If you stand still and quietly listen you’ll probably be able to hear the slow, increasingly thunderous chant of ‘You’ll Never Walk Alone’ ringing out across the Kop and the streets of Liverpool. Today Mr Justice Floyd (soon to become the patron saint of Anfield) ruled that Liverpool’s current owners, Tom Hicks and George Gillett, had no legal power to stop the sale of Liverpool FC to NESV, the owners of the Boston Red Sox.
The latest twist and turns in the financial affairs of Liverpool is just another addition to the sad saga that has consumed one of England and the World’s most successful football franchises. The club was originally purchased by Hicks and Gillett back in February 2007 for £218.9m. Each shareholder was paid £5,000 per share and the two new owners quickly cleared Liverpool’s modest debts of £44.8m. The 2007 takeover by Hicks and Gillett was supposed to usher in a new era of silverware and glory for one of Europe’s football titans, the truth however was a different reality.
So where did it all go wrong for Liverpool FC? Well to start with Hicks and Gillett never had the money to buy the club in the first place. Instead the entire deal was financed using loans secured against personal assets both in the UK and the US, as well as revenue estimates from the club itself. According to the BBC’s David Bond:
“The labyrinthine company structure created by Hicks and Gillett, consisting firstly of the club, Liverpool (LAFC). It was revealed that RBS is owed £97m by this company which breaks down as a £25m general facility, £52m for players and stadium investment and a £20m revolving facility. Above the club there is Kop Holdings Ltd which owes RBS the £200m main facility. Then there is Kop Football Holdings Ltd. This has security over the assets of Kop Holdings and LAFC. Above that is Kop Football Cayman Ltd and then Kop Football LLP, an American company registered in Delaware. It is this company Hicks and Gillett own 50/50.”
In 2008 it was revealed that Liverpool’s dynamic duo suffered a loss of £42.6m, much of which comprised of interest repayments to RBS; the ensuing financial crisis only compounded the problem. After two years of posting financial losses, arranging new refinancing agreements and poor performances in the league, leading to lower revenue predictions, RBS was forced to transfer Liverpool FC into the toxic division of its asset management department. They say that chickens often come home to roost; last month RBS finally pulled the plug on Hicks and Gillett, demanding that they repay the remaining £350m debt by the 6th of October, or face administration.
With the High Court ruling in favour of the board, with a vote of 3-2 for the sale of the club, it now seems likely that Gillett and Hicks will be forced to sell the club within a matter of days. John W Henry, the majority shareholder of NESV and widely acclaimed saviour of the now successful Boston red Sox, appears to be the front runner to buy the club.