Stigma in Scottish Football- Part 2: A Lesson From History

History Repeating

There is not a masonic conspiracy. There is not an unseen green hand. There is not bending to suit the Establishment club. This is about money and risk. I’ve disagreed with those that said only Rangers would have got the treatment they received in 2012. Celtic would too had they walked a similar path. The reason has nothing to do with team affiliations and everything to do with finance.

Bella Caledonia provided a link to Part 1 of this series: “Too Big to Fail” in its recent article “On Dave King and Karl Marx”. Everything in Part 1 would equally apply to Celtic.  For those that point to 1994 – the fitba’ world was different then. It hadn’t been transformed by media rights and European revenues the way it sculpts things now. And in 2012 – Celtic were both competitive and driving and sharing in those revenue sources. It was the early noughties when the drawbridges came up and the game really started to polarise. There would be the ‘haves’ and the ‘have-nots’. Scotland was looking at irrelevance in the grand scheme. Many tried to cross the bridge before it went up. Leeds and Rangers burned themselves up trying to stay out in front long enough to matter. Ideas like the Atlantic League and joining the English pyramid were born to try and stay in touch. The European elite – those so far beyond the rest they can practically guarantee Champions League qualification and passage to the last 16 is near unbreakable now. Everyone else is searching for relevance in the new order. The boat has been missed.

Where you started didn’t really matter as Chelsea, Man City and PSG have shown – just where you were when it mattered.  The big leagues with money had the gas to stick it out. PSG had national wealth bankrolling it. Celtic and Rangers were never equipped to last the distance but for Scottish football the choice was whether to help and hope for the trickle down or hinder and focus on being a competitive irrelevance in the grand scheme.  The effect of the transforming financial landscape twisted and distorted the pre-existing order. The same mass market and huge top end revenue changes that saw competitive monopolies built in Scotland affected European football too. It should be clear from the money leagues that real competition in domestic leagues now starts further down the table and those with ready dominance of a big domestic league have big advantages in the new Euro-elite.

money list.PNG
The elite, the regular qualifiers from the big leagues and those whose leagues are so rich European football doesn’t matter all in one diagram. Our top clubs make half of the bottom of this table in a very good year in revenue

Real competition in Europe only exists at the sharp end of the competitions. The rest is just revenue churning filler. The odds of former winners Benfica winning it on day 1 are 150/1 – similar to the odds of Forfar winning the Scottish Cup. For other former winners PSV its 200/1. Even Ajax – who defied all probability on their exhilarating run last year and allowed the mirage of success against the new world order an Indian summer – were priced this year at 69/1. That’s similar to the odds of Partick Thistle or Dunfermline Athletic winning the Scottish Cup.

Our game was rebuilt on the marketability of the ‘Big Two’ the same way the European landscape was for the elite, and so a new financial model emerged. Consider media agreements that guarantee minimum numbers of ‘Old Firm’ games for what they really are. The rivalry and manic desire to win has a market beyond Sark, Tweed and the ocean. The rest doesn’t beyond betting interests. It is all about creating watchable spectacles that draw in numbers Scotland can’t generate alone. Scottish football might be marketed differently – as an antithesis to the prevalent elitism for example – but it currently isn’t and even our own biggest and best are struggling to hang on to the coat-tails of the newly enriched also-rans of the big leagues in European relevance. It might be able to make more from a direct-to-consumer business model than it can by flashing its legs at major broadcasters and hoping for sloppy-seconds from the EPL consumers – but it doesn’t right now. Even the ahead-of-its-time SPL TV that could have given our clubs control of their own media rights and ability to market and produce content with real stories by people who do care about our game was bombed out.  It was Celtic and Rangers who denied that approach when the rest of the top flight were in – the star attractions of the current business model. You now currently need 3 different subscriptions to watch all Scottish games, most of which raised in Scotland goes to funding our ever opulent neighbourly EPL.

Its why there’s no appetite to end bigotry… it’s good for business. The result is that the infrastructure of all Scottish football at its contractually locked in levels depends on there being a Celtic and Rangers to play each other. It sadly depends on the hatred and rivalry. It would exist without them, but at reduced operating capacity. In such a model the reverberations of the collapse of one side of the main attraction cascades through the micro-economy built on its back until it can be recalibrated – by which time any number of clubs could be tumbling like dominoes. To repeat – it is finance and risk not club allegiances that shook up our club game like never before.  Sure certain clubs may have taken reckless gambles, but the model is the responsibility of the SFA and the league bodies. In the battle to stay relevant compromises are needed.

Throw into the mix the harmful effect of limited access to the transformative power of Champions League revenues only for the team that tops the league in a two horse race and it is little wonder there’s a titanic battle to be the bride and not the bridesmaid. Missing out on the action for too long will cause financial stress and a lack of ability to compete. That particular challenge may be altered by bettering the coefficient, but in the meantime it throws up a challenge made more risky than prior to 2012 by the need for SPFL Champions to hurdle qualifying rounds at the wrong end of the domestic football season. To speculate heavily to accumulate later. It is a challenge Rangers are staring at again just now.

The stage for 2012

It’s easy to look back now and say that no club followed into the abyss when Rangers collapsed in 2012, but to do so is to ignore the frantic efforts to stop that happening. That time period has been reinvented on all sides. Rangers fans feel they’ve been singled out for punishment. Celtic fans feel that Rangers got away cheaply in sporting terms with illegality in a war for dominance of the future. Fans of all the others feel that the rest of football was a casualty in a tussle they are not involved with. Nothing at that time happened in a vacuum.

The banking collapse of 2008 was still reverberating and there were fears of a double-dip recession. In the 2010/11 season wage bills were already dropping. The SPL wage bill dropped below £100m for the first time since the 2005/06 season but the aggregate P&L results for the top flight still produced a loss. Revenue had fallen too by 4% that season. The rise in attendances later experienced by some clubs look different when presented with the fact that both attendances and merchandising dropped off a cliff in 2010/11 – the biggest fall in attendances in the history of the SPL. To put that in context, unlike those big leagues that now dominate the footballing landscape, match day income continued to be the largest revenue source for SPL clubs. Three quarters of the stadiums were at less than 60% capacity.

On top of this the TV rights money had hit the game financially. Although a five year, £13m per season deal with Sky and ESPN was in its second year by 2010/11, the clubs themselves were still recovering from setting out their finances and playing squads based on a £31.25m per season deal with Setanta who had collapsed. By 2011/12 the deal would be renegotiated up to £16m per season with a two year extension only to see that deal collapse on Rangers liquidation.

Back in 2011 the SFA produced a lovely glossy prospective called “Scotland United: A 2020 Vision”. It gave an analysis of its own performance at that time, that probably helps demonstrate exactly where priorities had been as well as perceived achievement.


Going into the season that rocked Scottish football to its core, things were not in terrific shape for the league in general. Hearts were running consistent wages to turnover ratios of over 110% setting the stage for their own later insolvency. It had become reliant on forgiveness of related party debt, with £8.8m forgiven the previous season. Big-spending Dunfermline who’d been relegated a few seasons earlier after a Yorkson and Masterton financed resurgence in previous years had won promotion back to the SPL. Both Hearts and Dunfermline would both slide into Administration on the back of financial struggles within the game and their clubs but eventually be rescued from oblivion by fan ownership models.

Aberdeen had posted the single biggest loss before tax in the SPL for the season. The SPL as a whole had a £95m working capital deficiency. It had Net Debt totalling £86m, only £18m of which related to Rangers on-the-balance-sheet debt. The previous seasons had seen a string of financial failures including Motherwell (2002), Dundee (2003), Livingston (2004) and Gretna (2008) all going into Administration. Gretna had already perished.


At Rangers themselves things were becoming desperate off the pitch. By October 2010, the Aberdeen Asset Management case relating to DOS money-box schemes had been settled in HMRC’s favour and they were now chasing Rangers for payment of amounts avoided using a similar scheme.

Initially the amount sought was on the basis of tax due calculated on the sums lodged in the DOS Trust as the DOS trust being a sham. Later – as a result of the presence of previously and deliberately undisclosed side letters for de Boer and Flo, HMRC changed tack and pursued payment beyond the usual 6 year limit on the grounds of fraudulent or negligent behaviour as avoidance of PAYE and NIC instead.

By end November 2010 Rangers had accepted there was a case that tax was due and followed QC advice to settle because of the non-disclosure. The quantum of the final amount due (£2.8m) and so payable would be agreed at a meeting with HMRC on 21st March 2011. By mid-April the SFA Licensing Committee had granted Rangers a UEFA licence for 2011/12 – a subject which remains an issue of contention and will soon be part of a resolution at Celtic’s upcoming AGM. Also in April the First Tier Tax Tribunal sit in private to consider the ‘Big Tax Case’ on EBT’s and Craig Whyte’s takeover of Rangers is reaching its conclusion – with the £1 coin rolling across the table in early May.

Despite this backdrop, Rangers win the League Cup in March 2011 and seal the League on the last day of the season.

The last set of annual accounts to be prepared by The Rangers Football Club PLC were for the year to June 2010 and would feature a £4m profit (largely thanks to a huge £16.1m commercial revenue boost from being the only Champions League Group Stage participant from Scotland), an unqualified audit report and a reported wages-to-turnover ratio of 50% (comparing favourably to Celtics 62%). The squabble for European revenues had become the battle for dominance and a war of attrition for both sides of the Glasgow divide. The transformative power and risk involved in reaching for the European revenues were starkly evident. By this period in time Rangers winning the league in the 2010/11 season should really be seen as a Pyrrhic victory.

Conversely it had a working capital deficiency of £21.6m with long term debts of £37.9m. While long term debts can justifiably be looked at as part of the capital financing of a business, it would ultimately be liquidity (meeting short term debts as they fall due) which would see Rangers tumble into Administration, compounded by inability to secure longer term capital due to the risk of large liabilities still to land. Neither the ‘Wee’ nor ‘Big’ tax case was provided for or even listed as a contingent liability (prior to the interim accounts published on 1 April 2011) despite both being investigated by HMRC since 2004. On paper its Net Assets of £71m may have seemed favourable compared to Celtics £40m, but it was that ability to meet liabilities as they fall due that was critical. Prior to Whyte’s takeover, the Board at Rangers had already discussed entering Administration as Finance Director Donald McIntyre revealed at the Craig Whyte trial. When Whyte showed up willing to take it on, it offered a chance not to be at the helm when the probable crash happened. Lloyds saw a chance to get their money back and piled the pressure on.

Going into the 2011/12 European campaign, Rangers had their wages under control and were capable of turning profits from a decent European run and more if players then went for big money, but needed this to happen to have any chance at meeting the short term liabilities as they fall due thanks to the mismanagement of the past. An alternative model if it had been adopted earlier might have seen bigger expenditure cuts at the sacrifice of European revenues, but such cuts take time and had not been made under the stewardship of David Murray. The stakes could not have been higher. Craig Whyte would have known this was his only roll of the dice.

Over at Hampden, the tax situation would also be known. The SFA under the presidency of George Peat (who is an accountant) had been approached by HMRC to provide contractual information for the investigation (a Schedule 26 notice in 2009) into undeclared player payments. The potential liabilities had become public as the takeover progressed. Rangers themselves had confirmed they were under investigation in April 2010. Campbell Ogilvie – whose role had encompassed the early stages of at least the DOS arrangements at Rangers was the President-in-waiting of the SFA. The accounts themselves for June 2010 had been filed with Companies House on 2 November 2010. They had received interim accounts to December 2010 as part of the UEFA licensing process along with confirmations from Rangers to consider. Those interim accounts themselves contained information on the DOS liability (though it was described as ‘potential’ and said “discussions are continuing with HMRC to establish a resolution to the assesment raised”. The SFA Handbookfor 2011/12 showed that Andrew Dickson who took on administrative duties relating to the EBT scheme at Rangers from 2004 was on that Licensing Committee (chaired by current SFA President Rod Petrie), which would seem an incredible conflict even now. Then CEO of the SFA, Stewart Regan would later famously seek to put out an email clarifying the situation (with something shown later to be untrue) in an attempt to quell dissatisfaction relating to the licence grant given the known circumstances in December 2011, only for it to be made clear that it would cause trouble for both the SFA and Whyte’s Rangers.





Additionally as the takeover went through, a raft of fit and proper considerations would need to be done by the SFA relating to Rangers new owner and Board. Stewart Regan – in talking about Whyte later after revocation of his F&P status – subsequently gave one of the most astonishing dismissals of the process and its rationale I’ve ever heard from someone responsible for safeguarding an industry.


So we have a situation going into the 2011/12 campaign where:

  • Rangers were going to collapse without access to European revenues and only those could generate enough cash to meet liabilities as they became due;
  • The SFA and Rangers old Board all know how precarious things are and that a refusal to issue the license will almost certainly cause financial failure – but it could at least have been controlled;
  • The greater game in Scotland is in a financial malaise that has only just been rescued by a hastily negotiated TV deal but that deal itself is predicated on Rangers participation;
  • If Rangers collapse altogether there’s no telling how many other clubs will take revenue hits that risk their very existence and lack the time to readjust their costs; and
  • Rangers have a new Board with a chancer at the helm who is prepared to roll the dice regardless of what it costs his club or the game in general.

The choice is whether to allow that to happen or not.  The past is not the immediate concern – the future is. ‘Not knowing’ the situation is utterly implausible on the part of the SFA and even if true points to utter incompetence. The SFA green lighted a ‘Hail Mary’ rescue effort because it shared responsibility for the creation of a model of finance in our game that could not let a giant like Rangers fail without a domino effect. Because it was asleep at the wheel when things got to this point. Because now the only alternative was to face up to that and watch the carnage. It was not Craig Whyte’s fault things arrived at that point – he was merely willing to be the fall guy if the gamble didn’t pay off in exchange for a potential big win if it did. It was not Stewart Regan’s fault: he’d just arrived in time to deal with a looming crisis. Honest appraisal of the situation at this point though would have meant disaster was confirmed. It is unclear how much the rest of the clubs knew at this point – though protectionism within the SFA would suggest probably little at this time. There could be no paper trail.

Those that claim only Rangers would get this treatment are mistaking club affinity with self-protection and self-interest. It was always about the money – long term and short term. The same would have been done for Celtic had the shoe been on the other foot. They were also now too big to fail. Celtic PLC are not interested in pursuing the Resolution 12 matter because of this.

[Edit: for ease of explanation for those that are not familiar, information on what Resolution 12 is can be found here]

That it came at the expense (at least short term) of Celtic was only ever leverage for a tighter grip on key committees. It has already been resolved to investor satisfaction and now the ‘Requisitioners’ are a hindrance.

The only value to be salvaged now are changes to governance of the game that lead to genuine co-operation in the common best interest going forward rather than power struggles of competing self-interest. Celtic PLC lost interest in pursuing it because they are winning that game to investor satisfaction.

This is why I’m not entirely sure why many Rangers fans seem to want to see an end to Resolution 12. Rangers are already indemnified against any punishment, it can’t hurt them in terms of sporting or financial penalties. On a moral level, it was Craig Whyte’s Board who clearly had no real concern for the club.  All that ended up the case was that instead of a controlled insolvency event and reconfiguration, a spectacular car crash happened instead. Sir David Murray may have been the cause, Whyte the driver and the SFA the conditions (or maybe an ineffectual policeman waving traffic the wrong way) – but their team was the casualty and it cost them everything. Seeing matters in that light might see those who let their former stewards risk the club itself held accountable. It also allowed the wreckage to be claimed by more unsavoury characters creating a tougher road back than should have been the case.

Sure the SFA intentions at the end may have been to save Scottish football from a financial meltdown – but their main job is to ensure a level of governance and control environment to prevent the sort of all-in risk taking they ended up facilitating.

I’d assume for Rangers fans the reasons must be ‘banter rights’ if their club was seen to have bent the rules, but I’m not really sure (though happy to be corrected if wrong). As a fan of neither half of the Glasgow divide the only outcome I’m looking for from it all is that the failures of governance that allowed it to happen and the vipers nest of self-interests that benefitted from it are identified and steps to make things better for all Scottish football are the result. Truth rather than punishment, so things can be done better. Maybe then the charade of 2012 born of financial desperation can come to an end and Scottish football supporters can be treated as mature intelligent adults who can be engaged with in a meaningful manner.

20/20 Hindsight

When the hurricanes of change in 2011/12 came later came to be looked back at with more information in the public domain, the revelations from Craig Whyte’s fraud trial and leaks and investigative journalism (particularly new media and bloggers with inside information) shining light into the dark corners, the SFA would seek to throw the blame at the Oldco Rangers – knowing blame could rest there without any current reverberations thanks to the Five Way Agreement. Newco Rangers were right to resist it. The Judicial charges would have almost certainly found the old board responsible for misleading the license application but that no punishment was possible and therefore everyone’s hands are clean. The Rangers Board under David King refused to accept responsibility – and rightly so. His Newco had been exempted from the failures of the old bar the footballing debts on admission to the leagues. They’d been promised no action would be taken against them even if it was just a whitewash.

Faced with the choice of taking the issue to the Court of Arbitration for Sport and losing control of the narrative or dropping it and facing the music, the SFA have done neither. Just delayed and delayed. A result is promised by Christmas. There is no good outcome for the SFA. Even if the charges are upheld they’ll have to admit they can’t act on them and its likely that more damaging disclosures will be made in the course of the hearing. They have to drop it and try to bluster their way through the fall out.

There is no possibility of harm coming to Rangers thanks to the SFA signing away their rights in respect of retroactive punishment. Newco Rangers were entitled to try and limit their total costs for entering the leagues and the authorities didn’t have to agree – no one wants to write a blank cheque. It was a game of brinksmanship that the SFA/SPL/SFL conceded because they considered the financial risks too high. In a no deal, Green’s consortium would lose their £5m investment, but Scottish football would lose considerably more.

Mostly it would be the top flight clubs, who had to publicly stand with their fans in mock indignation while actually wanting Rangers and the media rights and match-day revenues they bring back immediately. Neil Doncaster was instructed by those clubs to get Rangers back as quickly as possible even if it meant intimidation and threats to the SFL. He speaks with those top clubs voice and should not be held personally accountable for what they wanted. Fans indignant about his actions at that time should really be looking at their own Boardrooms. In any case the SPL isn’t responsible for the sporting interests – it is responsible for the club interests. The same is true of the SFL. It is the SFA who are charged with the application of sporting interests and good governance including risk management – but it was also them that got it so wrong that this was necessary. And who pulls the strings at the SFA? The clubs again – and in particular the increasingly influential Professional Game Board now mostly enthralled to the big and powerful clubs, who as you will remember wanted Rangers back pronto to save their interests from crashing.

Celtic, Aberdeen, Hibs, Hearts….Rangers too…. it is undertandable fans getting upset at the outcome – but it is an outcome that was the collective will of all their clubs.  In Hearts case that will has become a bit closer to the fans now thanks to the benefit of fan ownership brought about by the very crisis this relates to. Hate the deadlocked self-interests, power struggles and inability to change for the better of the current model – but love the game. Don’t give up on it. Then change it by making the SFA more accountable to all Scottish Football’s stakeholders rather than just the financial interests of the top clubs.



6 thoughts on “Stigma in Scottish Football- Part 2: A Lesson From History

Add yours

  1. I cannot except or understand why there has been so far no action ftom SFA and clubs concerning the Supreme Court verdict in July 17 concerning the illegal use of EBTs.. As these EBTs were deemed as earnings and not declared to SFA then all games were these players competed in would result in a 3 0 loss. Over 55 players in a 13 year period (I include 3 years with DOS playets), no action taken. This level of cheating is the biggest scandal in sporting history. Fact when you consider these players plaýed in European competions for their club, but also for their varying countries in European Competitions and World Cup competitions while registered illegally. Absolute disgrace on every level.


    1. Officially that was covered in the LNS enquiry (obviously predating the Supreme Court decision) as regards footballing rule breaches. Sandy Bryson’s (of the SFA) evidence on the rules meant that despite not being properly registered in the first place, they were still eligible to play.

      Of course the later decision by the SC undermined the basis of the whole Enquiry, but the official line is that it cannot be revisited regardless of how people feel about that. Even if it could the clubs don’t want to anyway as it’s not in their interests to.

      An argumentative person might say that since the original enquiry never covered DOS debts or Scottish Games that the SFA could still being a complaint. It could even be argued that the SC decision invalidated the whole premise and things should be reset to before the conclusion and done again. Or that the SFA affected independence by giving evidence.

      The short response though is that it is only sections of the fan base that really want that to happen though and they don’t have the clout to force the issue anyway.

      The concern that raises however is ‘what should be done to give fans and their concerns more importance in such affairs going forward?’


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