What does the future hold for Scottish football now that the ‘New Rangers’ have been consigned to the bottom tier of league football?
I don’t know how many of you have heard the news. In a nutshell the old Glasgow Rangers FC had for some time been running at a loss for some time, and entered administration back in February 2012. Many – myself included – assumed that a buyer would step in, pay off the debts and everything would be fine again. But despite various rumours, no one came forward and the club was liquidated in June 2012 following pressure from HMRC over unpaid taxes. The reformed club – formed from the bought-out assets of the liquidated PLC – was refused permission by the Scottish Premier League clubs to take the place of the former club. This was despite massive financial consequences – including the termination of a lucrative TV deal. There was hope in some quarters that Rangers would join the next division below – the first division of the Scottish Football League (equivalent to The Championship in England) but the votes of clubs today turned that move down, consigning the reformed club to the Scottish third division.
Owing debts of up to £134million, there were always going to be some losers. The question is who and by how much. HMRC – and the wider taxpayer were one of the biggest creditors who stood to lose millions. Only recently have some extraordinary things come to light – things that have implications not just for Scotland, but for England and for how professional sport is governed in general.
What does this mean for Scottish football?
During my early years of football-watching, Scottish football wasn’t all Rangers v Celtic. Heart of Midlothian, Dundee United and Aberdeen were all top-flight clubs. Aberdeen won the European Cup-Winners-Cup in 1983 (since merged with the UEFA Cup/Europa League after 2000), Hearts were runners up in both the league and the cup in 1986 – being pipped at the post in the former on the last day of the season, and beaten by Dundee United in the cup final – the club going on to reach the UEFA Cup Final the following year. Indeed it was during this time that the last non-Glasgow side finished top of the domestic league pile – Aberdeen in 1985 – under a young Alex Ferguson. (Please don’t recall how I remember this).
The period 1974-1990 was a high point for Scottish football compared to today. Back then, the country regularly qualified for international tournaments – more so than England in the 1970s. They also more than matched England in head-to-head internationals. In the 1990s, the three clubs I mentioned seemed to fall by the wayside – certainly as far as big TV was concerned – and Rangers and Celtic really began to dominate. At the same time, Scottish football internationally seemed to fizzle out. 1994 was the first time since 1970 the country failed to qualify for a world cup, and since 1998 they have failed to qualify for a major international tournament.
Comparisons with the English Premiership
During the 2000s, there was on-off talk about whether Rangers and Celtic should apply to join the English Premiership. Certainly the commercial pressures were in favour, and there was – for some – precedence with the presence of Swansea, Cardiff and Wrexham playing in the English divisions. (Even though they were present in English divisions decades before the set up of the League of Wales in the 1990s).
Given the championship tennis played between the Old Firm rivals, to the fair-weather watcher it all became a bit predictable – and difficult to see who could come up from the grass roots to challenge the dominance of the big 2. Some have tried, but without huge success. But as money started pouring into both the English Premiership and the Champions League in Europe, so the divide between the super-rich and everyone else become more stark. Rangers and Celtic found themselves caught between being extraordinarily big fish in a tiny pond domestically, but being only medium-sized in Europe – failing to qualify on numerous occasions to the league stages of the Champions League. Amongst other things, this put pressure on both to try and secure that qualification, but without the domestic league infrastructure that the Premiership in England had. That’s not to say England wasn’t and isn’t without its risks. Just ask Leeds United who imploded not long after 2000, and Portsmouth who still have financial problems. Interestingly, everything came to a head for both clubs very shortly after driving for, and qualifying for European competitions.
What are the scenarios for Scottish Football?
In the short term, the TV companies will be looking at their contracts – in particular any clauses around the relegation of Rangers and Celtic. This is because the Old Firm games between the two are their biggest audience draws for advertisers. Without that rivalry, they fear people will no longer tune in and advertisers will no longer advertise. There are also consequences for the loss of revenue from matches against a team that otherwise draws 40,000+ supporters to each home game.
It was these financial consequences that led to some pushing for Rangers to move to the next league below top flight in order to get them back up again. But on the other side was maintaining the integrity of the league system. By racking up debts of over £100million, you could argue that the previous owners of the now defunct football club had cheated not just their own fans and the tax payer, but all of the other competing clubs by gaining an unfair advantage. When you look at what has been reported – the failure to pay taxes, the leveraging/securing of loans against future ticket sales and the like, you can see why a number of people are angry at what those running the former club did. This is one of the reasons why what comes out of the liquidation process will be of vital interest not just to Scotland, but to football in general. Why?
For a start there is an issue about governance. Should football clubs be allowed to rack up such huge levels of debt? What levels of transparency should there be around reporting of accounts? The reason why this matters is because the old football club was a PLC – thus bound by the law regarding public limited companies. Were the rules being abided by? If not, who was enforcing them? Are the rules strong enough regarding ‘fit and proper’ persons running such large institutions?
I’m not going to pretend to be an expert in insolvency – much of what follows is informed by Douglas Fraser’s article for the BBC. HMRC – and thus tax payers – have taken a huge financial hit over the liquidation. Therefore in the liquidation processes HMRC will want to go after the people that it sees as responsible. At least, that is what I hope they will want to do. There are also all of the unsecured creditors – ranging from employees owed unpaid wages and salaries such as stewards and ground staff, to caterers owed money for their services. Finally, there are all those fans who bought shares in a PLC that are now worthless. A lot of ordinary people have been hit very hard by this. Don’t think that this is just about a bunch of footballers.
As Fraser says in his article, the process of liquidation gives certain rights to liquidators to see certain documents – if necessary backed up by court orders. There will also be pressure to look at the role of previous owner Sir David Murray – as this catalogue of eyebrow-raising events demonstrates. Will Murray be the second high-profile Scotsman to lose a knighthood in recent times? There are calls for it. He got his for services to business in 2007 – but how much damage have his actions done not just to Scottish football, but to Scottish business?
Widening the distance between the rungs of the ladder
That’s what has happened with both English and Scottish premier leagues. The club I used to watch as a kid – Cambridge United – will be one of the last that has gone up the divisions in successive seasons – starting from the old fourth division in 1989/90 to being 2 games away from becoming a founding member of the new English Premier League in the 1992/93 season. The rungs between Rangers and Celtic and the rest of the chasing pack became too wide, just as the rungs between Rangers and Celtic and Europe’s elite became too wide too. But that’s what Europe’s big clubs wanted. They wanted a European set up that allowed the top clubs to play against each other regularly, so rigged the set up in their favour. As a result, it’s now much harder for the top clubs of yesteryear to reach the end stages of European competition. Part of the fun with Europe for me was that you were just as likely to stumble across a small obscure team as you were a big one. One of my old school mates joked about FC Trelleborg of Norway saying they sounded like a tribe from outer space. “We are the Trelleborgs. Take us to your leader!” – until they beat Blackburn in late 1994 - the season they would go onto win the league.
As for the gulf between Celtic and the rest? It remains to be seen how many of their players will be content to play against substantially weaker opposition. A number of Rangers’ high profile players have insisted they are free agents following liquidation of the club they were contracted to. That legal process is still being decided.
Financially, it also remains to be seen what the impact will be on other Scottish clubs too. Will the TV contracts be cancelled? If so, what will the impact be? Will there be fire-sales of players? Will there be a cutting of wages and salaries? Will there be an exodus of international players from the Scottish leagues? Will there be a greater onus on clubs to develop grassroots talent rather than looking abroad as they have done over the past couple of decades?
I hope Scottish football comes out stronger and far better managed and governed as a result of it. I also hope it has a longer term positive impact on Scottish international football – I like it when England are not the only team competing in international football tournaments. It means we don’t get saturation coverage of just one team – that and Scotland have a proud history of being popular travelling supporters at world cups. It’d be nice to see Scotland on the road again. Until then, it looks like the next couple of years will be a painful restructuring process. What’s been good to see from the reports is that the fans want to go through this to put the integrity of sport back into the game, while wanting to hold those responsible for this mess – not just at the old Rangers but also with the governing bodies – accountable.