Liverpool Stick Their Finger In The Dyke

By on Jul 28, 2009 in English League Football, Latest, Scottish Football | 8 comments

It was surely no coincidence that Share Liverpool FC chose their relaunch on the day that the club itself confirmed the details of a refinancing deal that was the financial equivalent of using a used sausage roll packet as a form of birth control. The vultures have been circling at Anfield for some time now, but while Gillett and Hicks have managed to defer the very worst that could happen for them, but serious questions remain over their medium to long term future. The Royal Bank of Scotland and the American bank Wachovia, in the current climate, could be forgiven for taking no prisoners in their deal with the club. They agreed, eventually, to extend the club’s credit, but at an immediate cost to the owners. Gillett and Hicks have to raise £60m in the next year – two-thirds of it immediately and the rest later in the year.

During the summer Gillett relieved himself of his majority share in the NHL club Montreal Canadiens, a deal which should make this somewhat easier, but the very fact that this debt needed to be restructured is an indicator of the extent to which their time in charge of the club has been a failure. Liverpool Football Club probably remains in the top five football – ugh – “brands” in the world, and their inability to maintain their promise to not load any debt onto the club itself and the death of their planned move from Anfield (at this moment time, I am only slightly less likely to move into a brand new, 60,000 capacity stadium than Liverpool are) says a lot about the lunacy of football financing. One of the top five – ugh, again – “brands” in the world, and they seem unable to be able to turn a profit on it. It’s enough to make one wonder why the rest of them are even bothering.

Share Liverpool FC, however, remains active. Their plan to find 100,000 people likely to part with £5,000 in order to buy the club always seemed to be on the optimistic side, but the reduction of that price to £500 and the subsequent widening of the potential base from which they can start makes the project seem more likely than it did. In addition to this, larger investors and commercial partners will be sought to raise the remainder of the capital required to purchase the club and run it as a community club in the same way that Bayern Munich and Barcelona are on the continent. The technicalities of the deal avoid bank loans or loading debt onto the club at a time that such a move would be even more dangerous and it expensive than it was two years ago.

Liverpool Football Club has reached a junction in its future, and the supporters of the club can now have a say in which route they take, should they choose to get involved. Between themselves or in groups, they can claim to be attempting to forge a new, sustainable future for their club. The alternative, inertia, will see more of the same at the very top of the club. More attempts at restructuring, more money bleeding out of the club in interest payments that it was never necessary for the club to take on for any reason other than to facilitate the take-over of the club itself. Anyone criticising the Share Liverpool scheme would do well to consider that before declaring its protagonists to be fruitcakes would do well to consider to circumstances that led to such a bid being so necessary. Gillett and Hicks may have applied a stickng plaster to Liverpool’s immediate funding problems for the time being, but The Royal Bank of Scotland and Wachovia will get their pound of flesh in the end. The question of whose flesh it will be remains up in the air, for now.

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    8 Comments

  1. You chase the wrong parked car.

    Today, players cost what whole Clubs cost two years ago.

    It takes real money to spend a million here and a million there.

    Your stupid tax laws confiscate wealth. No wealth, no players.

    A new 60,000 seat stadium will cost 3 times what LFC is currently worth (debt & equity). A 60,000 seat stadium is too small to compete with Madrid, or Barcelona, never mind the fellows up the road.

    All Hicks & what’s-his-name did was pay too much. And I don’t hear them crying.

    The “funding problem” at LFC starts with a flat broke demographic, a boutique stadium, and mob of back-stabbing yobs crying hard-done-by. They should thank their lucky stars at the job that the ownership, management, and players have done. It’s a miracle.

    joe holo

    July 29, 2009

  2. I think you are talking about a team that last season smashed a pathetic Madrid, Man Utd and Chelsea home and away, Madrid are a circus who are ridiculed the world over. Liverpool have the least debt of any top four club in England, It stands at £230m, While utd is £650m, Chelsea is £700m, Arsenal is £600m. Madrid owe millions to the banks and will need The King of Spain to help them again in a few years, They are a totally corrupt club, Barca are a proper supporters club the best in Spain.

    tony

    July 29, 2009

  3. I think the bare figures are misleading. Chelsea’s debt is in name only, Abramovich isn’t going to call time on that in the same way a financial institution will. United are far better placed to service their debt because their position in terms of being able to exploit their brand is so far ahead of anyone else. Liverpool’s debt doesn’t include the enormous costs they will incur building the new stadium. And Real Madrid – well, however their buying policies are viewed, they will continue to thrive.

    Gervillian Swike

    July 29, 2009

  4. The cash generated from the new stadium will be huge which is why Gillett and Hicks will not sell the club, Gillett can wipe out the debt today as he has the cash to do it. Who says Abramovich isn’t going to walk away?, He tried to buy Spurs before Chelski as he has no allegiance to them. King Juan Carlos has already rescued Madrid as you will know, It was highly dubious how he got involved. The RBS and Liverpool are working towards building the new stadium as soon as the financial markets settle down, Then we will see who generates what!

    tony

    July 29, 2009

  5. King Juan Carlos has already rescued Madrid as you will know

    No, tell us more

    ejh

    July 29, 2009

  6. “We’re ok because we’ve got less debt than you”

    How utterly ridiculous. Most sane football fans continue to pray for one of these brands to miss out on a top four finish. Then they will make Leeds (and now Newcastle) look like a cake-walk.

    Martin

    July 29, 2009

  7. Chelsea’s debt has now halved since the money-laundering oil gangster converted half of it into shares.

    Martin

    July 29, 2009

  8. Just looking at total debt is misleading too. What about the interest rates and repayment terms? They change the picture completely.

    Of the current boring top four, United already have a 75,000 seater stadium, Arsenal have borrowed heavily to just build one and Chelsea don’t need one whilst they still have Abramovich. Therefore, Liverpool’s debt is the most pointless.

    Martin

    July 29, 2009

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