Yesterday the stories about Liverpool flowed around like a dark murky flowing thing you would not want to put your hand in.
We knew that the owners were trying in utter desperation to do something, anything, that would allow them to refinance the £350.5m of debts six months ago.
We now know from leaked papers obtained by Bloomberg that they even thought about taking on the insane PIK loan which would have been so expensive they would have added another £100m to the debt! So out of the RBS can of £350 worms, into something far more horrible.
In now turns out that in March there was a dead secret offer of a rights issue run by Rothschild and Merrill Lynch. £50m for a minority stake in a beaten up old club that hasn’t won the league in 20 years.
Yesterday the big story was that Liverpool’s annual throw-away on over-priced players was being cut to £20m a year – which most of the papers and broadcast media ran with. But with RBS demanding £65m a year repayment, and only a tiny fraction of this raised with a new sponsorship deal, where is that £20m coming from?
But everyone ran the story, and so on the basis that if you say something enough it ends up being true, it became true. At least yesterday.
However a little prodding shows there is something else utterly nasty lurking at the bottom of the sink, or given the state of Liverpool’s finance, the sewer.
Because somehow, at one money they were so desperate they would go for PIK funding and then they not only don’t need it, they also talk of Benitez having £20m a year – infinitely more than the Lord Wenger of course (who makes a profit on transfers most years).
Even more oddly, other plans were dropped too. An 8% rise increase in ticket prices went out the window. And a plan gradually to convert cheap seats into corporate areas vanished. These plans are not dead – they sit their like a crab looking at the boiling water, ready to snip your fingers. (Actually that is a fairly ludicrous simile, but I’ve left it in because I think it is funny).
They are still playing with the ludicrous “Liverpool brand” academies, still looking for yet more secondary sponsors, and oh, you will love this one, they are going to improve the catering facilities to increase commercial revenue from £59m to £111.4m in the next five years.
Oh yes. Last time we heard stuff like that it was from Leeds.
A few days back I ran this little analysis of the net outflow of funds at Liverpool in terms of transfer fees year on year in Pounds Sterling.
- 2000: 24.75m
- 2001: 0.46m
- 2002: 13.5m
- 2003: 8.5m
- 2004: 15.75m
- 2005: 20.65m
- 2006: 19.5m
- 2007: 46.75m
- 2008: 19.55m
Now ask the question: is Liverpool is to be restricted to £20m a year, would that make any difference? In fact not, because many years Liverpool don’t spend £20m.
So, let’s summarise.
1. We now know that Liverpool were on the edge of borrowing the most expensive money in the universe to try and meet the repayment from the bank. They were also ready to hand over part of the ownership, for more money.
2. They also had plans to up the price of the tickets and have insane schemes to raise millions from selling pies.
3. Meanwhile they continue to pay back RBS £60m a year.
4. Suddenly, just when we start asking these difficult questions they announce that the manager can waste £20m a year on players – which they announce as a cut but which is more or less business as usual.
5. We still don’t know where this money to pay RBS is coming from.
6. The owners swore blind that they were not going to do a Manchester U and were never going to use the clubs own money to buy the club. Absolutely, they wouldn’t. And then they did.
The conclusion can now only be that they have got a plan to get their money out but this scheme involves something so stinky lurking in the background it is going to be worse than the time they found a whole load of corpses in the garden of one of the terrace houses that backs onto the ground.
Yesterday’s story was far too convenient, and far too unlikely, to be true. The situation is far, far, far worse than that. The notion that “Liverpool is the new Leeds” is about to look optimistic. I’d say Liverpool is the new Chester.
(c) Tony Attwood 2009
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