Socialist Worker

Debt and taxes spell the end of the line for Rangers

Michael Lavalette looks at how offshore trust funds and loan schemes have brought Scotland’s biggest sporting institution to its knees

Issue No. 2308

One of Scotland’s sporting giants crashed and died on Thursday of last week. HM Revenue & Customs voted against Rangers Football Club’s proposed debt repayment plan. The only alternative is liquidation.

Rangers, the biggest sporting institution in Scotland, went into administration on 14 February.

The immediate cause was the club’s failure to pay its taxes from May last year when it was taken over by billionaire businessman Craig Whyte.

Whyte inherited a mountain of debt and a range of tax practices that the government has argued are illegal.The most significant of the contested practices was an “employment benefit trust” scheme which placed “loans” to players into an offshore tax haven.

The players were not under any obligation to pay back these “loans”. The scheme effectively allowed Rangers to pay the players without paying tax.

Rangers got itself into this mess under the stewardship of its previous owner, Sir David Murray. He came to the club in 1988 promising success—and borrowed vast sums from Scottish banks to fund the dream.

Dwindling

This was a period when Sky was investing heavily into football in England. Murray borrowed to keep up with English clubs at a time when Scottish revenue was dwindling.

Eventually the banks began to balk at the scale of the debt being run up by Rangers. So the club turned to its off-shore trust to attract the players that it couldn’t otherwise afford.

The latest scheme to try and save Rangers is to transfer its assets into a new company and manoeuvre this “new Rangers” into the Scottish Premier League. But the league is not a “franchise league” and has never parachuted a club into its top tier.

This poses questions for Scottish football with regard to sporting integrity. Why should a bankrupt institution—one with vast unpaid debts and a proven history of “financial doping”—be allowed back into the Scottish Premier League?

There is one further issue, of course. Rangers is not just any football team. It reflects the worst of the sectarian divisions in Scotland and has often been viewed as the “establishment team”.

The club has close links to the Scottish Football Association, most notably via Campbell Ogilvie. He is a former Rangers club secretary and is now an association administrator.

All of this has fuelled suspicions that, despite all its problems, Rangers will “get away with it”.


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