Saturday, June 06, 2009

Liverpool FC Not Going Bust, Say Hicks And Gillett


Liverpool’s owners have vowed the club is not going bust despite losses of nearly £41m in 2008.

Latest accounts for Kop Football (Holdings) Ltd showed debt rising by £77m to £359m.

Auditors also cast doubt on the Anfield club’s future as a “going concern.”

But owners Tom Hicks and George Gillett today dismissed that analysis as merely “accountancy-speak.”

Sources close to Liverpool said the club was hugely buoyed by the Reds’ recent financial performance.

And they claimed Liverpool was in less debt than the rest of the Big Four Premiership clubs – Arsenal, Chelsea and Manchester United.

But angry fans today urged the Royal Bank of Scotland not to extend a loan to the club’s owners – who in turn said they remained committed to building a 73,000 capacity stadium in Stanley Park, work that should start when the current credit crunch begins to lift.

A club source said: “We would not have spent £18m on the planning process and a huge feasibility study if we were not fully behind this project.

“The club’s performance, profit and turnover is very strong.”

Anfield insiders say the likely reduced costs of raw materials after the recession will make the progress of the stadium swift.

They promised to meet a July 24 deadline to refinance the club, to continue to plough equity into Liverpool and put forward new transfer funds.

The Anfield hierarchy dismissed suggestions Liverpool may struggle to refinance the £350m debt by July, adding that ‘constructive consultation’ was under way between the owners and the banks. However, leading football financial experts believe in the long term they need a huge influx of cash from outside or they will have to sell up.

In January Kuwaiti billionaire Nasser Al-Kharafi offered £425m for overall control but the Americans only want to sell 50%.

“It is quite difficult but not impossible to get debt refinanced but it is absolutely not the ideal time to be negotiating debt positions,” said Vinay Bedi, of investment management firm Brewin Dolphin based in Newcastle.

“They wouldn’t be short of banks to turn to but the bank would make it very much on their terms – all companies that have restructured their debt deals in the last few weeks have got very onerous restrictions.”

However, Bedi does not believe the club is close to going under.

“It does create an element of financial risk to the business because it is not a good position, but the credibility of English football would be badly tarnished,” he added.

“For one of the top four clubs to be in this position is not particularly ideal, but I wouldn’t have thought the bank would want to call in the debt. I don’t think anyone genuinely believes Liverpool will not be playing in the Premier League and Champions League next season – it is just a question of who is running it and how it is structured.”

Bedi said that if Hicks and Gillett did decide to sell there would be a number of interested parties – at the right price.

“From an overseas point of view there are probably people to buy it as there is a better economic attraction because of the exchange rate,” he said. “The Premier League is still the best market for marketing yourself across the world and the fact Liverpool are one of the key clubs in the Champions League makes it an added attraction.”

Another leading analyst, Professor Tom Cannon, believes Hicks and Gillett may have to sell their interest in their American sport franchises or even cash in on some of Liverpool’s most saleable assets. Midfielder Xabi Alonso is a reported £23m target for Real Madrid while Argentina captain Javier Mascherano is interesting Champions League winners Barca.

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