Liverpool Football Club Prepares For The Takeover End Game

By on Oct 6, 2010 in English League Football, Finance, Latest | 8 comments

The Board of Directors have received two excellent financial offers to buy the Club that would repay all its long-term debt. A Board meeting was called today to review these bids and approve a sale. Shortly prior to the meeting, the owners – Tom Hicks and George Gillett – sought to remove Managing Director Christian Purslow and Commercial Director Ian Ayre from the Board, seeking to replace them with Mack Hicks and Lori Kay McCutcheon.

This matter is now subject to legal review and a further announcement will be made in due course. Meanwhile, Martin Broughton, Christian Purslow and Ian Ayre continue to explore every possible route to achieving a sale of the Club at the earliest opportunity.

The day started with a co-ordinated attempt to saturate the American media with a video decrying the behaviour of the – for the time being – owners of their club, but it has ended with something even more extraordinary with a statement of near-unprecedented bluntness on the official club website which seems to indicate a state of near civil war at boardroom level. Welcome to the world of Liverpool Football Club in October 2010. As long time observers will be aware, October the 15th is said to be the deadline for George Gillett and Tom Hicks to secure the funding to complete their takeover of the club, in the face of increasingly militant objections from supporters’ groups but, with only a week and a half left before the bank can step in and take control of the club, hopes of a clear resolution to the issue of the future of the club are being clouded by a situation that is rapidly starting to resemble chaos.

Earlier this evening, this message suddenly appeared on Liverpool’s website. The scenario that many had predicted, that offers would be made for the club that would be rejected by Gillett and Hicks, appears to have come to pass. One of the bids is believed to emanate from John W Henry, the owner of the Boston Red Sox baseball team and his New England Sports Venture group, while the other has come from a group of Asian businessmen. The five man board of Liverpool Football Club, which is made up of Gillett & Hicks, Chairman Martin Broughton, Managing Director Christian Purslow and Commercial Director Ian Ayre, is understood to have accepted Henry’s offer, only for Gillett and Hicks to now not only stand in its way but also to attempt to replace Purslow and Ayre on the board of directors of the club itself.

Their choice of replacements are highly significant, and not in a way that is likely to please many Liverpool supporters. Mack Hicks is the son of Tom Hicks, while Lori May McCutcheon is a Vice President at Hicks Holdings LLC in Texas, Hicks’ sports management company. Can they, however, actually go ahead and do this? This is the million dollar question and it is one that no-one seems to sure of at the moment. Gillett and Hicks remain the majority shareholders, but their level of control over the club has obviously been heavily diluted by their indebtedness to RBS and it would seem unlikely that RBS would have drawn up a contract containing the sort of loopholes that would allow them to do this. Stranger things, however, have happened.

It seems all but impossible that Gillett and Hicks will actually be able to get the funding in place to pay off the bank by next Friday, at which the point the bank will effectively be able to “repossess” Liverpool Football Club. This repossession may be just the news that Liverpool supporters have been waiting for. This isn’t the same as entering into administration (which is a legal process entirely of its own), so Liverpool supporters don’t need to worry about someone coming into the club, selling all of its assets and straddling them with a nine point deduction. A move by RBS to take full control of Liverpool Football Club would entitle the bank to sell the bidder that it believes to be the most appropriate. There is, however, a catch. Would the bank be prepared to allow Henry’s group as long as it needed to complete due diligence? It’s a question that is worth answering, because this can be a lengthy process. Alternatively, it is possible that due diligence had already started some time ago and that the bid submitted was made having completed that. The rumour and counter-rumour mills have been going haywire in Liverpool over the last few weeks and getting to the bottom of the truth behind what is actually happening at the club is far from easy at the best of times.

This, however, feels different. It feels like a last roll of the dice from two men that can feel time slipping away and are determined not to let go of something that they consider themselves still be the owners of without getting “a return on their investment”. Tick tock, George and Tom. Time keeps marching on. The problem for Liverpool supporters, however, is a subtly different one. Replacing Gillett and Hicks is one thing, but the new owners being everything that Liverpool supporters might hope for is something else altogether. The ideal would be some degree of supporter ownership, but if this is not possible, then Liverpool supporters need to tread carefully in their dealings with any prospective new owners because, despite the truism that is that “they can scarcely be any worse”, they may not be a great deal better, either. It is too soon to be able to say with any degree of confidence and, in the mean time, the protests at Liverpool must continue. The stakes are too high.

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  1. Not another Yank pls. They’ve proven how trustworthy they are and we’ve had enuf of that.


    October 6, 2010

  2. I wouldn’t trust another Yank unless he has huge amounts of his own money and is willing to put it in the club. John W Henry was only worth 1.1 billion dollars in 2009, this means he will also probably get loans to purchase the club and buy a stadium with loans. If im right it would cost 300-350 million for the club, plus 400-500 for a new stadium and then you have transfer kitty for new players, are you telling me this guy would pay his total of what hes worth on us i doubt that very much, and if he did where would the rest of the money come from for the future running of the club???? Maybe he wants to buy to sell it on for a profit aswell. The Asian consortiam sounds better but we need to find out more about them aswell, the future of our club is in the balance here. The following is the link of how much John W. Henry was worth as of April 1 2009 (This wasn’t know Aprils fools joke either) you can also read about him in the, who have stated he was worth 1.1 billion in 2009 but now is worth around 900 million.


    October 6, 2010

  3. Due diligence has already been completed by both of the bidding parties.

    The meeting held in London yesterday was to discuss the acceptance of the approved bid.

    It is believed that Broughton, Purslow and Ayre expected the two Yanks to behave how they have and the board members are believed to have employed Slaughter & May to resolve the situation and resolve it they will.


    October 6, 2010

  4. This is the best and last oportunity to sell the club. I would say to members to ignore stupid owners and sell the ream as soon as passible.


    October 6, 2010

  5. How can a company’s board sell a company against the wishes of the owners?


    October 6, 2010

  6. Borys: by issuing enough new voting shares to dilute the existing owners’ holdings down to below 50% plus one share. The proceeds of selling those shares go into the company’s capital fund, there’s no recourse for any owners.

    Owning a company means owning enough shares to appoint enough directors to be certain of winning any votes of the board. Hicks and Gillett are no longer on the board itself: they gave up that right on the insistence of RBS, I believe, and their nominated directors aren’t voting the way that the owners of the shares want. That’s why they’re trying to replace the directors. It would require an Extraordinary General Meeting to replace the board, and I think that would need 14 days’ notice or the agreement of the board, or of 95% of the voting share capital. (I’m looking at the model Articles of Association attached to the Companies Act 2007, rather than Kop Holdings’ actual Articles.) I’m not sure how much of the share capital Hicks and Gillett actually own.

    Once you own more than 30% of the shares of a company, you must make a bid for the remaining shares or reduce your share back below 30%. If the bid results in over 50% of the shares being owned, you have control. If you own more than 90% you can purchase all the outstanding shares. Obviously you can then hold your EGM, vote in your own board, and do whatever you like.


    October 6, 2010

  7. Thank you the explanation.


    October 6, 2010

  8. @Zahid – One of the things that you should ask as well is “why would anyone want to put in several hundred million into a football club?” The ONLY realistic answer is that it is some form of long-term investment – unless you are talking someone in the Roman Abramovic levels of the Super-Rich. Logically then the questions become ones concerning business plan, how the purchase is been funded etc – such as the Glazers at Man Utd. Some of the American sports (sic) moguls are interested because they see potentially huge sums of money around; I can’t imagine any other investors not wanting a return somehow.

    The problem is that us fans tend to not want to see dividends being paid out etc – we want to see any profits ploughed back in to increase the chance of success on the field. The two things are almost diametrically opposed – but with the top clubs now at the stage where not just a multimillionaire but a multibillionaire is needed as benefactor to keep things running smoothly, if there isn’t one around running as a profitable business is the only other viable option….

    Albert Ross

    October 7, 2010


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