Scottish champions Rangers – with a rich 140-year history – face a battle for financial survival after entering administration on Tuesday and being hit with a 10-point penalty, all but ending their hopes of a successful title defence.
Rangers, who were 15 points clear at the top of the Scottish Premier League table earlier in the season, now trail leaders and arch-rivals Celtic by 14 points following the penalty handed down by league chiefs.
They are awaiting a tribunal verdict which could leave them with a bill of up to 75 million pounds ($A111 million), should they lose a dispute with Her Majesty’s Revenue and Customs (HMRC), the British tax authority, that threatens financial meltdown for the already loss-making Glasgow giants.
Rangers remain second, but with their lead over third-placed Motherwell cut to nine points.
Craig Whyte, the Rangers owner, said in a statement: “The club did not want nor anticipate having to take this course of action today but had no option.
“We had hoped that continued dialogue with HMRC would mean a decision on administration would not have to be taken for 10 days while all other avenues were explored.
“Due to its cost structure, the club has been loss-making for many months.
“At no stage has a solution been sought where my personal interests were put before the club’s.
“The club and our supporters come first,” he added ahead of Saturday’s home match against Kilmarnock at Ibrox.”
But Whyte’s position came under fresh scrutiny when administrators Duff and Phelps said they’d been appointed after the non-payment of “circa 9 million pounds in tax” ($A13.3 million) following the takeover of the club in May 2011.
The HMRC case against Rangers centres on the previous Ibrox hierarchy’s decision to pay players using employee benefit trusts (EBTs).
Although EBTs are not illegal, HMRC insists tax contributions were due on the salaries players were receiving.
Rangers draw an average home gate at Ibrox of 46,000 pounds ($A68,000) – higher than leading English clubs Liverpool and Chelsea – yet are still facing the prospect of going out of business.
Whyte has tried to explain the situation by saying Rangers cost about an annual 45 million pounds ($A66 million) to run but only bring in 35 million pounds ($A52 million).
He has also attacked the regime of Sir David Murray, the man from whom he bought Rangers in May last year while inheriting an 18 million pound ($A26.6 million) debt.
But Murray hit back on Tuesday, criticising the administration move.
“Firstly, there has been no decision, and there is no present indication as to the timing of a decision, from the first-tier tax tribunal concerning the potential claim from HMRC of 36.5 million pounds ($A54 million) excluding interest and penalties,” Murray said.
“Secondly, legal opinion on the strength of the club’s case remains favourable.”
He added Whyte knew what he was getting into, signing a sale agreement which included the retention of 9.5 million pounds ($A14 million) for investment in players and settlement of an agreed tax liability.
Meanwhile, Scottish Football Association chief executive Stewart Regan said Rangers’ plight was “a profoundly sad chapter in the history of Scottish football and we should not underestimate the potential ramifications for the image of the game as a whole”.
Rangers, a largely Protestant club, and Celtic, a mainly Catholic one, have long dominated Scottish football but the Glasgow duo have struggled to make an impact on the lucrative European Champions League.