bleacher report lifts the lid on the glasgow r*ngers debacle
There's a common notion that Americans don't 'get' football. They even call it soccer.
This is not a fair assessment, the game is a huge participation sport over there, particularly with women.
Similarly here in Australia - it's the biggest participation sport, but the pro game has never quite taken off as a spectator sport.
But back to America.
One thing the American's do 'get', very well, is the BUSINESS of sport.
I'm going to quote large this chunk from an article by Daniel O'Connell in Bleacher Report, the US's 4th largest sports media site with 25+ million monthly readers, concerning the debacle around the Glasgow R*ngers FC situation.
Yes, as an Aberdeen supporter I'm biased. There is no love lost between the supporters of the respective clubs.
But it's interesting to see that amidst the kerfuffle it takes a US sports journo to step back at the situation, take a wide view and then call it absolutely correct.
Here it goes...
'Consider then the curious case of Rangers Football Club. The most successful club in Scotland, they have won the Scottish title 54 times and claim over 100 first-class honors in their history. They attract the second-highest attendances in the SPL and their fan base probably provide the majority of the viewing public for SPL matches televised on Sky Sports and ESPN.
Despite this, Rangers is in trouble. Since the club was taken over by Craig Whyte in May 2011, they have not remitted any of the taxes due to Her Majesty’s Revenue and Customs (HMRC) in Pay as You Earn (PAYE) tax and National Insurance Contributions (NIC).
Under previous owner Sir David Murray, the club operated an Employee Benefit Trust (EBT) scheme from 2000 to 2010. This is a scheme whereby employees are paid (and taxed on) a very small percentage of their wages. The remainder is paid into a trust, which then gives “loans,” to the employee, which are non-taxable and never repaid.
This is perfectly legal, but the key word is “trust.” The employee must “trust” the employer to ensure they are paid, “loans,” from the trust. Contractual payments absolutely cannot be made through the EBT. Evidence has emerged in the public domain which suggests that Rangers players were assured in writing that they would be paid from an EBT, and that they would never have to repay the money.
HMRC maintain that the payments made to Rangers players in this period were contractual in nature, and therefore taxable. They have presented Rangers with a bill for £24m in unpaid taxes, and £12m in interest. Should the First Tier Tax tribunal find in their favour, a further penalty will be imposed, which could see the final bill reach as much as £75m.
Since at least 1999, when a similar tax dodge was operated (Rangers admit this and have committed to paying £2.8m to HMRC), Rangers has therefore used non-payment and evasion of tax to give the club a financial and sporting advantage over every other club.
That’s not all. As Rangers has made payments to players which were not included in their contracts, the players involved were not correctly registered with the national association, and so ineligible. The accepted sanction for fielding of ineligible players in soccer is for the match to be recorded as a 0-3 defeat.
Since 1999, Rangers has won the Scottish Premier League seven times, whilst fielding ineligible players whom they could not have afforded to pay if they were not avoiding making tax payments on their wages.
To the outsider, it seems simple. Rangers must be stripped of all honours won during their financial “doping” years.
It goes beyond even this. The President of the Scottish Football Association is Campbell Ogilvie. He has held influential positions with the SFA and SPL over a period of many years, going back to the 1990’s. At which time, Campbell Ogilvie was the Secretary of Rangers FC.
Indeed, Campbell Ogilvie was himself paid via an EBT during his time at Rangers. Both the SFA and SPL have launched investigations into Rangers’ conduct in the years since 1998, but there is no confidence within the Scottish soccer community that they will take any serious steps to deal with Rangers’ wrongdoing.
One thing Rangers cannot escape though, is financial reality. It finally caught up with them on 14th February when the club was placed into administration.
This is a UK legal term which basically means that a court-appointed team take over the running of the company. It prevents creditors from taking legal action against it, and the administrator must take steps to make the company profitable to ensure creditors are paid.
The administrators may seek to arrange a Company Voluntary Agreement (CVA) with the creditors. This requires the agreement of 76 percent of the creditors by value. It means that all creditors would accept a pennies-to-the-pound deal. Once they are paid, for example, 30p for every pound owed, the company can exit administration and emerge debt-free.
If the creditors do not agree a CVA and the company cannot pay them in full, it is then liquidated. All assets are sold off and the proceeds distributed evenly amongst the creditors. As the majority of Rangers’ debt is owed to HMRC, the chances of a CVA are unlikely. It is the policy of HMRC to reject CVA’s.
The most likely outcome for Rangers FC is that they will soon be liquidated. The club will cease to exist. Here’s where it gets interesting. The SPL yesterday published a set of proposed changes to their Financial Fair Play policy.
Amongst them, is a proposal to allow a club, on liquidation, being allowed to transfer their, “share,” or membership of the SPL, to a new company. This would mean that should Rangers be liquidated, their directors, or anyone else who wants to buy their stadium, training ground and players, can do so and be given Rangers’ place in the SPL.
Effectively, this would mean a debt-free company, called Rangers FC, playing in blue shirts at Ibrox Stadium next season, while HMRC and other creditors (Rangers are in debt to possibly as much as £134m) are left with nothing.
One of those creditors is Heart of Midlothian FC, from whom Rangers signed full-back Lee Wallace. They still owe £800,000, which is unlikely ever to be paid. Another is Rapid Vienna, from whom Rangers purchased Nikica Jelavic, whose goals were instrumental in their winning of the SPL last season. Rapid are still owed £1m, and despite Rangers selling him to Everton FC for £5m in January, Rapid are unlikely to ever see their money.
Effectively, the SPL propose to issue a cheats’ charter, and coincidentally I am sure, just as it looks like Rangers are to be liquidated. Nothing like this happened just four years ago when Gretna FC were liquidated.
Rangers FC is in serious danger of being liquidated because they have lived beyond their means for far too long, in the process distorting the market in Scotland.
It has abused the tax system to give itself an unfair sporting advantage over the rest of the clubs in the SPL.
It has bought players from other clubs it could not afford to pay for and had no intention of ever paying for.
And the Scottish sporting establishment, governing bodies and media, want everything possible to be done to facilitate Rangers, who have destroyed the sporting integrity of the Scottish game, escaping the consequences of their self-inflicted troubles.
We can’t allow the money-tap to be turned off, after all. Can we?'
