Rangers 2012 collapse offers bleak template for Manchester City's uncertain future
Rangers' demise put under microscope as City face unprecedented sanctions
In the wake of Manchester City's unprecedented guilty verdict for serious breaches of Premier League financial rules, the search for a comparable precedent has led analysts back to Ibrox. BBC Scotland explains how the financial collapse of Rangers in 2012 could offer a dark, if imperfect, template for what might come next for the Premier League leaders.
What happened to Rangers in 2012
Rangers' case became an insolvency event after the club racked up huge tax liabilities linked to the Employee Benefit Trust scheme. Under former owner Sir David Murray, Rangers paid money into EBTs for employees including players, managers and directors for about a decade at the turn of the millennium. More than £47m came out of the trusts to more than 80 individuals.
HM Revenue and Customs argued the payments should have been taxed as earnings. After lengthy court and tribunal proceedings, the Supreme Court definitively ruled in favour of HMRC. That came five years after the old company's liquidation.
City, by contrast, have been found to have arranged "sham contracts" with a number of commercial partners as part of a scheme to disguise more than £830m of funding, according to the Premier League. The Manchester club have been found guilty of all charges related to serious breaches of the league's financial rules between the 2009-10 and 2017-18 seasons. City have appealed against the verdict and deny any wrongdoing.
Sanctions, stripped titles and re-entry
Entering administration in February of the 2011-12 season triggered a 10-point deduction for Rangers. They finished the campaign second, 20 points behind champions Celtic. No further penalties were applied, with liquidation ensuing in June 2012. Rangers were also never stripped of any honours they won during the years they used EBTs, which were ruled to have not gained them "any unfair competitive advantage".
Following liquidation, the football assets including Ibrox, the training ground, name and brand were acquired by a new company led by Charles Green. Despite the team continuing to play at Ibrox with the same colours and badge, debate over whether it was the same club has persisted.
Ten of the 12 top-flight clubs voted against Rangers remaining in the top tier, with Kilmarnock abstaining. Rangers then applied to play in the lower leagues, governed by the Scottish Football League, separate from the Scottish Premier League. The Scottish FA recommended entry to the second tier, but 25 of the 30 SFL clubs voted for Rangers to enter the fourth tier instead.
The scenario shares similarities with the current English structure, with the Premier League separate from the English Football League. Premier League expulsion has been hypothetically discussed as a potential sanction for City, which could mean they then have to apply to be accepted into the EFL, just as Rangers did with the old SFL.
The human and on-pitch cost
There were fears TV deals would be under threat without Old Firm derbies. League chief executive Neil Doncaster initially described the reduction in broadcast income as "slight" but acknowledged "there will be money coming out the game as a result of Rangers not being in the top flight".
Then manager Ally McCoist continued in his post following demotion and led the team through the fourth and third tiers with relative ease. He recently described the 2012 ordeal as an "absolutely horrendous" situation because of the job losses that occurred.
"You're not talking about your centre-forward or centre-back," he said on Talksport. "I had one of the older lads in tears, not a player, just someone who had a wee job, because he was losing his job. It was heartbreaking."
On the pitch McCoist recalled a bizarre but "unbelievable" journey, including a game at Brechin delayed because the match ball landed on top of a hedge, and being dragged off the team bus by the Peterhead chairman to speak to fans.
McCoist left midway through Rangers' first Championship season, which ended with them being denied a third straight promotion when they were beaten 6-1 on aggregate by Motherwell in the play-off final. Mark Warburton arrived in summer 2015 and guided Rangers back to the Premiership. Just one league title, delivered under Steven Gerrard in 2020-21, has come in the following decade.
Starting from scratch
Due to the nature of Rangers' plight, they lost a host of integral players without being able to recoup a penny. The likes of Steven Davis, Steven Naismith and Allan McGregor were among those to lodge objections to a transfer to the 'newco'.
City fan Matt Mellor joked he "can't wait to see Erling Haaland bag a hat-trick against Grimsby" in League Two next season. McCoist isn't convinced.
"When you go down there, you're effectively starting from scratch, because the players won't stay," the Rangers great said. "If you're talking about Manchester City, you're starting again. You're officially starting again."
Attempting to translate that for City is difficult given the financial disparity between England and Scotland. Even in the fourth tier, Rangers' budget still allowed them to attract some of the Premiership's top talent. For City, squad dismantling and contract clauses would add another layer of complexity.