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After decades of wearing kid gloves, Her Majesty’s Revenues and Customs (HMRC) has finally decided to tear them off and declare war on British football clubs – not that this constitutes anything remotely resembling a surprise, as shooting even the most cursory glance at the not-so-balanced books of most clubs in Britain would confirm. That HMRC has begun to pursue a dogged strategy in clawing back its outstanding PAYE bills should baffle only in that it hasn’t happened sooner. Emphasising this change of tack is HMRC’s issuance of some 26 winding-up petitions since 2009 – affecting a dozen English football league clubs, including one from the Premier League, Portsmouth in 2010 (Portsmouth have since entered administration for a second time and will start next season in the third tier of English football).

It’s a club plying its trade in the Premier League north of the border, however, that has earned the unwanted moniker of the "biggest British football club to enter administration" (not my words, Leeds United fans, not my words). The Glasgow Rangers case centres predominantly on a huge debt amassed over many years of financial mismanagement – potentially as high as £134 million, though most commentators agree on a figure between £90-100 million. No small change, then.

Rangers are the fifth Scottish Premier League (SPL) side to enter administration in the past decade – the others are Motherwell, Dundee, Livingston and the since-departed Gretna. As the excellent Rangers Tax Case blog attests, their troubles began just over a decade ago when they began operating a tax scheme called an Employee Benefits Trust (EBT). EBTs provide a business owner or senior employee with a facility into which they can deposit large amounts of money and then apply to the trustee for a loan. The interest paid on the loan is nominal and amounts to a fraction of the sums payable under a standard salary or bonus, which are subject to PAYE and National Insurance contributions. Generally, EBTs are perfectly legal, but they cannot be legally used to settle contractual payments.

No football agent worth his salt would allow his charge to merely trust the word of a club executive and so rather than raise the capital required using conventional methods, it has been alleged that Rangers’ EBTs were used to settle contractual payments, which, in short, isn’t allowed. Many of their problems can be traced back to this arrangement. All in all, some £48 million is alleged to have been paid into these trusts, meaning the taxman could be owed anything from £24 million to £34 million.

The bottom line that a lot of people seem to have missed is that for Rangers to continue as a going concern, a Croesus-rich benefactor would be needed to sate the HMRC. For when the taxman cometh, promises are not worth the wind they are pissed into. No payment = Glasgow Rangers in administration – an event that occurred in February, cueing an automatic 10-point deduction which all but gift-wrapped the title and sent it down the road to Celtic Park. Add in the receipt of a £160,000 fine and a 12-month transfer embargo from the Scottish Football Association for breaking its rules, and you have one unholy mess.

Of course, HMRC has been unable to comment and so the magical school of sports journalism has been left to flesh out the detail, resulting in a fantastical narrative in which vast tax bills are written off and Rangers manager Ally McCoist is given £50 million to spend on new players. Many of the stories in the press are bonkers: they just don’t add up. The water is muddied further by the fact that Craig Whyte, the club's erstwhile owner, mortgaged £24 million of future season ticket revenues around the time of his takeover last May (Whyte bought the club for the princely sum of £1). Whyte used the initial payment from Ticketus, worth £24.4 million in total to pay off Rangers’ bank debt, and just before going to press, it was announced that the London-based firm had launched legal action against the club.

Too big to fail

The fallacy underpinning both the crisis at Rangers and the collapse of, say, Lehman Brothers and near collapse of Royal Bank of Scotland, is that an organisation can be too big to fail. But in the same way that poor management decisions and inadequate regulation did for some of the banks, football clubs have also been peering over the financial precipice, while dishing out wads of cash from seemingly bottomless pockets. Aside from not-insignificant transfer fees being shelled out by Rangers in recent years - £3.25 million on Kyle Lafferty, £3 million on captain Steven Davis, £2.6 million on Maurice Edu, £1.9 million on Steven Naismith and £4 million on Nikica Jelavic (although he was sold to Everton for £5.5 million back in January) – the wage bill is where, commonly, the problem lies. While administrator Duff & Phelps was busy looking for savings of £1 million a month until the end of the season, the elephant in the room – dressed, no doubt, in a Rangers tracksuit and pair of ill-fitting headphones – was the £22 million-a-year the club pays its players. While the figure is dwarfed by the wage bills of English Premier League clubs – Deloitte reported last June that Chelsea once again headed the wages bill, splashing out £174 million – it is a huge figure for a Scottish side.

They think it’s all over... well, not quite yet

Rangers’ latest knight in shining armour is the somewhat unlikely figure of Yorkshireman Charles Green, who is leading an international consortium. As always seems to be the case in these sorts of situations, the former Sheffield United chief executive has been euphemistically described as "colourful" – Green has been blamed for United’s financial and footballing misfortunes in the mid to late 90s. According to the BBC: "Thirteen of the firms he has been involved with have since been dissolved". Colourful indeed. Green refused to name his consortium colleagues on 14 May, despite the club trying to organise a company voluntary arrangement (CVA) in order to see an agreement reached with its myriad creditors, but pledged to be approachable to supporters. He explained: "As I said [on Sunday] we’re fully committed to trying to achieve a CVA that will enable the club to emerge from administration. That is our priority but it is in the gift of creditors. If that cannot be achieved we will have to pursue the alternative route of a newco [it has been suggested that Rangers be reestablished as a new entity], but that would be structured in such a way the club would not lose its history. But that is not the way we want to go."

All of which ultimately makes owning Rangers appear something of a thankless task for whoever takes the helm at Ibrox. The days of highly paid stars like Paul Gascoigne and Brian Laudrup seem a distant memory, while the fans continue to demand that their city neighbours are dispatched into second place season after season ad infinitum. If a profit is to be made at Rangers – and of course, that ultimately and literally is the bottom line – then fans should steel themselves in the art of patience, with an onus being placed on youth development rather than big money signings for the foreseeable future.

What has stuck in many a Scottish football fan’s craw though, is that Rangers may well continue with minimal sanctions being imposed, and with the taxpayer left out of pocket. "Integrity" has become a buzz word in the most recent days of Rangers’ predicament. Hibernian chairman Rod Petrie hinted strongly that he would vote against a "newco" Rangers entering the SPL, asserting that "integrity is beyond purchase". But as Kilmarnock’s chairman Michael Johnston admitted: "There is a feeling that member clubs see the commercial benefits of having Rangers in the SPL, even if it is a newco. Member clubs are mindful of a sporting integrity aspect, but the commercial benefits outweigh that." Would the SPL accommodate the likes of Hibs and Kilmarnock in quite the same way? Maybe Rangers really are too big to fail after all.