Untold Economics: Rangers like Everton are going to the very edge « Untold Arsenal: Arsenal News, supporting the club, the players and the manager
by Tony Attwood
I wrote over the weekend about Everton – a club with a long history and tradition, and a huge support, but who are struggling on the very edge of financial survival.
Continuing the analysis, I want to look at Rangers, but before I do let’s consider the analysis in England as a whole:
- Very profitable: Arsenal, Man U
- Immune because of benefactor: Chelsea, Man City
- Oddities: Liverpool, Tottenham
- In trouble: just about everyone else except perhaps the newly promoted teams who can keep stability if they choose not to go wild
I include Man U in the very profitable group, because as a club they are just that. Their problem is that so much of the money is then used to keep the crumbling Glazer empire running, rather than being used for football purposes. Tottenham and Liverpool are unique – Tottenham because they have a benefactor in the Virgin Islands, but he doesn’t really want to do a Chelsea, and Liverpool because the Americans are throwing money around – but none of us knows how long this will go on.
Each “in trouble” club is in trouble for different reasons. Everton because they have lost money each year since Rooney went, and the bank has said enough, Birmingham who actually made a tiny profit last year because everything about them has been murky since their takeover – money laundering allegations were just the latest thing, Fulham because the word is that Mr Al Fahed wants to sell, and without him they are dead…
I have chosen Rangers as the next example, because like Liverpool before them it seems almost impossible that such an institution could go down the river. Yet Rangers are arguably in more trouble than Liverpool were. If Rangers go, it is fair to say that the shock waves will reverberate around world football.
Those awfully nice people from Her Majesty’s Revenue and Customs are rather interested in Rangers and keep dropping by to ask if the club has any spare change for old tax payments and fines. The amount due is £4m.
Which is a lot to you and me, but in terms of what we have just seen in the transfer window in England it is nothing at all. And yet Rangers don’t have it, and can’t get it from the bank since they are being run by the bank anyway.
Rangers say they are paying it as fast as they can (if you are English and of a certain age you might imagine them as Billy Bunter expecting a postal order from his aunt). But there are some interesting snippets in this.
First they have paid some money – no one denies that – but it is under £1m. In other words they are so broke (and we are talking of a major club here who get crowds of 40,000 or more for most home games) they ain’t got the rest.
Second, some of this debt goes back several years – which is just about the best way possible to get Revenue and Customs upset.
Third part of the money owed is a penalty for not paying the previous amount of tax.
Fourth, Rangers (the current Scottish champions) are certain to be first or second each year, and so get some sort of a lob at a European competition – but so hard up are they, they can’t even invest in the talent to see them through into the group stages of Europe, which would help them pay off their debts. Now in football terms, that is debt!
There is a further problem however in that there further case going on with Revenue and Customs, over the way players have been paid in the past. If Rangers lose then the current liability will be meaningless, since this second one is much bigger. Add the two liabilities together and it will be all over.
So what happens if Rangers go down? Maybe they go into liquidation and Rangers 2011 will be formed, but that would surely mean a huge penalty and the possibility of Rangers sinking down a division. That’s not very good for them financially, but neither is it for Celtic who would lose out on their biggest matches.
At worst they could just go. We haven’t seen this happen, but we have seen clubs collapse. Leeds is an obvious comparison, since although Rangers’ importance in Scotland is mega, their actual size in terms of success at the time of collapse is less than Leeds – and yet as we know Leeds went through administration and into the third division.
Overall for Scottish football it is not looking very clever – but then nor is English football.
Sadly, the view among the chattering classes is that winning something this year means everything, but staying financially sound doesn’t when all around you are going south. I disagree – I want the club to survive while all around are collapsing. Of course it would be nice to do both – make a profit and win a trophy. But if the choice is win a trophy (like Rangers) and then collapse financially (like Rangers) I think I’d vote against that one.
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