to rebuild, so SFL3 would give us a better chance to rebuild,’ while even the fans seemed to be embracing the idea of Division Three, rather than offer the prospect of financial succour to the clubs which had rejected them. But the game’s executives were insistent, with Doncaster maintaining publicly that SFL3 ‘would inflict massive damage on the whole of the game in Scotland and effectively punish 41 innocent clubs for the misdeeds of one’, while Regan seemed to be suggesting that the ideal scenario was for Newco Rangers to spend only a year in SFL1 before being promoted, allowing a resumption of the status quo after an interval of only one season.

  Doncaster’s position was perhaps excusable, given his remit as a bottom-line moneyman employed by the SPL, whose clubs were clearly desperate for a hasty return of the Ibrox cash-cow, but Regan was head of the SFA, the organisation charged with safeguarding the whole of the Scottish game, and yet he had apparently expressed a preference, on financial grounds, for which club should win one of the country’s four senior divisions and gain the only available promotion slot to the SPL. ‘Notwithstanding the moral and ethical arguments,’ Regan maintained, ‘holistically the alternatives to [Newco] playing in any division other than the First will not help the game. The game cannot survive without it… It’s fair to say that the broadcasters would live with a year, because it could be a fantastic story for them, which is why I think First Division rights will be an interest as people will want to see how this club is going to bounce back… If Rangers don’t get promoted, then the game has got another year to suffer with the financial consequences that brings.’