LFC INSIGHT: How Liverpool FC ended up in American hands

Feb 5 2008 by David Bartlett, Liverpool Daily Post

Liverpool FC spent years scouring the world for investment before the arrival of Tom Hicks and George Gillett a year ago this week. On day two of a three-day special report, David Bartlett looks at how the deal was done

IT IS often assumed that members of the Moores family (by their annual inclusion in the Sunday Times Rich List) have an endless supply of cash.

There is no doubt that David Moores, former Liverpool FC chairman and nephew of the late Sir John Moores, is a wealthy man.

And while he certainly did not drain the club of money, Moores’s Littlewoods-accrued fortune was not enough to allow the level of investment needed in his beloved football club to give it Chelsea of Manchester United-style wealth.

And so it was that in March 2004, Liverpool FC hired finan-cial advisors Hawkpoint Partners to start a world-wide search for investors.

The search would take Moores and club chief executive Rick Parry to all four corners of the globe, sometimes to embarrassing effect. At an early stage of dealing with former Thai Prime Minister Thaksin Shinawatra, who now owns Manchester City, the pair went to Thailand with Keith Clayton, a club director and Moores’s accountant.

They were invited into one room to talk, and then into the next and unwittingly found themselves in a most unwanted press conference.

Talks with Shinawatra stalled in summer, 2004, with a sigh of relief from many fans far from enamoured with his human rights record.

Robert Kraft, who owns American Football team the New England Patriots, was also courted while multi-millionaire Liverpool FC shareholder Steve Morgan was keen to take a controlling interest.

Club officials first met George Gillett, now co-owner with Tom Hicks, in August, 2006, after the club had been chasing the investment group of the Dubai government, Dubai International Capital (DIC), for about two years.

“He was not taken terribly seriously at that stage, but those who met him thought he was a nice man,” a source told the Daily Post.

In the autumn of 2006, frustra-ted with the prevarication of DIC in making an offer for the club, Parry and Moores travelled to Montreal, Canada where Gillett showed the pair his ice hockey team the Montreal Canadiens.

A source said the pair were impressed but continued dialogue with DIC.

On December 6, 2006, Moores decided to go with DIC and the company was named preferred bidder.

The parties agreed to a period of exclusivity which ended on January 19, 2007.

IT IS clear, though, that Gillett did not give up at that stage, and Companies House records show that Kop Football Limited, the holding company through which he and Hicks own the club, was incorporated on December 18, 2006.

The DIC offer on the table was to buy at £4,500 a share, but a source said that club officials became frustrated with the company’s “dithering” over carrying out due diligence.

A DIC briefing paper was leaked which detailed an “exit strategy” and their intention to sell the club at a profit in the future. When this was revealed and faxed to Rick Parry from the Daily Post and Echo building, the tide had gone against the company, said the source.

According to a source there was a secret meeting at the Marriott Hotel at Canary Wharf, London where Gillett came in with an offer of £5,000.

“George was running the deal, but he didn't have the money, so he brought Tom Hicks in,” said the source.

DIC had withdrawn from the process and on January 30, 2007, the club board met and agreed to accept Hicks and Gillett’s offer.

Moores, who owned 51.5%, made almost £90m, Granada (or ITV Productions) pocketed around £18m, Radio City founder Terry Smith made £1.5m, former director Noel White £1m, and Steve Morgan about £8.7m.

Rick Parry was also paid a £500,000 completion bonus on top of his £500,000 salary.

Hicks and Gillett paid £174.1m for the club’s 34,800 shares, and also took on £44.8m of debt.

The controversial £350m refinancing package concluded last month – which has so angered fans – paid off the initial loan used to buy the club but loads both Kop Holdings and Liverpool FC with debt. It did, however, see Hicks and Gillett dip into their own pockets for the first time, with a joint investment of around £40m.

“Paradoxically about 70% of what they have done is good,” said a source. “What they have got dis- astrously and consistently wrong is the public presentation of it.”

First there was the new sta-dium, unveiled last summer with great fanfare but sent back to the drawing board in December.

Then there was Hicks’s public admission that Jurgen Klinsmann had been lined up as a possible replacement for manager Rafael Benitez. And then the refinancing package that included £105m of debt on the club’s books.

“Now there is a huge chasm between the owners and the fans,” said a source. “They just don’t understand The Liverpool Way.

“We have different standards and expectations to other clubs – and rightly so.”

SPORT: PAGES 44, 48

davidbartlett