Rangers Under New Management But With An Old Problem

By on Aug 24, 2011 in Latest, Scottish Football | 2 comments

When your club is the league champion, it seems everyone wants to take you down. Titles often come with that rather annoying Bulls Eye that the manager can never remove from his club’s back until they are no longer champions or he is no longer the manager. For Rangers, of course, it matters not who the manager is nor how long it has been since a title had last been won. Along with Celtic, Rangers’ prolonged dominance over Scottish football lends itself to the club often being a focal point for myriad parties surrounding the game to target, for good or bad. From the media that cover them in greater detail than most of the other Premier League clubs, fans in Ibrox and elsewhere that celebrate every goal or bemoan any mistake, other sides that save their best matches for them, to that other Glasgow club aware of their every move and keeping pace, Gers are unlikely to cease being a polestar for the league anytime in the near future. And considering a star was one of the club’s early shirt crests, they are probably just fine with it being that way sometimes.

In many ways, though, Rangers might be wishing this season was one in which fewer would have paid attention to what they were doing, as they are a club in transition both in the dugout and in the owner’s box. Walter Smith stepped away from Ibrox for a second time at the end of last season, taking with him the managerial experience gained while winning ten league titles and five Scottish Cups with the Light Blues. Able assistant Ally McCoist was appointed as his successor, not so much to the sound of a Hallelujah Chorus from Gers supporters but more so to a slightly melancholic David Gray acoustical tome with a bit of folksy hope thrown in. McCoist probably deserved some time to find a proper grip upon the reins, as there is certainly some adjustment involved in being promoted from an assistant to the head man, regardless of how long one might have been with any club. Perhaps the Bellshill man should have been able to take stock of the slightly thin squad he inherited from Smith, as the club sought to cut operating expenses over the past few seasons in absence of a rich owner’s bottomless pockets by trimming the playing squad of its higher wage earners. Even just having a bit of time to survey the transfer market and discover the players he needed to ensure the opening stanza of his tenure at Ibrox would be a successful one would likely have been welcome.

The only Scottish manager afforded that amount of time is likely Alex Ferguson when Manchester United are behind after ninety minutes, and when SPL officials chose to start play earlier than ever before to help clubs like Rangers prepare for European competition, the clock starting ticking for McCoist this summer before he knew it had even been wound.

Thus, the transfer market was addressed in fits and starts, with Spaniard Juan Manuel Ortiz and Lee Wallace from Hearts being the only new players on the books for a while. With potential targets choosing to either go to lower league English clubs or opting to wait and see what their current sides might offer in the way of money or playing time, the outline began to be darkened around that bulls eye on a club like Rangers. With Scotland only earning one Champions League spot these days–and even that one being a playoff qualifier spot–owing to the top flight’s UEFA coefficient, whatever allure there might have been for top international players to hitch a ride to Europe via Glasgow has slightly dimmed. That red center was well and truly struck when McCoist managed the club out of the Champions League with their opening tie defeat to Swedish club Malmo along with beginning their SPL campaign at home with a 1-1 draw to Heart of Midlothian. This perhaps reinforced the reservation some Rangers fans had expressed about McCoist’s promotion to manager, as it had been rumoured he was given charge over the squad during some of their Scottish Cup matches the past year under Smith and these were the games where the club played out of sorts. Early on, then, it would seem McCoist might not be adept at directing cup matches, which is a bother as it is there where potential revenue is lost with early exits in the harsh light of a poor television contract for the league and declining gate receipts along with reducing the attractiveness of the club to players seeking Champions League football. As for the draw to Hearts, the question might have been whether Walter Smith would have been able to manage that into a win on a day when Rangers had raised the champion’s flag over the stadium that day.

Despite these early season setbacks, the recent 3-0 victory over Motherwell find Rangers in the same spot where Smith left them: atop the league and one point ahead of Celtic. Although McCoist’s side did lose to Maribor in the away leg of their Europa League encounter, they did capture that vital away goal, so with a good performance in Glasgow this week, Rangers should hear their name called upon for the group stages and have a chance to continue European play this season. The transfer market has also softened for the club, with Americans Alejandro Bedoya and Carlos Bocanegra having recently joined defender Dorin Goian along with Kyle Bartley again on loan from Arsenal. Of these signings, only Bedoya has yet to feature due to issues over obtaining a visa, but once in the side he should represent a solid, if not spectacular, crop of players McCoist has been able to bring into his squad minus the failure of securing David Goodwillie’s services. McCoist has been around Scottish football and Rangers long enough to know even with this he and his club’s performances will still be at the center of football discourse, and even victories will do little to reduce that focus. But is does give him a better chance at dodging some of  the slings and arrows shot his way.

The club itself, however, is also the target of perhaps a more powerful entity than any pundit surveying the lack of quality in the Scottish game and more demoralising than when Steven Whittaker gives away another ball in his third of the park. HMRC has come in for unpaid taxes owed by the club under its previous ownership of Murray International Holdings (MIH) that are now held by Craig Whyte, chairperson of the new owner Rangers Football Club PLC. The details of how Rangers came to having the tax man rummaging through its offices a couple weeks ago stretch back over a decade, when the club was dabbling in an Employee Benefits Trust scheme to operate the daily expenses at a reduced tax rate. MIH apparently failed to notice the laws were changed during the period, closing a particular loophole that allowed organisations to conduct their affairs in this manner by shuttling money from some offshore entity back to themselves in the form of relatively tax-free loans, and underpaid HMRC over the years somewhere in the neighborhood of £24 million. In addition to the underpayment, interest has been assessed to Rangers on their tax debt that would bring the sum asked by HMRC to around £36 million. The decision over whether this amount is still owed to HMRC by Rangers is currently under consideration with a tax tribunal, but should Rangers be found to owe this–and a ruling should be coming by this fall–£15 million in penalties could also be assessed by the three-judge tribunal, increasing the club’s tax bill to £51 million.

Now, it seems the £2.8 million figure that has been mentioned of late relates directly to a liability directly assumed by Whyte and his group when their takeover was completed in May this year. When financial books from the previous owners were more closely reviewed, there was this small matter of a tax debt found, which at the time was said to be not a “deal breaker.” The debt was assumed by Rangers FC PLC with Whyte apparently promising HMRC he would pay it promptly. Since, though, Whyte has contested the amount, claiming most of it is a penalty his group should not be made to pay and did not agree to assume from MIH, having been dutiful enough to report the oversight to HMRC in the first place. Naturally, the tax authorities believe it is still due as it was counted as a debt against the club, which is now owned by Mr. Whyte through Rangers FC PLC. This is actually a separate matter from the tax issue surrounding the EBT scheme, and should negotiations between Rangers and HMRC fail here, this would seem to initiate another tribunal.

In a worst case scenario, then, Rangers getting bounced early from the Champions League or even failing to find form in Europa would hurt less than if the tax man hits his target true. It would not be down to the failings of a new manager that damaged one of the most successful clubs in Scotland the most, but instead what should be the more simple matter of paying taxes when they come due or when one promises to pay them. One would imagine that Whyte might relent on the issue of the lower tax sum in the hopes of earning some good will with HMRC, but he might have the issue of being able to have the line of credit necessary to do this while at the same time maintain the club’s daily operations. With the transition from MIH (which was effectively in the hands of the Lloyds Banking Group near the end) to Whyte, loans extended to the club to maintain the bank’s solvency have seemingly dried up as the bank is no longer a party to the proceedings, thus reducing any financial flexibility Whyte might have in satisfying any assumed liabilities while simultaneously retaining a steady cash flow to pay the players their wages and ensure other employees’ cheques do not bounce. Overall, it would appear difficult to imagine such calamitous action unfolding for the Glasgow club, but the financial state of the game in Scotland remains a tricky affair on which few would take a confident punt.

Perhaps Rangers need Celtic to lose a few more matches like they did to St. Johnstone recently so target practice could be moved away from them for the time being. No, not even that would shift attention away from Gers, but maybe McCoist finding his feet and leading the club to greater success on the pitch than Whyte seems to be showing against HMRC could reduce the size of that bulls eye and make it more difficult for others to hit the mark.

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    2 Comments

  1. east kilbride man super ally is not a bellshill man thought a would let you no

    craig durie

    August 24, 2011

  2. Craig: Thanks for reading. It does appear Ally’s family moved to East Kilbride when he was young, but it seems as if he was born in Bellshill, which might suggest both areas could have a claim on him.

    Jason

    August 24, 2011

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