Imagine you wanted to buy a business. The company you’re looking to buy has roots that extend across the world. The company’s employees and supporters are devoutly loyal. Historically, it’s one of the best at what it does. Here’s the catch, the company’s financials are in shambles.
Thanks to the actions of Rangers Chairman Craig Whyte and previous owner Sir David Murray, Rangers F.C is on the brink of financial ruin. Murray, climbing into his defacto escape pod, organized a sale of the club to Whyte for a single British pound last May – a transaction that is still being investigated by local authorities.
Murray had traded financial solvency for trophies during his reign at the Ibrox. Included in Murray’s scheme, one that would’ve made the jackals at Lehman Brothers and Goldman Sachs proud, was cheating the tax man at every turn. The club, led by Whyte, entered administration on February 14th.
On April 5th Her Majesty’s Revenue and Customs (don’t mess with the queen) claimed Rangers owed 93 million pounds in unpaid taxes during Murray’s tenure. It wasn’t just the government who was owed. Other clubs, including Arsenal and Manchester City and local suppliers were amongst the indebted . The club’s total debt is now estimated to be 134 million pounds.
This week, Whyte was given a lifetime ban from football by the Scottish Football Association. The judgment also included a 12 month transfer embargo on the club which, coupled with the 10 point penalty for entering administration, punishes Rangers supporters more than anything.
There are two paths left for The Gers, and neither includes Whyte’s embarrassing attempt to join the Premier League. The choices: new ownership that buys the club, debt and all or liquidation.
The only business model that makes sense for a new owner of Rangers is to get them back to normal – winning things, playing to packed houses – as soon as possible.The “transfer ban” makes that unlikely, particularly when you remember that many Rangers players gave up a huge chunk of their wages in return for the promise that they can go this summer if the club looks doomed, or if the ownership situation remains unresolved. Throw in the impending tax bill and you have more variables than any sane businessman would ever countenance.
A tough sell to say the least. Liquidation would see the club plummet to the depths of the Scottish Football League’s third division and basically start over. Upon entering liquidation, the group that buys Rangers will be the biggest factor in determining the future of the club. The interested parties include the Blue Knights, a group of wealthy Rangers supporters and American businessman Bill Miller. Neither party has outlined their plans in firm detail.
It was a great week for football. Two memorable champions league clashes left us in awe of the beautiful game. It would be a shame, however, to lose sight of what is happening in Glasgow. Here’s hoping one of football’s most storied club’s sees better days.