Astonishment, shock and disbelief. These were just some of the emotions that I was feeling as I opened my newspaper to read an interview with Rangers chairman Craig Whyte where he would not rule out the possibility that the club may be forced into administration.
Whyte’s announcement is in response to the increasing number of rumours about the perilous state of Rangers finances. It has long been public knowledge that the club has been fighting a lengthy battle with HMRC over an unpaid tax bill. However, questions began to be asked when leaked papers from the legal team of ex- Chief Executive Martin Bain suggested that the club could ‘go under’ if they are forced to pay more than £15 million to the taxman. Further fuel was added to the fire when law firm Levy and McRae claimed in a row over unpaid fees that there was ‘real concern’ over the solvency of the club.
Under intense pressure, Whyte faced the media yesterday to try to alleviate the fans fears. While he was quick to point out that he was confident of winning the case against HMRC, he did concede that more cuts at the club could be necessary as it faces a £10 million blackhole in their annual running costs.
This is a worrying development for all Rangers fans who believed that the new Craig Whyte regime would bring an end to the cost cutting measures that had been in place for the last decade under David Murray.
At first glance, it is difficult to blame Whyte for the current situation at the club. The battle with HMRC was already in progress before he arrived at the Ibrox in May. Though, far more importantly the roots of the problems can be traced all the way back to the 1990s where the board led by David Murray lived beyond its means and criminally overspent on players. While I cannot deny that growing up watching a Rangers team containing international names like Brian Laudrup, Paul Gascoigne and Jorg Albertz was a joy to behold, it did not bring the success in Europe that kind of investment warrants.
Unfortunately, Craig Whyte cannot change the past and must work with the situation he has today. So, what can he do to retrieve the situation and prevent the club going into administration?
Firstly, it is important to say that I have faith in Craig Whyte. He is a businessman with a strong track record of turning around failing businesses. As well as this business acumen, he also benefits from being a Rangers supporter, so it is difficult for me to believe that he will do anything that will put the club in jeopardy.
However, while there are these positives he must learn from the mistakes he has already made at the club. While I admire the fact he has now come out and spoken to the fans he should have done this much sooner. He allowed the rumours to develop and instead of tackling them responded by simply banning journalists from Ibrox.
Another important question that he has to be held accountable for is while the club are clearly struggling financially why has the wage bill increased by 20% since he arrived in May. I understand more than anyone as a Rangers fan that for the club to recover financially it has to be successful on the pitch and as such players need to be paid good wages. Though, it seems strange to me that with the threat of a tax bill hanging over the club’s head why pay players more wages when you may have to sell them a few short months down the line.
The next few months are going to be crucial to Rangers long term future. Even if the club were to go into administration I would find it difficult to imagine they would go out of business. Though, the act of going into administration would have ramifications for the club for years to come.
It will be a great test for Craig Whyte. Though, I am confident in his abilities both as a businessman and a supporter to steer the club in the right direction. Though, the real lesson that all supporters must take from Rangers struggles is no matter what the size of the club if it is living beyond its means it is vulnerable to severe financial difficulties.