INSIGHT: Where did it all go wrong at Liverpool FC?

Feb 3 2008

Liverpool FC owners George Gillett (left) and Tom Hicks _320

FINANCE

While the initial deal did indeed not put debt on the club it was so short-term as to need renegotiating last month.

The new £350m deal with Royal Bank of Scotland and Wichovia puts £105m of debt directly on Liverpool FC, with £60m committed for the first stage of work on the new stadium and the rest for transfers and normal capital workings.

Some, though not all, accept that as legitimate but it is the part of the debt placed on Kop Football Holdings, the company formed by the Americans to run the club, which is most controversial.

A spokesman for Hicks recently made it clear that the asset itself – ie Liverpool Football Club – will be expected to “service” that debt of almost £200m, though with Gillett and Hicks on standby if the club fails to produce the necessary profits. Essentially the club pays for the loan used to buy the club.

It should not come as any huge surprise. As early as last March, Daily Post business editor Bill Gleeson warned of possible repayments of around £21m a year, perhaps by the club paying its first ever dividend to the new shareholders. With refinancing, those estimates have jumped to around the £30m mark.

It is now clear the only thing which prevented the whole debt coming onto the club at this stage was the stubborn refusal of both chief executive Rick Parry and former owner David Moores to sanction it. Both are members of the Kop Holdings board (along with Hicks and Gillett, and sons Foster and Tommy).

The Daily Post has learned that bankers demanded an agreement from all six board members on the refinancing deal, allowing Parry and Moores the opportunity to block it.

Removing them from the board at this stage would have been viewed as too antagonistic so the compromise was agreed.

Rick Parry’s letter to season ticket holders last February saying “the club is in very safe hands” is suddenly ringing distinctly hollow for many.

It is not quite Glazer, but it is a mini-Glazer and the natives are not just restless, but rebellious. A new fans group, Sons of Shankly, intends to boycott club merchandise as part of a campaign to hit the owners where it most hurts. Others led by the University of Liverpool’s Rogan Taylor have launched a radical plan to buy the club with a one member one share, one vote proposal which seeks 100,000 investors at £5,000 each.

Both could be overtaken if the DIC bid materialises as expected though some in the Anfield hierarchy believe fans are clinging to an option they know little about.

“The question you should ask fans is what details they know of the DIC bid? The reality is most know hardly anything and are grasping that option because of the anti-American feeling,” said one senior figure.

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