It is always good when Adam pops back in to offer us his views and thoughts, which I appreciate greatly. I also liked the Fitzcarraldo comment! He has been party to a cracking debate running on the blog as we speak, and I thought I would take advantage of my position as the blog host to write a response to some of what he has been saying tonight.
For those who have not been following the debate (and why not?) one strand of discussion has been what the Rangers debt would have been without the “Big Tax Case”, whether Lloyds wanted their money. There are a couple of points where I think something needs to be added.
First of all, here are some of Adam’s comments.
I was specifically responding to the point of “if we ignore the FTTT debt”. The “FTTT debt” was the killer for us. That’s the main reason Lloyds wanted nothing to do with us as they didn’t want to lose £18m and they knew they would do so.
It is a mile out in the context of the picture re the Big Tax Case being ignored. It’s the butterfly effect. If you ignore the Big Tax Case, then you can also ignore Ticketus and the PAYE to HMRC and numerous unpaid legal bills.
Murray was never going to stay in charge whilst the BTC was hanging over his head if he had a way out.
Lets be 100% clear and 100% factual. The reason Murray sold for £1 was due SOLELY to the Big Tax Case. There is absolutely not even a smidgen of a doubt about this.
Just checked the creditors list and as stated, if you ignore Whyte’s abominations and potential frauds/lies which were a direct result of the FTTT then the real debt owed was £6.5m. This excludes debentures to bond holders which were potentially payable over 25 years but in reality would never be paid back (Celtic have similar).
As previously stated, the reason Lloyds wanted out was because of the Big Tax Case. The risk profile was high that they would end up with nothing.
The Big Tax Case “started” when tax assessments were made upon Rangers in 2008 in connection with the EBT usage. However Sir David Murray was trying to sell out his interests at Ibrox long before that. As the BBC said on 13th July 2006:-
Rangers owner David Murray may sell the club within the next three years and has already been approached by potential buyers.
He told the Financial Times: “I’m coming up for 20 years, and I think that will be enough for anybody. We’ve had a couple of people speak to us tentatively, but I would only sell the club if it was somebody who could take it to a higher level.”
John Macmillan, secretary of the Rangers Supporters Association, said: “I am confident Mr Murray would only sell to someone with the best interests of the club, its players and supporters at heart. It’s true he has had his detractors who say he only took over Rangers for his own profile but he has invested lots of time and his own money in the club.”
Stephen Smith, of the Rangers Supporters Trust, added: “Our biggest nightmare would be a Malcolm Glazer taking control at Ibrox.
“One man who might be interested is Sir Tom Hunter, he’s known to be a big Rangers fan. But we don’t want one unaccountable rich man replaced with another. David Murray owns 91.8% of the club, that’s unhealthy, and whoever takes over we would like to see ownership radically overhauled and re-distributed.”
So he was looking to sell long before the Big Tax Case.
I included the comments from the fans’ spokesmen to show how easy it is to be wrong, and contrastingly how some had the right goal in mind.
As an aside, have a read at this excellent piece from expert financial journalist Ian Fraser from October 31st 2009 – Does Lloyds mean what it says about Rangers F.C.?
Mr Fraser’s piece makes it clear that Lloyds were concerned about Rangers long before the Big Tax Case.
Rangers are the latest club to be targeted by Her Majesty’s Revenue and Customs regarding offshore payments made to players. The newly crowned Scottish Premier League champions issued a statement this afternoon which confirmed they are subject to an investigation and facing court action although they vigorously reject any suggestion of wrongdoing.
Rangers are understood to have used employee benefit trusts over the past decade to subsidise the wages of the highest-paid members of their playing staff, a matter which has triggered HMRC’s interest.
“There is an ongoing query raised by HMRC, which is part of a pending court case,” said Rangers in a statement. “On the basis of expert tax advice provided to Rangers, the club is robustly defending the matters raised.”
Alastair Johnston, the Rangers chairman, added: “This is not a new problem. It has been there for a long time.”
You will note that Rangers was “robustly” defending the case on the basis of its advice – correct as it turned out to be, at least so far.
As for ignoring lots of debt on account of Craig Whyte’s involvement – with hindsight the Big Tax Case bill is nowhere near what it could have been (although there is a liability still) but there was still the Wee Tax Case and either the Lloyds debt, or the Ticketus debt which cleared it, to be taken into account.
And (a point which I have not seen examined in any detail anywhere, except by me) Mr Whyte’s non-payment of bills to HMRC etc was not, as far as has been made public, to allow him to leave Ibrox laden with sacks full of gold. Instead the money that was not spent tax bills and other creditors was spent on running the football team and paying the wages of players whose salaries could not have been afforded if the tax and bills had been paid.
Rangers Football Club benefited from Mr Whyte’s decisions not to pay! That is why there was justice in the “football debt” being insisted upon being paid by newco.
And whilst the debenture holders might not have wanted their money back, it was still debt – as for Celtic’s debenture holders, it seems unlikely that the company which operates the team will go into liquidation, leaving debenture holders and shareholders with nothing.
And the sale of Rangers was, net, for £1. It however included Mr Whyte clearing £18 million debt. Therefore the sale price was effectively £18,000,001.
Blaming Craig Whyte for all of Rangers’ woes, as Adam seems to suggest (and I apologise if I misrepresent him) is a re-writing of history, and an invalid one.
Maybe Sir David Murray sold up because he did not want the risk of being the man at the helm when the shutters came down. But blaming the FTT for that is wrong. As I mentioned, the “For Sale” signs were up long before it was an issue.
And, talking of losses, one of the selling points to the City when Mr Green was looking to succeed with his CVA proposal was that, with HMRC approval (ha ha!) the successful buyers would have the use of over £40 million accumulated losses to be applied to reduce tax bills in future.
So, to conclude -
Did the Big Tax Case make Sir David Murray decide to sell? No.
Did it make Lloyds want out? No.
Were Rangers making huge profits till Whyte arrived? No.
Did Rangers benefit financially from non-payment by Mr Whyte? Yes.
Will this argument continue? Yes!
Posted by Paul “Herzog” McConville