Christian Purslow Admits Liverpool Can Barely Service Loans

Liverpool’s managing director, Christian Purslow, admitted today that the club can barely service the debts and interest which were loaded on to the club by Tom Hicks and George Gillett when they took over Liverpool in February 2007.

"Can we afford to meet [our loans, interest costs and bank charges]?" Purslow said. "Just about. Do I wish that every penny spent on interest was available to spend on players? Passionately."

In a series of strikingly frank answers to emailed questions from anxious supporters published on Liverpool’s official website, Purslow acknowledged that the "leveraged buyout" employed by Hicks and Gillett, loading their own £185m loans onto the club to repay, is a severe financial problem.

That principle has been consistently denied at Manchester United, where the chief executive, David Gill, has argued the £716m debts and £400m interest, costs and bank charges imposed by the Glazer family’s takeover are not a burden on the club. "We are highly profitable," Purslow said. "The issue is that too much of that profit is being used to service loans put into place when the club was bought."

In the first public acknowledgement of the boardroom divide at Liverpool between Hicks and Gillett and the three directors who can outvote them, Purslow said he, the chairman, Martin Broughton, and commercial director, Ian Ayre, would reject any proposal from the owners to replace the club’s £237m bank debts with further borrowings from elsewhere.

"Can you, Ian Ayre or Martin Broughton oppose the refinancing of the debt by the current owners?" one supporter asked. Purslow replied: "Any incurrence of indebtedness by Liverpool Football Club needs full board approval. The non-owner directors have made it clear that’s not what we want to see happen."

Asked whether the owners could refinance the debts and secure new borrowings against the club’s assets – the players, stadium or training ground – Purslow stated: "That would require board approval and the other members of the Board have made it clear that’s not what we want to see happen."

Throughout, however, Purslow stressed Liverpool is not close to being insolvent, saying it made record income in the year to July 2010, and will not sell players, including Steven Gerrard and Fernando Torres, to pay off debt.

Purslow said all the directors, including Hicks and Gillett, are committed to selling Liverpool, and a "small number of potentially interested parties," whom he declined to name, are carrying out due diligence. Deutsche Bank, rumoured to be in refinancing talks after Hicks was apparently spotted outside their New York offices, are understood not to be involved.

Purslow hinted at the power wielded by Royal Bank of Scotland, to which Liverpool owes the bulk of the £237m, when he confirmed that the board’s reorganization into its current structure, in which Hicks and Gillett can be outvoted, followed the owners’ rejection of a proposal by Rhône Group at Easter to pay £100m for 40% of the club. RBS is said to have pushed after that for the club to be sold.