Dawn of a new Liverpool FC era - one fans feared they'd never witness

Jan 30 2008 by David Bartlett, Liverpool Daily Post

THE events of January 25 this year were dreaded by many Liverpool FC fans. It was the day when American co-owners Tom Hicks and George Gillett revealed they had completed a deal that loaded £105m of debt on to the club.

Many fear it marks the beginning of the end of what had traditionally been a family club, now left vulnerable to the whims of the market.

The debt on the club was part of a wider £350m deal that also saw the co-owners taking on £245m through their Kop Football Holdings company, and will see around £30m in interest being paid annually.

Liverpool FC will be responsible for its chunk, and Hicks and Gillett for that of Kop – so goes the theory.

But the two Americans are businessmen and will not want to sink money endlessly into the club.

A spokesman for Mr Hicks has implied that Liverpool FC would be expected to help fund the total interest, but in a situation where there was a shortfall Hicks and Gillett were “prepared to fund whatever was required”.

The Daily Post can reveal that the financial plan also includes “significant funds” for transfers in the summer.

But the lack of explicit statements on future funding has left many fans fearing Liverpool’s future ambitions could be weighed down with a chunky debt.

Liverpool FC has not been very good at making profits in recent years.

Kop Football Holdings, set up by Gillett and Hicks to buy LFC, is yet to file its first set of accounts – they are due in May.

But looking at the previous accounts the club made a loss in two out of three of the previous years. In 2004, when the club did not qualify for the Champions League, a loss of £21.9m was recorded.

Even when the club won the Champions League in 2005, it only made a profit of £9.4m, and this was later restated as £500,000.

In the latest available accounts, 2006, the loss was £9.7m.

It would appear that servicing the debt out of club profits is currently out of the question.

A new stadium would, of course, help bring in extra cash, as would increased revenue from future TV deals.

Anfield currently seats 45,000, while the new stadium could potentially accommodate 71,000 fans.

Based on an average ticket price of £30, the club could make £2.1m from every home game.

If the club were to only play the min- imum 19 Premier League matches, its revenues would still increase by £14.8m a year with sell- outs, even before additional corporate hospitality profits.

It is understood the club will also look to secure a huge naming rights deal of around £100m, similar to Arsenal’s Emirates deal.

Last night, a source said “modest” ticket price rises were factored into the refinancing deal.

Success on the field is a key component – more matches equal more cash.

At the moment, it would appear that Hicks and Gillett are willing to make “losses” on Liverpool for the time being until the stadium investment starts to pay off.

Neil Blankstone, a director of Blankstone Sington, a stockbroking firm that specialised in buying and selling Liverpool FC shares when it was a public company, said he was not overly worried about the new deal: “One would assume that it is reasonably important [to qualify for the Champions League].

“But they could probably afford to miss one, even two years, in a five- year period.”

Mr Blankstone, who has been an observer of Liverpool FC’s affairs for the past 20 years, said a dividend could be paid to the owners to service their section of the debt.

“But a dividend can only be paid if the club makes a profit.”

It is success for Liverpool FC on the field which will bring success for their co-owners off it. For now, the pair will fall and rise as one.

davidbartlett@dailypost.co.uk