Walter Smith to stay on for one final season

Months of uncertainty surrounding Smith and his backroom staff of McCoist and first-team coach Kenny McDowall, who have been operating while out of contract since January, came to an end when they all signed new deals – one year for Smith and two for McCoist and McDowall.

It seems likely to be 62-year-old Smith's final season in football management and he admitted it had not been easy to reach a conclusion as he pondered whether to extend his second spell at the helm of the Ibrox club.

But it appears recent talks with bankers Lloyds, who have been holding the club's purse strings while the saga over a potential sale by owner Sir David Murray rumbles on, have satisfied Smith that conditions are acceptable for him to try and lead Rangers to a third successive SPL title.

The man who has won 19 major trophies as Rangers manager is also gratified that the club have embraced his recommendation that McCoist should succeed him in 12 months' time.

"I am wholly committed to managing the club next season," said Smith, "and when it comes to the end of next season I firmly believe that Ally and Kenny would do a great job and I am glad everybody at the club shares that view.

"I have given this decision a great deal of thought. The next season holds many challenges for everyone at the club and I would hope that with the backing of everyone – supporters, management and staff – we can pull together as a club and continue to achieve at least the levels of success we have enjoyed over the last few seasons.

"We have big challenges ahead, on and off the field, but we are all Rangers men at heart and are looking forward to going for our third league title in a row and playing in the Champions League."

Martin Bain, the Rangers chief executive who finalised the new contracts with Smith and his assistants at the club's Murray Park training complex last night, has been encouraged by the recent negotiations with Lloyds which he says will now allow the manager to strengthen his first-team squad.

Rangers have not purchased a new player since August 2008 while operating under firm restrictions imposed by the bank. They continue to face severe difficulties, with a most recently recorded debt of 31million and a potential tax bill of 24million following an HMRC investigation into offshore payments to players. London property developer Andrew Ellis's proposed 33million takeover of the club, meanwhile, remains unresolved.

But Bain insists a new agreement has been reached with Lloyds which will release Champions League income for Smith to spend on player recruitment.

"We are all delighted that Walter, Ally and Kenny are staying on and we are pleased to be able to inform fans more fully about the club's position," Bain told www.rangers.co.uk.

"We have been engaged in direct and constructive discussions with the bank about how the club can operate in the foreseeable future, given the improved financial position since last season. We will, of course, continue to look for new investment in Rangers but, in the interim, there is a plan in place for the club to operate on a stable basis.

"The club recognises that Lloyds Banking Group is looking for structured debt reduction at the club. Equally, the bank recognises that the club needs to be managed at a level where it is in a position to deliver success on the field and meet supporters' expectations. In broad terms, we will invest some Champions League revenue and general profit from this year in the playing squad. We will be able to maintain our wage levels as they are and, if any players decide to leave, we will be re-investing proceeds back in the squad.

"We believe the outcome of our recent positive discussions with the bank gives us a real platform for operational stability at the club and we thank Lloyds for their support. We have a clear business plan in place and will continue to maximise efficiencies and endeavour to increase our non-playing income. I would also like to thank our supporters who have been absolutely tremendous throughout this period of uncertainty. There is no doubt their efforts helped the team achieve its success over the last few seasons and we would hope this fantastic support will continue.

"At no time has the supporters' backing been more crucial than it is at present and it is never taken for granted. Everyone at the club has to continue to earn their support every day."

Rangers chairman Alastair Johnston, who has been openly sceptical of the likelihood of Ellis purchasing the club, paid tribute to Smith's influence in persuading the bank to provide greater financial leeway.

"He has played an instrumental role in our ongoing discussions with Lloyds Banking Group," said Ohio-based Johnston. "I'm sure, like myself, every Rangers fan across the world will be delighted by the football management team's decision.

"I said when I took over that Walter and Martin Bain are the men to run the club and I am very encouraged by the fact that both will be at the helm going forward. Walter's continued presence within Rangers was something I was determined to make happen and Martin was instrumental in creating the environment that encouraged Walter, Ally and Kenny to remain on board."

The only negative note was sounded by the Rangers Supporters Trust, who welcomed the news of Smith's new deal but branded the delay in securing his services as "scandalous".

RST spokesman Stephen Smith said: "We think the manager deserves at least that and we welcome the fact that he's got a new deal.

"But we regret the fact that it's taken so long for it to happen.

"It's a disgrace that a football club like Rangers couldn't even offer its management a contract and it's taken more than five months to do that.

"It's been scandalous and we warmly welcome the fact that it's been rectified.

"He has been an exceptional servant to Rangers and this will give them some breathing space in order to resolve the off-field problems that the club still has.

"We warmly welcome the news – it's the very least that the club could have done for him."

Smith added: "Ally McCoist is a Rangers legend and has the goodwill of the fans and the support of Walter Smith. That will go a long way and we wish him every success when he succeeds Walter Smith."