Rangers administration: Seeds of club’s destruction sown by Fergus McCann

THE cast list took on the proportions of a Cecil B DeMille production. Yet BBC Scotland’s investigation into Rangers’ monetary meltdown, The Men Who Sold The Jerseys, made no reference to the man who can be held, at least indirectly, responsible.

Football law-breaking and the collapse of the club’s financial stability seem to be the consequences of Rangers using Employee Benefit Trusts (EBTs). And David Murray’s decision to turn to these risky schemes can be traced to the rebirth of Celtic. Which makes a key player in Rangers’ downfall none other than Fergus McCann.

Simply by getting so much right, McCann caused Murray to send Rangers down a path which has proved patently so wrong. McCann was the antithesis of Murray. The Scots-Canadian detested what he called football’s “jam tomorrow” philosophy of Murray. And, as Rangers rampaged to nine consecutive titles between 1989 and 1997, for all his brilliance in rebuilding Celtic, McCann lost the on-field battle.

By the summer of 1997 – year four of McCann’s five-year plan – Celtic were still stuck in the shadow of Rangers. Murray made sure of that. For much of the 1990s, Rangers had run at a profit. With no challenge from across the city, they needed only the occasional luxury such as Brian Laudrup and Paul Gascoigne, which they could just about afford. However, in order to rack up a historic tenth straight title, Murray decided greater investment was required. A Scottish record close-season spend of almost £15million was sanctioned.

A posse of players, headed up by Italians Lorenzo Amoruso, Marco Negri and Sergio Porrini, each of whom cost around £4m, was added to a proven squad. In contrast, under new head coach Wim Jansen, Celtic reconstructed their entire team with what they brought in from the sale of prized assets Pierre van Hooijdonk, Paolo Di Canio and Jorge Cadete. The modest £650,000 acquisition of Henrik Larsson was mocked for being much trumpeted by general manager Jock Brown.Celtic’s efforts were considered futile. The Daily Record set out three Rangers teams capable of winning the league.

In the end, Walter Smith’s final season brought no silverware to Ibrox as McCann’s mission was accomplished, Celtic winning the title and League Cup. Everything changed. Almost, it seemed, as an act of vengeance, the bullish Murray escalated the arms race and put his club on a path to self-destruction. With cash injections from new investors Dave King and investment firm ENIC totalling £60m, he recruited Dutch manager Dick Advocaat and allowed him to lavish a British record summer spree of £24.5m on players. But, even though Murray’s credit tap from the Bank of Scotland was flowing freely throughout his business empire, he saw the need to make efficiency savings… of the tax variety. For it was in 1998 that discussions began with Paul Baxendale-Walker over such schemes.

Moreover, in that summer, the legacy that McCann would leave Celtic when selling up his stakeholding the following year was cast in bricks in mortar as stadium rebuild was completed. With a 60,000 capacity, it ensured a revenue advantage over Rangers, whose Ibrox home housed 50,000. Only borrowing or fresh investment could allow Rangers to keep pace.

EBTs were a means by which Murray could even up the figures. Ultimately, the £47m paid into them between 2001 and 2010 can be implicated in all sort of ways in the predicament Rangers now find themselves – and the possibility that they could be stripped of 13 trophies won during that period.

EBTs allowed them to retain a spending level to compete with Celtic when the club’s bankers halted the easy access to credit while debts across Murray Group spiralled out of control. It is no coincidence that the zenith of EBT use came in 2007, when Celtic won the title, reached the last 16 of the Champions League and posted a £16m profit. However, these trusts were administered in such a fashion that, a year later, HMRC hit Rangers with a demand for unpaid back taxes of £24m. That is the basis for the Rangers appeal, subject to a first-tier tribunal that has yet to deliver a judgment. It is expected to pass down a harsh one that could land the club with a £50m bill.

Baxendale-Walker says that EBTs were only a “problem [for Rangers] because of how they implemented the structure”. Rangers’ botch is that in order to fulfil the discretionary and loan elements of legal EBTs, they could not lodge payments made to these trusts in the playing contracts forwarded to the SPL and SFA. However, few agents would accept payments to their players that were simply verbal understandings. Hence the fact that, of the 63 Rangers players who are thought to have had EBTs, the BBC claims 53 had side letters detailing payments that were made for contractual fundamentals such as appearances and bonuses. SPL and SFA rules state that all payments made in respect of a player’s playing activities must be included in the contracts lodged with these authorities. Essentially, in seeking to serve, however dubiously, the tax laws, Rangers were not able to serve footballing law.

It is difficult to see how Rangers can now avoid being found to have improperly registered almost half their players between 2001 and 2010. In the past, clubs who have been guilty of this offence have had their results voided. In Rangers’ case, this would mean their title successes of 2003, 2005, 2009 and 2010 would have been won unlawfully, and likewise the Scottish Cup victories of 2002, 2003, 2008 and 2009, and the League Cup triumphs of 2002, 2003, 2005, 2007 and 2010.

That would be a bitter blow. But no more bitter than the fact that, were it not for the EBT case hanging over Rangers, Murray would have found a buyer other than a shyster such as Craig Whyte, and the club would have avoided the descent into administration and possible oblivion. That man McCann has an awful lot to answer for.