According to the report, Rangers director Dave King and former board member Paul Murray have been talking to tax officials as part of the HMRC investigation which has revealed that £24.4 million has been borrowed against future season ticket sales.
The tickets over four seasons have been sold to Ticketus, a London-based company, a deal that was claimed to help finance Whyte’s operating costs after his takeover of Rangers Football Club.
The Daily Record stated that Whyte had confirmed that he sold off the tickets, but denied that he used the money to pay off Lloyds Bank insisting that the £18 million for the bank debt came from one of his companies.
Mr Whyte – If the money did not go to the bank debt? Where did it go then? And how much is left? Also which company?
The current debt at Rangers Football Club sits at £21 million, which is owed to Ticketus plus £5 million VAT on the ticket deal. This is before other bills are due – including interest payments to Ticketus – and the club are still awaiting the verdict of the EBT tax case with HMRC.
Whyte’s spokesperson insisted that everything was legal and normal practice for football clubs, he said: “The suggestion that the Rangers takeover was funded through financing arrangements on season tickets is categorically untrue.
“Rangers FC is no different in that it has a working capital facility with Ticketus, as have many, many other clubs. It is a common arrangement in football. This facility was in place at Ibrox long before the takeover.”
Former board member Paul Murray spoke to the Daily Record, stating: “These documents prove to me that Rangers fans have actually paid and will continue to pay for the sale of their club.”
Murray has also stated that HMRC have told him that they are due VAT, around £5 million, in relation to the deal with Ticketus.
HMRC officials are looking at the documentation which has revealed the borrowing against ticket sales from this season, season 2012-12 and 2013-14 as Whyte raised £24.4 million.
The first repayment occurred on June 27th, around £9.5 million, but Whyte could only come up with £3.5 million and to make up for that deficit he mortgaged off part of season 2014-15 to value of £6 million.
British football clubs have used this practice of selling future ticket sales, although clubs have seen problems arise – including Leeds United – who borrowed too often and too much.
Murray added: “HMRC asked for a meeting at the end of last week to find out what knowledge I, having been a director of the club at the time, had of these transactions prior to the takeover. I knew nothing about this and although I have been questioned by HMRC and seen some especially revealing documents which are in their possession, it is still very hard to take in what has been going on.
“Collyer Bristow were acting for Craig Whyte during the takeover and I have been shown their client account, from the opening of it until today. I’ve also seen all invoices from Ticketus to Rangers and Rangers to Ticketus supporting all these actions. I can’t believe Rangers have been handed over in this way.
“Remember also, the Independent Board, set up to make sure any potential buyers were capable of making the purchase and then funding the business, asked repeatedly where Craig Whyte was getting the money.
“He said it was from his own personal wealth and through Liberty Capital, which he insisted he owned 100 per cent, in the British Virgin Islands. Plans were being made to sell off future ticket sales but the directors were never told. This was all being done behind our backs.”
Dave King, who has had his own fair share of financial issues, was shocked to learn of Whyte’s deal and said: “Securitising season tickets is a valid seasonal funding strategy to smooth cash flows within the year – but no longer.”
However, Whyte’s spokesperson has claimed that Rangers and Ticketus were already linked before Whyte took over. He said: “The takeover team instigated discussions with Ticketus prior to the takeover because the relationship with Rangers was already in place and the new owners wanted to continue it. They were clear from the outset they wanted to ensure there were robust working capital provisions in place that could deal with the many financial challenges the club faces.
“The takeover was funded by one of Mr Whyte’s companies. Several months before then – and long before any discussions with Ticketus – Mr Whyte was asked to provide proof of funds for the takeover and he did that to the satisfaction of the previous owners, Lloyds Banking Group and professional advisers.”
In the lead-up to taking ownership of the club and after it was finalised, Whyte claimed that he would:
- Provide £5,000,000 for investment in the playing squad.
- Invest £20million by 2016 for investment in the playing squad. Up to £5m per year – which will come out of the £20m investment.
- Provide up to £5,000,000 of additional working capital facilities to the Club.
- Contribute to the Club the amount required to meet a liability owed by the Club to HM Revenue & Customs in relation to a discounted option scheme tax.
- Provide £1.7m to the Club to improve kitchen and public address equipment at Ibrox.
After eight months of ownership has Whyte lived up to his promises?
Rangers debt now stands at £35.4 million specifically relating to the Ticketus deal alone, which does not include interest payments also. Ticketus will also have the right to sell the tickets they have bought at a price they set and not the club, who sold them at a discounted rate – the usual way that Ticketus works.
Former Rangers chairman Alastair Johnston was in a sort of ‘it old you so’ kind of mood when he spoke to the Daily Record, but was far from gloating.
He said: “We asked Murray International to ask that specific question: Is he raising the money to buy the club or to finance the operations of the club against the assets of Rangers Football Club? He said he wasn’t doing it. But we didn’t believe him.
“We were trying to say at the time that selling the club to Craig Whyte could be a disaster. We were ridiculed by a lot of people for saying it but I take no gratification or satisfaction from being proved right.Inevitably, it was only a matter of time before this happened. The destiny of the club is now clearly not in its own hands – it’s in the hands of Octopus.
“Unfortunately I think administration is now almost inevitable because the club’s debts are unsustainable and Octopus want their money back. In my view, the only way the club can clear these debts now is by going into administration. I just wonder if he still has his position as the secured creditor. It was always his intention to be the guy on the other side of the river when the club came out of administration. But it looks to me as if Octopus is now essentially the secured creditor.”
He added: “First, during the process of due diligence it became clear he didn’t care about cash flow. That indicated to us they were in for a short ride. They had no interest in operating the club. Also, the day after we won the championship at Kilmarnock I had a meeting with Whyte and his lawyer during which they both asked me to disband the Independent Committee.
“They said now the sale had taken place the Independent Committee had no value. I said no as I had a written agreement we would remain in place until he provided our shareholders with a circular. That was a warning. They were trying to get rid of us because they knew at that point in time they had embarked on a track of borrowing against season-ticket money.
“He had told us it was all his money and it hadn’t been borrowed against the assets. He then used all sorts of excuses to get myself, Paul Murray, Martin Bain and Donald McIntyre off the board. The day before that happened I had seen the latest financial statements and knew there was a real problem.
“That’s why they got us out. They knew we would never approve their plan. They then spent the next couple of months discrediting us and saying we were yesterday’s men. But we knew we were right. We knew we had an obligation to the fans and shareholders.
“But he launched a very effective PR campaign and used lawyers to intimidate everyone. He made out any criticism of Craig Whyte was actually an attack on Rangers. Fans rallied around him. But it was like a human shield. He used Rangers Football Club as a human shield to protect himself.”
However such revelations are not new to those who are regular readers of the Rangers Tax Case blog or Phil Mac Giolla Bhain’s website, who have been covering these issues since Whyte came on the scene and took over at Ibrox.
Source: Daily Record
