Bursting The Bubble

Craig WhyteThere’s a classic episode of The West Wing where President Josiah Bartlett is counselling his staff on jumping to conclusions. The Ryder Cup team has refused an invitation to The White House because he made a silly joke at their expense, and the staff has decided to try and reign in his tendency to say things without thinking about the broader context.

CJ Cregg, the Press Secretary, brings up the not inconsequential matter of how they lost the State of Texas in the last election. She puts it down to a joke he told about not campaigning there much because he didn’t “look good in funny hats.”

The President is amused by this notion, and he tells her than on her tombstone will be inscribed the phrase Post Hoc Ergo Propter Hoc. She jokes that no-one will be able to understand her tombstone and he asks the room to chip in with the meaning. A lot of them are lawyers, but only one knows the answer, Leo McGarry, the Chief of Staff.

“After it therefore because of it,” he says, and gets the nod from the President.

It’s an example of what geeks like me call Logical Fallacy, and more specifically Deductive Fallacy. It assumes that because A came before B that B was caused by A.

There’s a particularly egregious example of Logical Fallacy in Scottish Football, and it amazes me that more people haven’t called it for what it is. It can be summed up in four little words, and although it is utterly illogical, when one examines the evidence, it is nevertheless part of the mythology of the game here, but it also affects the future and that’s why I want to talk about it.

The four words are these: Craig Whyte Killed Rangers.

Transpose this situation to the Latin; post hoc ergo propter hoc. After it, therefore because of it. Craig Whyte came to a club that was not dead. When he left they were declared dead. Craig Whyte, therefore, caused the death of Rangers.

It’s not true. It’s not even remotely in the vicinity of being true.

Of all the distortions of truth in the Scottish game, this is one of the worst, and it’s of the utmost importance that the historical record one day reflect that it’s not how it really was. The blame for what happened at Ibrox during the Craig Whyte tenure simply cannot be laid at that man’s door and at no other. He took staggeringly bad decisions … but I am moved to wonder just what choice the man really had. He wasn’t playing with a particularly strong hand.

It’s time we knocked this one on the head once and for all. It’s time we stopped letting the supporters of Sevco Rangers play the victim card. It’s time we stripped them of their alibi that what went wrong there was the work of one insidious man. It wasn’t.

Let’s face it, every rival supporter in Scotland has had a ball with this in the last two years. Craig Whyte’s name has been sung and shouted from the stands everywhere Sevco Rangers has played. When the Dundee Utd fans sang “You’re not Rangers anymore” at the weekend, there were a few shouts of Craig Whyte’s name in there, and a lot of Sevco Rangers fans who would have invoked it like a curse. The man has been granted the freedom of many a Glasgow boozer, whilst assuring he can never again enter many others.

Yet all of this is based on that false impression that because he was the one with his hand on the tiller when things went out of control that he did it. Whilst I have relished using his name to wind up many a Sevco Rangers fan, I would be lying if I said I believed he bears the responsibility. He was, in many ways, the owner they’d been waiting for … and I would stipulate that he did not wreak havoc at Ibrox as much as he brought reality through the doors.

This was a club that had a chance to start again, and whilst they have blamed spivs and crooks and charlatans for their current plight (and not without cause, but that’s part of what I’m getting at) the real culprits have been amongst their own supporters. The real blame for what happened to Rangers, and for what’s happening to its successor club, lies there.

Indulge me for a moment whilst I tell you about bubbles. We’ll start with soap bubbles. They look wonderful. They catch the light. They float in the air. If they land just right, they can stick to things, and half their surface flattens out and they appear like little domes.

Then they burst. They are temporary. Are they the origin of the phrase in economics? I don’t know, but they have all the characteristics of their economic counterparts, in that they are artificially inflated, they seem wonderful, even miraculous, whilst they last and they eventually pop.

Economic bubbles are based on what are called intrinsic values. In other words, they are based on intangibles and are not grounded in the profit and loss statements and “book values” which can be calculated by analysing a company cash flow. Intrinsic values are smoke and mirrors. They are not based in reality but on a perception of reality. They don’t represent true worth, but only what the market says something is worth.

The first bubble was called Tulip Mania. It started, we think, in what were then called the United Provinces, or what we would now call Holland, in around 1637. At its height, entire estates were dedicated to the growing of tulip bulbs, and each one could fetch a value many hundreds of times the average working man’s salary. This sounds ridiculous to us now, as the present housing bubble will one day sound ridiculous to our grandkids, but at the time the market value of these bulbs was so high that entire fortunes were built – and subsequently lost – on them.

If you think this sounds utterly insane consider this; the Jwaneng diamond mine, owned by the DeBeers corporation, on its own produces between 12 and 15 million carats of diamonds every single year. One diamond mine, people. Annually. Yet the price of diamonds is, as we all know, ridiculously high, and its kept that way because of two things; perception and, believe it or not, scarcity. DeBeers and the other diamond producing companies keep the bulk of their stocks in storage. Very little of it ends up on the open market.

The international diamond market is built on intrinsic value. As a consequence, there have been bubbles – and subsequent pops – throughout its long and chequered history.

Football is going through a “bubble” period at the moment. Prices are going up far quicker than fans can keep up with them. The new England top came out recently, priced just below £100. It’s ridiculous. Season ticket costs in the EPL are astronomical, and unsustainable. Anyone in football who thinks they can keep raising the ceiling year on year is living in a fantasy world, and it doesn’t matter how high that ceiling gets anyway … player salaries and transfer fees are rising so quickly that the clubs can’t stay ahead of the game no matter how much they leech supporters.

It should be obvious what this has to do with Sevco Rangers. For more than 25 years, this football club was built on quicksand. They were bankrolled by Murray, after he bought them in 1988, and he in turn was allowed this leeway because of his relationship with the bank. When the clubs debt reached £80 million in 2001 it was only with the indulgence of the Bank of Scotland, and the guarantee of the debt based on the balance sheet of Murray International, that allowed the doors to stay open. Rangers was, technically, trading whilst insolvent for a decade or more.

I have described what happened next as a street magicians trick of shuffling a pea between three paper cups. Murray transferred £50 million of debt from one of his loss making companies into the larger loss making company that was MIH. Their own debts at the time were four or five times that, and as they were all under one roof it was easy to do.

Let’s be clear; it involved no sacrifice on Murray’s part. It wasn’t his money in the first place. It was the bank’s money. Neither he, nor Rangers, ever earned it. They could not afford it, except for the sheer lunacy that was the bank’s policy of that time.

All of this, we already know, of course. When the financial crash hit in 2008 the party was well and truly over. Lloyds took over and started asking questions, and demanding answers.

For years now, we’ve heard how unfair the bank was. How they were the ones who started Rangers on the long, slow decent to the grave. It is nonsense. Lloyds were more fiscally conservative, and disciplined, than Bank of Scotland, and they were without the incestuous ties that bind. They wanted to know where every penny went. They had a fiduciary duty to their shareholders and to their other customers to make sure the profligacy at Rangers came to an end. They had the evidence, in front of them, of what would happen if they allowed the taps to be turned on.

Imagine the mentality it takes to be angry at a bank for behaving like one. For insisting income and expenditure were broadly matched. For going after the money they were owed. I’ve heard seasoned journalists actually say the bank were hard on Rangers. One or two have even gone as far as to argue the bank should have forgiven the debts. It’s hard to conceive of the kind of mind that can balance that particular idea with what happens in the real world.

Reality has never been particularly welcome at Ibrox. The team of the 90’s was built on debt and then on EBT’s. Whether the latter were legal or not, the distinction really doesn’t matter for the purpose of this article. These schemes were a means of getting around high wages the club couldn’t afford to pay. It was living out with their means.

You will hear talk of how the club had paid down its debt in the years between Lloyds taking over and them ending up in the hands of Craig Whyte.

Some say Lloyds demanded that sale. It’s possible they did, and if so they must have considered themselves fortunate to have gotten out in time. They had already demanded that costs be brought under control, but they knew that wasn’t enough.

This is the part where reality and myth begin to merge. Before we examine what happened, let’s go back in time to the year 2008.

On May 22nd that year, Celtic won at Tannadice, on a memorable Thursday evening, to take the Scottish Premier League crown. It was their third title in a row. It gave Celtic automatic qualification to the following season’s Champions League Group Stages. Rangers were forced to play qualifiers. Later that year, they lasted one round in the big competition, being knocked out by Kaunas. It was a footballing, and financial, disaster.

They had brought in £11.5 million from the sales of two players – Carlos Cueller and Daniel Cousin. That might have plugged the financial gap for that year, and restored sanity to the process. Instead, Walter Smith, backed by the Rangers board, in a move that seriously alarmed the bank, went out and spent nearly £18 million on signings, inflating the wage bill massively at the same time.

They had reached the UEFA Cup Final the previous year, but as Celtic were all too aware, the rewards of doing so hadn’t come close to what would be realised in the Champions League. In order to justify these exorbitant fees and wages, they had to get back to that competition, and they won that year’s title, going on to retain it for the next two seasons.

That gave Rangers the financial shot in the arm they needed … and they really needed it, because in 2009, they had posted debts of £30 million, coming during a financial crash and the reorganisation of their relationship with the banks.

Craig Whyte got his hands on a club which had kept its head above water chasing Champions League income. Their whole business plan depended on it. When they qualified for the 2011-12 competition, they pretty much needed that cash to keep going as they were.

Nothing sums up for me better the madness at the heart of Rangers’ thinking than to check their Wikipedia page for that historic final season.

The text reads “Hampered by a bizarre transfer policy under Whyte, Rangers found themselves knocked out of first the UEFA Champions League and then the UEFA Europa League by the end of August …”

What was this “bizarre transfer policy” to which they refer? They renewed the contracts of a number of key players, who were already on big money, and they brought in seven players to augment a title winning team. The total cost of these signings was £4 million. It was, in some ways, a measure of sanity. What happened next is history.

They crashed out of both European competitions in short order, and as a direct consequence of that they found themselves paying wages they couldn’t afford, and with no bank willing to do what first BOS and then Lloyds had done, in offering them short term credit, they were always going to flounder. It was a matter of time.

It would not have made a difference who was running Rangers in the period that followed. They had “paid down debt” for three years on Champions League income. Had they cleared the debt and used what was left to restructure their finances, and get spending under control, they would have survived the loss of European football for that season. Typically, however, they had allowed the spending to increase, and the deficit between income and expenditure to grow.

They assumed, as the European brokers caught up in Tulip Mania had, that they could get away with their suspension of disbelief, their ignoring reality, as long as they liked. The world had changed, but their mind-set hadn’t. That was never going to end well.

Craig Whyte found himself the man at the centre of this crisis, and his choices were to buy time, and stop paying bills, or accept the truth and place the club in administration before Santa Claus was pulling on the big red outfit.

They had one final chance to salvage the finances, and history will ponder why they didn’t do it. They retained the services of Nikica Jelavic when common sense said they should have sold him during the January window. They claimed to have turned down a £9 million offer at the last knockings, prompting some well publicised hilarity from Celtic chief executive Peter Lawwell, who must have known, sitting there that day, that his club’s rivals were now holed below the waterline.

So it proved, and for the past few years the blame for this has been laid at Craig Whyte’s door. Yet what killed Rangers was a mixture of arrogance and established practice. This is a club for whom reality hadn’t existed for a very long time. For twenty five years they had lived by the indulgence of some other force, whether it was an owner with deep pockets or a bank prepared to fill them. When the fun came to an end in 2008 a less ego driven organisation would have reined it in, and started to fortify against a coming storm. Not Rangers.

25 years of financial steroids had turned them into Scottish football’s leading subsidy junkie. When the good times ended and one bank was replaced by another they could have taken the medicine on offer and downsized, and they would have survived. When it became clear that the Rangers board had no intention of doing that, the bank knew its options were limited.

They understood that with expenditure as high as it was, Rangers was only one bad year on the pitch away from meltdown. They had gotten their way to a certain extent, but the real changes were never going to come to pass in the way they wanted.

To force the issue would have brought them problems – see the fan protests and the threatening manner of some of them – and so it’s not hard to understand why they grabbed Craig Whyte’s cash. Because they knew that the storm clouds were gathering, that the end was going to come, and they wanted to be well away from the destruction when it did.

It was no more Craig Whyte’s fault than it was theirs. He took over the club and he inherited the mentality that went with it, the one that thought reality would forever be outside the door. He, at least, in that last summer, tried to restore some with his “bizarre transfer policy”, but when the twin hammer blows of Malmo and Maribor hit them there was no going back, and no-one could have kept the cold wind from sweeping through their world.

Bubbles burst. It’s that simple. Rangers’ bubble lasted 25 years, and it was built, as all bubbles are, on artificial means, on suspension of disbelief, on denying tangibles.

You’d think they’d have learned from it. They haven’t. Today their manager is still trying to spend money that isn’t there. Their fans are demanding the board come up with a wholly unworkable and unfeasible plan to “catch Celtic” and Dave King is promising to fix things using the very means by which the club reached this sorry pass.

There is no fixing things here. This club has been broken for a generation or more, living a fantasists existence which bore no relationship to their place in the world. Rangers Football Club died clinically insane, and the newly emerged variant of it is infused with the same insanity.

There is no going back to the way things used to be. King’s talk of £50 million being spent here is tending tulips in the sunshine when the rest of us are looking out at the rain.

The country is struggling to emerge from one of the blackest economic periods in its history. State spending is at levels proportional to the 1930’s. Median earnings are falling as costs continue to rise across the board. Public and private debt are at record levels and going up.

Fans can barely afford season tickets, let alone fresh share issues, which themselves only continue to fuel the bubble of transfer fees and player salaries. There is no end in sight to “hard times”, and it’s from this suffocating black smoke that he is promising to restore the club to the “Rangers I grew up with.” The one that never had to live in the real world, which never had to pay its way.

These people simply cannot face up to the truth; it’s all done. It doesn’t matter whether “the club” still exists or whether it died with “the company”, because the version of Rangers he’s talking about, the version their fans have supported for 25 years now, is gone, it’s gone forever, and it ain’t coming back. That’s all there is to it. It’s as simple as that.

In that famous West Wing episode, Josiah Bartlett explains to his staff what the logical fallacy is. If someone could explain it to Rangers fans, and to the media, and to Dave King whilst they are it, we might just see the dawning light of realisation replace the glint of madness in their eyes.

Craig Whyte did not kill Rangers. He was on the scene, but he wasn’t holding the knife. What ended the club’s two decades long dance with death was a self-inflicted wound.

The same dynamics are at play again with the Newco. It too is heading for a mortuary slab, and as with Whyte there are convenient scapegoats on the scene, but the fans are so busy calling folk out for being murderers they’ve missed that this was a suicide. Even as they look for someone to blame, they’re guzzling the Kool Aid.

The first thing you learn in an Anonymous group – be it for alcohol, drugs, gambling or debt – is that you can’t get better until you admit you have a problem, and face up to what it is.

They are no nearer getting well than they were on 14 February 2012.

There’s an infection called necrotizing fasciitis. It’s a “flesh eating” bacteria that starts to destroy skin and muscle by releasing toxic substances. Once the infection starts the only way to get rid of it is to cut away the infected area before it spreads further.

The cuts should have started at Ibrox already, perhaps years ago. The mind-set should have been changing, or already changed. Now it’s too late.

Hack off an arm. Chop off a leg. It’s not going to make one blind bit of difference to the outcome now. They can slow the spread, but they’re never going to halt it in time, and they’re certainly not going to do it trying to bandage up the wounds.

This notion amongst them that “we need to keep up with Celtic” isn’t the cure. It’s the disease. It’s what ails them, it’s what’s making them sick.

And ultimately, it’s what’s going to kill them. Again.

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James Forrest

James Forrest is a writer and blogger from Glasgow, and the author of two books, Fragments and Believers, which are available on Amazon.

15 thoughts on “Bursting The Bubble

  • 15 April, 2014 at 4:06 pm

    died clinically insane i love it james do i have your permission to use it on a coupla zombies i know

  • 15 April, 2014 at 5:27 pm

    Excellent article once again. Thank you !

  • 15 April, 2014 at 6:39 pm

    A beautiful article, James.
    After decades of knowing full well that they were getting away with all sorts of colossal cheating on and off the field, I will never get tired of watching them paying the price.

  • 15 April, 2014 at 6:43 pm

    Great article again buddy, only one mistake and that is I haven’t met another fan yet that is even thinking of celtic at the moment. The biggest majority of fans just want the club to survive (doubt it though).

  • 15 April, 2014 at 7:08 pm

    Great article,the only thing i would slightly disagree with is that Rangers problem started the minute Lawrence Marlborough started to bankroll Souness in 1986.Rangers debt when Murray took over was £6m and rising

  • 15 April, 2014 at 7:22 pm

    Brilliant article, up there with some of the most descriptive blogs of the last 12 months regarding the self destructive mind set of all things oldco and inevitably newco..HAIL HAIL, KTF

  • 15 April, 2014 at 8:01 pm

    With the passage of time this will become the official narrative of the fate of Rangers FC and who were responsible not just at Ibrox but in smsm.

    The parallels with the journey through grief are stark.

    Depression which will be marked as beginning on the day of the Ramsden Cup final
    Acceptance of this narrative and the necessary change of mindset that will follow.

    No pain, no gain.

    It is how reality makes its presence felt.

  • 15 April, 2014 at 8:15 pm

    It can’t kill them AGAIN !

    You can only die once.
    Rangers are dead.

    Hopefully Sevco-Rangers (est 2012)
    Will die soon, too!

  • 15 April, 2014 at 8:18 pm

    Brilliant article loved reading it.

  • 15 April, 2014 at 10:27 pm

    Ahh The West Wing.
    I wrote about it on your other blog.

    The problem with ‘The Rangers’ is the fact that they define themselves by what happens across the city.
    The media in Scotland used to write that a giant had been woken when Lawrence Marlborough took control at Ibrox.
    That wasn’t the case, the giant was woken the moment Fergus McCann walked in the front door at Celtic Park. He galvanised a support with a unity that had been forged during the awful years from 1989 to 1994. Sure the giant had to learn to walk again but as soon as a 60,000 capacity stadium was complete, Celtic were generating more money than RFC could deal with. Selling 10,000 more season tickets every year meant an extra £4M in the bank. Over ten years that is a massive £40M. This coupled with the desperate JJB deal meant RFC lost out again financially to the team from the East end over an extended period and this also ensured that the writing was on the wall.

  • 16 April, 2014 at 12:24 am

    Brilliant as usual James ! but do you not think Celtic should get a wee teenie bit o’ the blame? for reaching and winning the big cup in Lisbon! as well as reaching the first 9 in a row!and showing the world how the game should be played! For me It.s comforting to remember and glory in the fact, that our club was instrumental in ridding Scottish football of a vile sectarian institution! but the bastards didn,t even give us the blame we deserved! That was the old club of course! and now the Charlie Green founded Club are on the same road to hell! Hell Mend Them! ya effin beauty!

  • 16 April, 2014 at 12:16 pm

    James i got a few swallies yesterday on the strength of showing people your article of course there were a few discenting voices but they were sent home with a flea in their ear ha ha keep up the good work mate

  • 16 April, 2014 at 8:08 pm

    Great reading James, but there’s one thing I would say. We as Celtic supporters have a lot to thank Jock Stein for and I honestly think he was the man who sowed the seeds of Rangers downfall. When the Big Man brought the Big Cup home it Left a bitter and burning desire within Rangers to equal that feat, after all their mindset was that we were inferior to them in every way, and also they were the establishment club, they,(in their own minds) could not allow upstarts like Celtic usurp them. When SDM came along they thought the time had arrived, endless cash,(borrowed) and their pick of players. Who can forget the then vice chairman Donald Finlay’s crowing, just before his karaoke got him kicked out. As we know their attempts to win the European Cup failed, and that started their descent. We have a lot to thank Big Jock for, but maybe his best legacy is putting an end to his greatest rivals.

  • 17 April, 2014 at 1:06 pm

    A fine article James.

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