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Liverpool & Everton will be the first to crash financially.

On the day when everyone is raving (quite rightly) about our team of 3 year olds there’s nothing more to add on that front – save to reiterate that it was possible to get a ticket for £10.   If we had been playing the Tiny Fantasists they would have demanded the standard A prices – just as they did last season.Which leads me to money.

We all know the economy has disintegrated, the banks are bust, and capitalism is on the brink.   But the football clubs sail on into the sunset without any worries…

Except…

At a conference in Zurich, Keith Harris, the man who is trying to sell Everton and Newcastle, said he is most concerned about Liverpool.   As I have mentioned before Liverpool have to find £350m to pay in January to Royal Bank of Scotland and Wachovia.

Both these banks are in dire trouble, and there is no sign that they want to agree to roll over the debt (something that Manchester Bankrupts are also dependent on, but from different banks).

The £350m owed by Liverpool Insolvency includes £185m borrowed by those lovable cartoon characters Tom Hicks and George Gillett, to buy the club, even though they promised the supporters of the Insolvents that they would not do this.  And some of the Insolvents supporters believed them.

Ah.  Bless.

Liverpool can extend the debt at higher rates of interest, for a further six months, and then, in July – just as the transfer window is bubbling into life, Liverpool Ins. must either refinance the loan or repay it.

Of course some idiot might come along and put money into the Insolvents, or  that old “we can’t let a famous club die” stuff might kick in.

But what the banks know is that for everyone in Liverpool that they might alienate if they let the club sink, there are 100 people who would applaud them.  After all why should companies that manage their affairs well be refused money while a club that manages its affairs so badly is given cash?

Meanwhile at Everton, Bill Kenwright, the chairman, has said that they must have new investors because they just can’t keep borrowing as they are now (and that’s before they even think about building a replacement for the current ground).
For someone to buy a club they look for an increase in the value of their investment  of around 10% a year, without any extra investment.  Everton can’t get anywhere near that.  Which is why no one wants to buy.

Both Liverpool Ins and Everton suffer from being based in, well, errr, Liverpool.    We all know it is not a very nice place to live, and in truth it is not a wealthy city.  There are not the financial and business connections to run clubs in terms of massive purchases of players year after year after year, as they have done.

Of course clubs don’t have to go bust.  What they have to do is have stadia that make a profit on every match, bring in their TV money, have a very positive image world-wide, and can afford seasons where things don’t go well.

Which brings me back to Arsenal.  The performance by the Children’s Team this season is making news around the world – in the most positive way possible.  Even the rampant nationalists who insist that we have english players in every side had to shut up. (Interesting that everyone forgets that 20 years ago Liverpool played a cup final without a single english player in the team).
For Arsenal it is exactly the positive publicity that brings in more and more supporters to the club.

And as Harris said at the Zurich conference “Arsenal’s £260m, borrowed at 5% interest to finance the building of the Emirates Stadium is the most competitive and conservative”.

For Arsenal, its not looking too bad at all.

 

1 comment to Liverpool & Everton will be the first to crash financially.

  • don't believe the hype

    Yet more evidence for those who don’t already know that Arsene (and Arsenal) knows!

    In the near future while others are looking to buy players they can’t afford, with money they don’t have, Arsenal can pick the best players off their conveyor belt of talent and sell the rest at a premium.