By John Knox
All of us honest taxpayers are outraged at the tax-dodging that has been going on at Rangers Football Club. And now, with the club in the deserved disgrace of administration, it looks like we will be cheated out of a fortune somewhere between £50m and £75m.
It is like the banking collapse. In the ruins of once-proud institutions, we discover the rot, the financial chicanery, the overweening ambition, the greed, the following-of-fashion, that brought them crashing down.
What ever persuaded Sir David Murray to allow the accountants at Rangers to pay their players through tax-avoiding EBTs, employee benefit trusts? Why did the tax authorities allow him to get away with it for a decade? And why did Craig Whyte allow tax arrears of £9m to build up in the short few months he was in charge?
To be generous, they were probably doing it to try to make the club what they would consider “a success” – buying in expensive players, winning trophies, playing in European competitions, selling TV rights, sponsorships, tickets, shirts and trinkets, corporate entertainment packages etc. And the only way they could see to do it was to delay paying their taxes. But the business model has not worked. Finally, the taxman has woken up and has gone to court to try to collect what rightfully belongs to the public to run our hospitals, schools, welfare system and other services.
At the height of the madness, Rangers were paying £12m in transfer fees alone for one foreign player, Tore André Flo. They have been regularly shelling out £5m for a player and paying top players £14,000 a week. The total wage bill is £20m a year, most of it going to foreign players. In its current squad of 41, only 12 are from Scotland. This is nuts. And it is not successful. The club was knocked out of the European Champions League by Malmö (wage bill £4.3m) and Maribor (wage bill £1.3m).
The solution for Rangers, it seems to me, is to sell off its foreign players, reduce its wages, remortgage its stadium and training grounds and reach a settlement with HMRC to pay off the tax bill over the long term. The administrators should then try to set up the club as a co-operative, owned either by the fans or by the citizens of Glasgow. The co-operative model has worked well in the best footballing nation in the world, Spain, where both Barcelona and Real Madrid are run as co-operatives.
Rangers, of course, are not the only Scottish club to collapse financially – Motherwell and Dundee have been through the administration mill too. It is a sign that there is something rotten in the whole state of professional football, indeed in the whole state of professional sport. The emphasis is wrong – it is on winning instead of participating.
Sports clubs have become so obsessed with winning that everything else goes by the board – enjoyment, entertainment, skill, art, health, the social side of sport and, of course, financial prudence. And meanwhile sport has become less of a spectacle – there are fewer goals, more ridiculous penalty shootouts, races are won on fractions of second which only electronic eyes can see, rugby matches are just walls of heavy flesh bashing into each other.
For real entertainment and the magic interplay of luck and skill, I much prefer to watch an amateur match or race. I know the participants have other lives and that taking part is more important than winning.
A more modest approach to sport might mean Scotland will not win the next World Cup or 100 metres at the Olympic Games. But we can still field a team and take part. The gap between professional sport and the amateur clubs will be smaller and there would be a greater feeling that sport is for all of us, not just for the tax-dodging few.
As far as football is concerned, we have to get over our imperial past. Scotland may have been one of the founders of the modern professional game, but we have now exported it to the whole world. We are now just a small country on the edge of one continent and we cannot expect to win every competition, or even get into the finals. Instead, we should try to preserve the purity of the game and disentangle it from the financial rat-race.
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