by Tony Attwood
There is a school of thought that says that no matter what, a club as big as Liverpool will always be able to carry on. The banks would never foreclose on those irritable little scoucers and besides, they are just too important to go bust. Someone will buy them.
Quite possibly this is so. If the bank were to shut the club down, the football-debt rules (now being challenged again in the courts) could well mean that the banks would not get much of their money back. Besides the negative publicity a bank gets from bringing a club to its knees might make even a bank ponder the consequences of its actions.
(No, actually I have just re-read that last sentence and whichever way I put it, it doesn’t read true. A bank considering the consequences of its actions… No, no chance).
But whichever way you look at it the crisis at Liverpool is deep.
The Liverpool chairman is a Chelsea supporter who was brought in by the banks to make sure that the club is sold, and so can repay the debts to the banks. Being a Chelsea man , Martin Broughton their chair, has no real knowledge of long term success. Indeed being also chairman of British Airways he must also be fairly away of what life in crisis is all about. (He’s also been chairman of the British Horseracing Board and British American Tobacco who have a big plant just outside the village where I live – but that’s not actually relevant to this account).
Anyway, his job is to sell Liverpool and so far his success rate is zero. Not only has he not sold the club, he’s also not had any bids since last April when those chirpy yankies Hicks and Gillett bowed to bank pressure and agreed to flog the place.
Broughton has said the first serious offers will turn up soon, and that he expects to sell the club in August or September. In terms of the lack of offers he said, ” I wouldn’t have expected there to have been at this stage. There are a number of interested parties, but there’s no specific deadline on it. We are looking to the middle of July-ish for the first round of bids but that’s not a final stage – that’s a first entry through.”
It shows the level of the problem at Liverpool FC that Broughton has also said that Hicks and Gillett could not veto a sale and no price had been set to sell. That is quite remarkable – and again reflects the depth of the Liverpool crisis.
The owners have given up control over the price they sell their ownership of the club for!
That is the deal the banks extracted from them in return for allowing the club to continue after it defaulted on the £100m repayment to the banks. It is quite a heavy price to pay, and the fact that the owners agreed to it means that they are now in a corner, without enough assets to extract themselves from the mire.
The company that owns Liverpool FC lost nearly £55m for the year to 31 July 2009, which was a huge leap on the previous year. £40m of that loss went on paying RBS and Wachovia (the US bank) interest on the £351m debt – the money that the banks now want back, and for which the £100m due this summer should have been a part payment.
One rather amusing side-affair in the accounts is the fact that that loveable old rascal Rick Parry was paid £3m severance pay – which is a fair sized pay off for introducing Tom Hicks and Georgie Gillett the Lesser to the club and preparing their way for a takeover in 2007.
Quite a good earner: “Hey guys here’s a couple of fellows of dubious business repute who would like to rape your club. Pay me some money for introducing them, and then another £3m to make me go away.
The man who has to sit by and watch British Airways fly itself into the ground with endless strikes and total customer dissatisfaction said, “The owners can’t block the sale of the club. I read all too frequently numbers being floated about in the media, normally associated with Tom Hicks’ name. I would like to make it clear there is no number. There is no base line.
“This is a willing buyer, willing seller auction. We will do a deal with what we consider to be the best bidder.”
So there we have it. The chairman works for the creditors (the banks) not the owners, not the club. He is careful to make noises about the future of the club so as not to risk the supporters ire (he doesn’t want his hub caps nicked) but otherwise, this is a hard-nosed business: RBS want their loan back, and they will sell the club in anyway they can to get it.
But it is clear – if someone offers £351m for the club, and no one else makes a deal, then club can be sold – because all the chairman wants is his £351m back.
Meanwhile, while finance is the subject in hand, Cardiff City have failed to pay their players and others on time, despite having got rid of Ridsdale and having brought in a new rich owner. Well, that’s how it goes.
What is amazing about the Cardiff situation is how closely it resembles what Ridsdale did to Leeds. The story allows us to note just how desperate clubs can become to bring in someone, anyone, who might just get them into the big party.
Ridsdale became chairman in October 2006 after Sam Mammam of Wimbledon moved aside. Ridsdale then borrowed money from future earnings to try and get the club into the EPL, in his last season mortgaging huge amounts of unearned money to bring in players who he hoped we secure promotion. The club lost in the play off final.
Among his many tricks was to raise money by selling off future season ticket sales (for the year 2010/11 when it was hoped the club would be in the EPL) at half price, on the promise that the club would use the money to buy new players to secure that promotion. In December 2009 Ridsdale admitted the ploy was a con trick and that the money was used to pay off some of the debts he had run up.
A Malaysian Consortium headed by Dato Chan Tien Ghee took over 30% of the club at that point, for just £6m deal. Cardiff now have between £10m and £30m of debt (post-Ridsdale you never know) and had a fifth Revenue and Customs winding up order over a £1.9m tax bill on 16 June. They survived, but the price has now been seen – they couldn’t pay the wages on time.
Untold Arsenal, from here, to there, and then somewhere else
Making the Arsenal: the second edition is just about the same as the first, but it does say second edition inside it.
- How much have Arsenal’s rivals spent on transfers in recent years?
- Why is it becoming so difficult to find a sponsor for new football stadium?
- Corruption flares up again in Italy, as Premier League figures don’t look too clever
- How much does a club have to spend on transfers to get a trophy?
- Does the team that is top after 14 games usually go on to win the league?