05 November 2015

Tax case seems lost, but what exactly was the sporting advantage?


by James Black | Guest Contributor

The taxman finally won.

After years of going to and fro with investigations and appeals HMRC finally received a judgement in their favour at the Court of Session yesterday.

The masses were right. Rangers had cheated the public purse. Sir David Murray, who the claim was ultimately against, and BDO could still appeal the decision to the Supreme Court however either party are yet to comment on their next move.

Unsurprisingly, Twitter went into meltdown. Rangers fans discussed what this meant for the club going forward and the implications for the liquidators of the Oldco whilst fans of every other club sniffed blood. It felt like the summer of 2012 all over again with some fans demanding "justice" and others hatching plots to see Rangers stripped of any and all trophies won in the spell that EBT's were used.

This wasn't limited to just fans though. Several prominent members of the Scottish football press pack saw this as an opportunity to revive an old favourite of theirs. Rangers were "cheats" and deserved to have titles removed due to an unfair sporting advantage caused by having different tax schemes in operation. Yeah, I don't quite get it either.

Anyway, this continued into today and now there are special "Twibbons" bearing the hashtag #stripthetitles, a Channel 4 journalist (or should that be stenographer?) wanted to know if recently retired Scottish FA president, and former Rangers secretary, Campbell Ogilvie planned to resign his presidency, and there's no doubt an online petition demanding some kind of title stripping too.

There seemed to be a real notion that Rangers had gained some of sporting advantage by managing their tax affairs in this way. Some suggested it allowed the club to bring in players that would perhaps be beyond their financial reach and the judgement yesterday even suggest players "might" have taken their services elsewhere if they didn't receive a suitable financial package.

So I decided to take a look.

Rangers spent £47m on EBT's between 2001 and 2010 so roughly £5.25m per year. Not a massive sum really. Particularly not when you look at the club's transfer spending in the early part of that spell.

The staff who received EBT's were; Alan Hutton, Alex McLeish, Alex Rae, Andrei Kanchelskis, Andrew Dickson*, Arthur Numan, Barry Ferguson, Bert Konterman*, Bert van Lingen, Billy DoddsBob Malcolm, Carlos Cuellar*, Chris Burke, Christian Nerlinger*, Claudio Caniggia, Craig Moore, Dado Prso*, Dan Eggen*, Sir David Murray, Dick Advocaat, Douglas Odam, Egil Ostenstad*, Fernando Ricksen, Federico Nieto*, Gavin Rae, George Adams, Graeme Souness, Gregory Vignal*, Ian McGuinness, Ian Murray, Jan Wouters, Jean-­Alain Boumsong*, Jerome Bonnissel*, Jesper Christiansen, Joel le Hir*, John Greig, John McClelland, Julien Rodriguez*, Kevin Muscat*, Kris Boyd, Libor Sionko*, Lorenzo Amoruso, Martin Bain, Marvin Andrews, Mo Ross, Michael Ball*, Michael Mols, Mikel Arteta*, Nacho Novo, Neil McCann, Nuno Capucho*, Olivier Bernard*, Paolo Vanoli*, Paul le Guen*, Pedro Mendes*, Peter Lovenkrands, Ronald de Boer, Ronald Wattereus*, Sasa Papac*, Soti Kyrgiakos*, Stefan Klos, Stephane Wiertelak*, Steve Davis, Stevie Smith, Stevie Thompson, Tero Penttila, Thomas Buffel*, Tore Andre Flo, Yves Colleu* and Zurab Khizanishvili.

The names in bold are staff who were either already at the club before the EBT scheme started in 2001 or they are players who came through the club's youth system. Of the £47m spent by the club £20.7m was spent on staff already at the club. They "might" have taken their talent's elsewhere however all were under contract to the club prior to the first EBT being set up. 

Big names like Ronald de Boer, Arthur Numan, Dick Advocaat and Barry Ferguson all benefited from the scheme however all of them were already at Rangers before the Murray Group decided to reduce it's tax liabilities. Again, they might have gone elsewhere but this would have need the club to sell them or the players to run down their contracts.

Watch the incredible events of Helicopter Sunday in 2005:


The remaining staff all joined the club at some point in 2001 or beyond. Looking at the list there's very few who anyone could make a reasonable argument for that they wouldn't either join Rangers without an EBT as part of their deal OR were that good a player that Rangers would have looked a hugely different side without them. Many of them came from Scottish clubs before moving to Ibrox and some were self­-confessed fans. 

Nacho Novo, Claudio Caniggia, Marvin Andrews and a few others all joined from Scottish clubs. Were these players only moving to Ibrox for a tax-free loan? 

Could Rangers have out­muscled the likes of Dundee financially? Yeah, probably. Rangers supporters Alex Rae and Steve Davis also moved to the club and received an EBT. Both players were well-known as fans of the club. Rae was coming to the end of his career, Davis had just completed a successful loan spell at Ibrox.

Adding players (in italics) who joined Rangers from other Scottish sides or who were known as fans of the club takes the total to £26.6m out of £47m.

What we're left with(*) is a group of fairly average players, with some exceptions, who hardly set the world alight in their time in Scotland. Guys like Soti Kyrgiakos, Olivier Bernard, Paolo Vanoli and Dan Eggen. That's an unfair "sporting advantage" to Rangers? 

There are others like Dado Prso and Carlos Cuellar who were fantastic players during their time at Ibrox but could you seriously argue that an EBT was what brought them to Scotland? It wasn't Champions League football, 50,000 fans idolising them every other Saturday and the opportunity to live very comfortably indeed in a country we like to trump as one of the most beautiful on the planet? 

It definitely wasn't any of that but it was the possibility of a tax free loan that might not really be a loan? None of them were hugely sought after and the better ones tended to move on fairly quickly. Arteta, Boumsong, Cuellar all spent short spells in Govan with Arteta being to only one to lift a league trophy. 

Others, like Sasa Papac, had longer spells at the club and while being successful on the pitch weren't highly rewarded via EBTs. Papac, for example, earned £319k through his EBT. 

Watch highlights of the 2002 Scottish Cup Final win over Celtic:



So that's the money aspect of it. Now let's look at what Rangers actually won between 2001 and 2010. I'll start at the 2001/02 season since any player playing in the previous season would have had a contract signed in 2000 which is before the Murray Group began using EBTs.

2001/02: ­ Scottish Cup & League Cup Double (Celtic won the league)

2002/03: ­ Treble (Rangers win the league by one goal)

2003/04: ­ Nothing (Celtic win league and Scottish Cup)

2004/05: ­ League & League Cup Double (Celtic win Scottish Cup, Rangers win league by one point)

2005/06: ­ Nothing (Celtic win league & League Cup)

2006/07: ­ Nothing (Celtic win league & Scottish Cup)

2007/08: ­ Scottish Cup & League Cup Double (Celtic win league)

2008/09: ­ League & Scottish Cup Double (Celtic win League Cup)

2009/10: ­ League & League Cup Double

In nine seasons Rangers won four league titles, four Scottish Cups and five League Cups. By comparison Celtic won five league titles, three Scottish Cups and two League Cups. Hibs and Livingston were the two other sides to win a League Cup during the spell, Dundee United and Hearts both lifted the Scottish Cup.

Now that it is broken down a bit, I challenge anyone to pick a year and explain to me exactly what unfair "sporting advantage" Rangers gained. Celtic won just about as much as Rangers did, which compared to the ten years previous is a damn sight better than they had been doing, and regularly beat Rangers during the time of EBT's. 

Alex McLeish had the longest run of defeats to Celtic of any Rangers manager in history right in the middle of the EBT scheme. Maybe it's just me but I'm really struggling to see where there's any unfair "sporting advantage".

Then again, maybe this isn't "sporting" after all...

10 comments:

  1. Rangers spend v Celtic spend in EBT seasons where we won the title:

    2002/3 Rangers Net -0.75M Celtic Net +1.8M
    2004/5 Rangers Net -2.375M Celtic Net 0 (This season they had Bellamy, Juninho & Camara on loan)
    2008/9 Rangers Net +5.5M Celtic Net +7.5M
    2009/10 Rangers Net -4.3M Celtic Net +1.8M

    Overall in these seasons Rangers spent -1.925M and Celtic spent +11.1M

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  2. Absolutely, people need to look at the facts, maybe that is what the panel did and found Rangers not guilty.
    Anything to try and get the goods on us, it's pathetic, but as I said the panel must have broken it down and studied this also.

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  3. Rangers would have sold players and fallen away from 2001 without EBTs. They couldnt have afforded to spend nearly 50 million more (which is what was saved) over that time. Basically it wouldn't have been possible to spend the money on transfer fees under Smith the second time (season 1/2) or replace Arteta with Ferguson. Prso would have gone elsewhere. Souness EBT linked to Boumsong? Couldn't have afforded Davis transfer. Its crazy to think that that kind of saving didn't effect the results. How would each team in Scotland have spent 50 million extra each in that time and would Rangers have won as much if each team also had the extra money.

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    Replies
    1. The total spent on EBTs over approximately 9 seasons was around £47 million. Assuming the tax rate for all those receiving the EBTs was 40% then we are down at around £18 million owed to the taxman over the 9 seasons. Therefore we are talking about £2 million a year for Rangers which had a turnover in those years of around £50 million. David Murray was the biggest beneficiary of the EBTs which means even less was used on actual players. So the ebt scheme is not nearly as significant as suggested by the previous comments. The above emailer states many of his opinions as if they were facts, for example. - "Prso would have gone elsewhere". There are not many people in Scotland who get involved in football discussions and don't support a particular football team so it is almost a waste of time to ask people to read these messages dispassionately. There is one team in Scotland who stands to gain the most out of promoting the ideas in the previous email however it needs to be remembered that Rangers won its trophies on the football field whereas many supporters of this other Scottish team are trying to win trophies by ridiculous arguments and persuasion. How sporting is that?

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    2. The total spent on EBTs over approximately 9 seasons was around £47 million. Assuming the tax rate for all those receiving the EBTs was 40% then we are down at around £18 million owed to the taxman over the 9 seasons. Therefore we are talking about £2 million a year for Rangers which had a turnover in those years of around £50 million. David Murray was the biggest beneficiary of the EBTs which means even less was used on actual players. So the ebt scheme is not nearly as significant as suggested by the previous comments. The above emailer states many of his opinions as if they were facts, for example. - "Prso would have gone elsewhere". There are not many people in Scotland who get involved in football discussions and don't support a particular football team so it is almost a waste of time to ask people to read these messages dispassionately. There is one team in Scotland who stands to gain the most out of promoting the ideas in the previous email however it needs to be remembered that Rangers won its trophies on the football field whereas many supporters of this other Scottish team are trying to win trophies by ridiculous arguments and persuasion. How sporting is that?

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  4. Even with rangers cheating Celtic still beat them...shameful trying to justify this clear tax dodging!! Hospitals armed forces not to mention all other SPL teams who may have win more...clowns

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  5. Even with rangers cheating Celtic still beat them...shameful trying to justify this clear tax dodging!! Hospitals armed forces not to mention all other SPL teams who may have win more...clowns

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  6. Deluded Child Abuse FC fans. Celtic used the EBT scheme as well. HMRC will be coming for you Timmy and there will be no sweeping under the carpet this time

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  7. Dear Emily. Are you familiar with the difference between tax avoidance and tax evasion. Big companies such as Rangers and even some smaller companies such as the other team you mention, employ experts to ensure that they keep as much of the money they earn without breaking any laws. Tax returns and accounts were available every year for HMRC to inspect and they highlighted no problems at the time. Your talk of tax dodging makes the issue sound black and white when in reality there are many shades of grey, as shown by the fact that different tribunals and law lords have arrived at opposing decisions. However, many tax experts have expressed their amazement at this latest tribunal decision which appeared to make its judgement based on common sense, rather than the technicalities on which tax laws are based. As for other teams winning more - this assumes that if Ebts were not used then Rangers would have a poorer quality team. For this to be the case you need to make further assumptions that the players would not have come to Rangers for a tiny percentage less than the money they got, and that Rangers could not have got the money from some other source. So hopefully you can see that any points you tried to make don't bear scrutiny. Please try not to be so negative about Rangers. If you don't have anything positive to say then don't say anything.

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  8. Dear Emily. Are you familiar with the difference between tax avoidance and tax evasion. Big companies such as Rangers and even some smaller companies such as the other team you mention, employ experts to ensure that they keep as much of the money they earn without breaking any laws. Tax returns and accounts were available every year for HMRC to inspect and they highlighted no problems at the time. Your talk of tax dodging makes the issue sound black and white when in reality there are many shades of grey, as shown by the fact that different tribunals and law lords have arrived at opposing decisions. However, many tax experts have expressed their amazement at this latest tribunal decision which appeared to make its judgement based on common sense, rather than the technicalities on which tax laws are based. As for other teams winning more - this assumes that if Ebts were not used then Rangers would have a poorer quality team. For this to be the case you need to make further assumptions that the players would not have come to Rangers for a tiny percentage less than the money they got, and that Rangers could not have got the money from some other source. So hopefully you can see that any points you tried to make don't bear scrutiny. Please try not to be so negative about Rangers. If you don't have anything positive to say then don't say anything.

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Keep it civil, lads.