The news that Liverpool FC are in the financial s*** does not really come as a surprise.
Those who have kept even half and eye on the activities of Tom Hicks and George Gillett will know this anyway and we are not alone. Of all the Premiership clubs only a handful, if any at all, are “debt free”. Us, along with Arsenal and The Mancs, account for the highest proportion of the total Premiership Club debt. If you class the money Chelsea owe to Arbramovich as debt then the big four account for well over half the overall total.
For the record, Liverpool reported a pre tax profit of £10.2m in the year to August 2008. Turnover was up to £160m, a record. However, that is not the full picture. The club’s parent company owed by Hicks and Gillett lost around £42m. This was mainly due to interest payments on loans the Star Spangled Duo took out to finance the take over bid and the building of the new stadium. Although Hicks and Gillett have put some of their own money into the club the amount, as a percentage of total money owed, is small. The owners, despite claiming that they wouldn’t do a Glazier, are in effect draining money out of the club to service the debts they have saddled it with.
On 24th July these loans will need to be refinanced. Although the owners remain bullish about the situation KPMG, the clubs accountants, disagree saying the situation. “may cast significant doubt on the group’s and parent company’s ability to continue as a going concern”. Hicks in a typically, insulting, patronising quip that fools no one described this as “accountancy speak”
In the meantime the latest news that Hicks and Gillett have claimed nearly £2m in expenses from the club in one year will only serve to worsen their relationship with the fans. It is hardly good PR a time when expenses are not exactly yesterday’s news. Perhaps Tom and George have become good friends with Hazel Blears? Maybe we’ll see a “duck island” on the Kop or a moat around the Anfield Road End!
This will only serve to fuel an image of two men callously and greedily milking the club for all it’s worth. This season the Star Spangled Duo have cut down of the daft, patronising statements and kept fairly low profiles. However, this sort of news brings to the top of the agenda once more all the doubts that many – do not be fooled gents just because it’s gone quiet and we’ve been preoccupied by events on the pitch – still hold and at a time, with loan refinancing imminent, when they simply don’t need it.
So where does leave Liverpool? I cannot see us going out of business. Even if the banks call in the loans the first thing they will do is to try and sell the club. There will be no shortage of takers, even in these troubled times. The problem appears to be The Star Spangled Duo who are simply hanging around the club unwanted and unpopular. Sadly, the fact that they are trying to free up capital from selling some of their sports interests in the US so that that it can be ploughed in Liverpool, suggests they are not thinking of leaving and still see long term worth in their involvement?
Despite these efforts perhaps the situation will ultimately force their hand? In the US Hicks’ Sports Groups have already defaulted on loan repayments three times to the total of £354m. Hicks has insisted that this was a negotiating tactic with his bankers. I’m sure that will really go down well with them – who would want to do business with a man who pulls these sort of stunts? If I were the bank I’d seriously consider rewarding such arrogance with a harsh lesson he’d never get! One wonders if Hicks will the try the same with the Royal Bank of Scotland and Wachovia, who he has the refinance the loan with before 24th July? Remember RBS is now part owned by the government. Perhaps he won’t be so cock sure this time?
Perhaps, as the financial screws are turned, Hicks and Gillett will run out of options or realise that there isn’t the cash flow to make their involvement in the club work? Perhaps it will be too much of a risk? Or may be they will try to “tough it out” and try and get the stadium project working even though other sources inside the club have basically said it’s a non starter? Like Arsenal once this is built revenue will increase the problem our couple have is making sure that they are still in place when the gates are opened?
Ultimately of course all this speculation is pointless. Who knows what is round the corner. Although many will say they saw it coming, who would have predicted the financial state the world finds itself in when the takeover happened? How many football clubs, even those in the Premiership, will be in business in five years time?
As it is the knock on effect is felt by when it comes to building the team. Rafa has only a limited sum available this summer and it looks like he’ll have to sell before he can buy. The chief victim of this policy, despite everyone’s reassurances, looks like being Xabi Alonso. Yet Rafa plus many of our top players have signed new contracts with suggests they feel all is not totally lost? We are generating enough money to finance our debts, and the banks won’t turn their noses up at £30m interest payments per year, but it brings home the importance of Champions League football. Perhaps we‘re being naive about the conduct of the owners and that this is normal business behaviour however does that make it acceptable when it comes to our club?
In their accounts, Hicks and Gillett said they were.
“….committed to building a new stadium and actively seeking funding to complete the project”
However, reassuringly there are still many, who hold this club in deep, deep regard, who are still committed to seeing it’s future secured under a more competent, pragmatic, less manipulative, less unscrupulous and more respectful ownership. For most the achievment of that vision will necessitate the removal of the present incumbents?