As the growing problem of debt in Scotland continues to worsen there are grave concerns this weekend regarding the future of Glasgow Rangers football club which has been in existence for over 140 years. The club has been placed in administration amid concerns that an alleged £9 million tax bill is owed to the Inland Revenue as we also await the outcome of a separate HMRC investigation into alleged unpaid tax going back many years in relation to offshore employment trust.
Debt in Scotland
The debt situation in Scotland has worsened considerably over the last few months and indeed the fact that renowned football club Glasgow Rangers is also struggling will be a body blow to many in the country. Debts in relation to Glasgow Rangers are estimated at potentially in excess of £100 million if the company was to lose the ongoing court case with HMRC. This relates to allegations of unpaid tax in relation to employment trusts which were instigated some years ago and the legality of which is clouded in controversy.
This is a football club which is followed by a large proportion of the Scottish population and while in excess of 50,000 attended today’s game at Ibrox, money is tight for everybody and gate receipts for Glasgow Rangers have allegedly been sold forward for the next four years. The company has attracted unfortunate and uncomfortable headlines over the last year or so since Craig Whyte took control after David Murray decided to sell up and move on. He sold his 85% share in Rangers football club for a nominal one pound, handing over the debts to the new regime.
Financing debt going forward
There are real concerns about the viability of Rangers football club as it stands at this moment in time with debts piling up and pressure from all sides. Indeed current owner Craig Whyte decided to stay away from today’s game against Kilmarnock with expectations of a very hostile welcome from the Rangers faithful. The expectation is that Rangers football club as it stands will need to come to some kind of arrangement with creditors whereby they will need to agree to receive pennies in the pound for their current debts.
It is unclear at this moment in time whether all parties involved would vote in favour of a voluntary arrangement but in reality there may well be little choice. The company is unable to finance current debts and is in effect insolvent and unable to operate on a day by day basis outside of administration. Indeed there are suggestions this evening that some of Rangers star players may well be sold in the coming months to try and pay down the debt and reduce overheads going forward.
Debt and Scottish football
Debt and Scottish football seem to go hand in hand at the moment as a number of clubs have struggled and continue to struggle. Indeed when you consider that Celtic football club and Rangers football club bring by far and away the most income into the league there will be a major shortfall in the event that Rangers was to remain in administration for any period of time. There is also speculation that the club currently owes various third parties outstanding transfer money for players signed over the last few months with Heart of Midlothian allegedly owed around £800,000.
Scottish football is currently in a situation where no one club can afford to take a small hit never mind figures in the region of £800,000. Hearts have also been in the headlines over the last few months with regards to the late payment of player’s wages and indeed it seems that the club was only a few hours away from various penalties from the Scottish Premier League. So where does this leave Scottish football going forward?
Debt reorganisation for Scottish football
There is no doubt that Scottish football as it stands at the moment would struggle to operate going forward purely and simply because of the income system which is dependent upon Glasgow Celtic and Glasgow Rangers and which many believe favours these two clubs. Despite the fact that Glasgow Celtic recently suggested it was not dependent upon the existence of Glasgow Rangers there is no doubt that both clubs need each other to prosper in the relatively small goldfish bowl which is Scottish football.
It is also worth noting that Celtic football club was on the verge of going bankrupt itself only a few years ago with a last-minute reprieve allowing the club to continue as normal. At this point in time, despite the fact that much of the future income from Glasgow Rangers has been allegedly sold forward, it seems unlikely that the football club will fold and the connection with the original company lost. However, the Rangers spending spree of years gone by which saw some of the worlds best-known stars gracing Ibrox will certainly be a thing of the past and unlikely to ever return.
Government intervention to save Scottish football
The Scottish government has intervened on numerous occasions with regards to Scottish football and the finances associated with Scottish football teams. However, in reality the cost of attracting the best players in the UK and in Scotland has increased dramatically over the last few years and Scotland’s better players are being picked off by their UK counterparts. It is unclear whether part-time football is the answer for the lower leagues or indeed whether the share of income associated with Glasgow Rangers and Glasgow Celtic should be spread more evenly through the leagues.
There is also the ongoing danger that Glasgow Rangers and Glasgow Celtic will at some point look to move to the English premiership or indeed become heavily involved in a European wide league. This would effectively pull the plug on Scottish football and drain finance from a sector which has produced some of the best footballers in the world. Nobody quite knows the answer to the Scottish football conundrum at this point in time for one thing is certain, it cannot continue in its current state.
