“Too big to fail” is a term that’s been heard a lot in the last couple of years, mainly in relation to giant financial institutions receiving massive government bailouts because the alternative – allowing these banks to go under – could trigger the collapse of the global financial system.
It’s also a term that many people might be using in relation to the financial state of Rangers Football Club. Surely Scottish football is inconceivable without one half of the country’s famous “Old Firm”? But with new information emerging daily on the parlous state of the Ibrox finances, it’s maybe a thought that needs thinking.
Back in October, when it was confirmed that Lloyds Bank were de facto running Rangers, I considered the different options likely to play out: administration; a white knight; or an extended period with bankers in charge, (“Are Rangers Donald Ducked?”). Well, the longer this goes on the more it looks like the final scenario is the one that’s playing out, giving Celtic fans at least some happy news in this dim time for Tims.
The one piece of major news I read this week is that Rangers FC owes over one hundred million pounds to its parent company, Murray International Holdings. This is something that I’d long suspected – I am sure that when Rangers had a rights issue to clear their £70m+ debt a few years back, I heard that Murray was just shifting his piece of the debt around, and it now seems like that was the case. RFC owe £60m plus accumulated interest of £48m to MIH. I think *that* is the killer piece of information that is scaring every potential buyer away.
Murray can’t write off these debts if he wanted to – because his company MIH owes hundreds of millions of pounds to Lloyds, so they won’t let him. And no investor in his right mind is going to pay off those debts, on top of the £31m owed by Rangers directly to Lloyds, to obtain a football club with little prospect of making any money in the near future.
Frankly, I’d like to see the Scottish Parliament do to Murray what the US Senate is currently doing to Lloyd Blankfein, chairman of Goldman Sachs – haul him up in public and ask some very difficult questions as to how he got such a major Scottish institution into this mess. Like the Gers or loathe them, you should want this to happen too: if you’re a UK taxpayer, you stand to lose 43% of the £100m+ that Rangers owe – and even if you’re not, it could happen to your club one day (looking at you, Jambos). Football clubs are social institutions and they have obligations to the wider community – so the government should take an interest.
This likely won’t happen, so let’s move on and say the unthinkable happens: Lloyds pull the plug. They convert Ibrox into flats, or maybe the casino that Murray has long tried to build, and get some cash back for their shareholders, while Rangers FC as we know it ceases to exist – what happens next?
Some new variant of Rangers would appear – say, FC Rangers, along the lines of Man U’s FC United offshoot. Starting in the lower leagues – junior football? – and working its way up with a much, much stronger revenue base than the competition. If Gretna can go from Division Three to the Premier League in three years then so could FC Rangers.
But how would they get from the juniors into the Scottish Football League? Currently it’s a closed shop, in fact it’s a separate organisation and there’s no route to do so. Maybe this would force the SFA, SFL, SPL, and every other hanger-on administrative organisation in Scottish Football to work out a viable pyramid system.
But until that happens, Celtic could bring Tony Mowbray back and still be guaranteed to win the league every season. Maybe not the Scottish Cup though, because even as a junior league team Rangers would have a shot at that.