http://news.bbc.co.uk/sport1/hi/football/12932160.stmRangers chairman Alistair Johnston has admitted that the club could go bust.The admission came in the wake of recent talks with would-be owner Craig Whyte and half-yearly figures indicating that the club owes £29m. Johnston insists that, when published in June, annual figures will show that debts have dropped to around £22m. But,asked if it was possible for the club to go out of business if a decision over tax payments went heavily against them, he nodded in agreement.
"The reality is that, if the decision is bad and the club can't pay, there would be a decision to be made," said Johnston, who expects a decision on the purchase of the club in the next couple of days. It's not clear where the liability lies. It could be October or November before we find out. The situation is not holding up the sale, but it does inhibit new financing and new investment. I have no idea of the sum for which we may be liable, but Rangers cannot afford much."
Figures for the six months to 31 December show that the amount Rangers owe to creditors due within the next year has increased by nearly £3.5m to £29m, most of that is believed to be owed to Lloyds Banking Group. The club suffered a drop in pre-tax profit from £13m to £9m, turnover decreased by £4.1m to £33.7m and there was also a 4.9% decline in the number of season tickets sold, together with a reduction in sponsorship income. However, Johnston insists that annual figures will show that finances are now in a much healthier state.
"Today's figures are a snapshot," he said. "They are not bad figures. Progress is good. Around £22m is a more realistic debt figure."
The real concern for Rangers is the judement they await from Her Majesty's Revenue and Customs over a tax issue relating to offshore payments to players and the Murray Group Management Limited Remuneration Trust. Johnston admitted that "but for the HMRC verdict, life would be a lot easier".
The club's financial position has also been hit by a separate charge from the HMRC for £2.8m for activities in a player compensation scheme between 1999 and 2003. All this is happening as Rangers are deep in talks with Whyte, who is hoping to take over ownership from Sir David Murray. "This is a two-way street," said Johnston. "He is still enthusiastically addressing the issue and we are looking at his credentials. I want a forcing mechanism to force him to do what he says he is going to do in terms of future investment in the club.
His agreement with the bank and with David Murray has nothing to do with Rangers. I want assurances of his ability to fund what he says he is going to do. Craig has to understand the club's position and the expectation level of the fans. It is very easy to talk about £25m investment, but there must be a forcing mechanism. We must get it into any purchase agreement. I admit this is very unusual."
Johnston also revealed that he asked manager Walter Smith and chief executive Martin Bain to give Whyte a briefing about the cash flow of the club in terms of the future requirement of players and that was done last week.