How much debt does Rangers have?

Answer 1

As we are all too painfully aware, Rangers are facing an uncertain future given the club's current financial state and the news that we are effectively being run by the Lloyds Banking Group. This report is a statement based on information currently in the public domain, so may not be accurate given that all parties involved in the proposed takeover are banned from discussing it under Stock Market rules.

What can be confirmed, and as we all know, is that the purchase of the club by Craig Whyte seems to have ground to a halt. What has become evident is that this may be due to the fact that the club could see it's debts rocketing to a mind blowing £190m!

As recently as December 2010, well placed sources were saying that the club would be bought by Mr Whyte before Christmas and that the Management Team would be given the sum of £25m for transfers over the next five years. Sources on both sides are now saying the prospect of a sale in the near future is "remote." While is it not impossible for the deal still to be struck, it must be said that the more time that passes, the less likely it seems that a quick deal will be hammered out. Why is this though? It seems that the prospect of being laden with debts that have never been made clear to the supporters is making Mr Whyte wary of finalising a deal without first agreeing on who would be liable to make what payments.

Mr Whyte still hopes to secure 75% of Sir David Murray's 91% stake in the club, then moving on to fully wipe out the debt which we are told currently stands at £27m. It would appear that this is well within the grasp of a man who has made a personal fortune which is estimated to be as much as £1 billion! However, what is also clear is that Mr Whyte did no amass such a fortune by losing money on his many and varied business deals.

The major point which seems to have stalled the deal is the tax assessment served on the club by HMRC who allege that Rangers have avoided paying tax by making offshore renumeration packages to players and other employees. The demand at present is thought to be £24m, but given that the club has chosen to appeal this, penalty clauses and interest charges may be added to this amount, meaning the total payable may be as much as £55m! Rangers will be taking this to an independent tribunal in March, but if they lose in their hearing, the implications for the club are massive. Any further appeal could take a further year and the club then faces the prospect of the takeover not taking place until then. Rangers have said that they will defend themselves vigorously, but it remains to be seen what the outcome may be.

The Lloyds Banking Group no own 24% of Rangers holding company MIH, and this is where the story enters the murky waters of business loans! Murray Sports, which effectively controls Rangers FC on behalf of MIH loaned £60m to Rangers in 1999 with the proviso that no interest would be paid on this money until the club showed an operating profit. No interest would be paid but still accrued, and the interest on this loan currently stands at some £48m! It has been suggested that this would mean that Sir David Murray would need to be paid the sum of £108m when the club is eventually sold, and while the current club owner seems keen to write this off to help the club, the Lloyds Banking Group are less keen on this, given that MIH still owes them over £700m themselves! Experts on this matter are still debating whether or not the collateral of the interest, the £60m, could be repaid with the interest being written of as a sweetener on the deal! It is almost unthinkable though that Mr Whyte, or any other potential owner, would contemplate taking on this level of debt at a time of great uncertainty for the future of the club!

One last thing to consider regarding the club's level of debt, the majority of which is owed to The Lloyds Banking Group. Former players have been appealing in the media for some leniency to allow Rangers to compete with their nearest rivals, but given that the bank itself was bailed out to the tune of some £37 billion by the taxpayer, it has an obligation to try to get some return on it's loan to the club. Given that the bank seems intent on playing hard ball with the club, it may be some time before all of the debt issues are resolved! Also, given that the conflict with the HMRC seems likely to come out with Rangers having to pay some money to them, the bank seem likely to try to get their slice of the pie first.

Regardless of whatever outcomes occur, this is a time when the club needs us, the supporters, to unite behind the team and the club more than ever before. This is not a time for petty bickering, this is a time to cheer the team on to every victory, to every cup win and to ultimately win the league.

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