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Can you believe these English people actually think we have money?

Usually, it takes a certain amount of alcohol for me to feel melancholy and reflect back on the past.  It’s easy to be down about what would’ve, could’ve, or should’ve happened, especially if you are a supporter of this club and have just watched Hot Tub Time Machine.  If only we could all jump into a hot tub and be whisked back to 2007 and prevent the sale of Liverpool to Hicks and Gillett, everything would be different now, right?  Or maybe, like in the movie, we’d be that guy who still gets stabbed in the eye no matter what choice he made.  

Coming off the heels of a Champions League¹ victory, acquiring the club for £218.9m was a steal.  One of the problems now, is that the owners value the club much higher.  If you look at what the players alone are worth if they were sold in the summer, they do have a point.  In a worst case scenario, if the roster was cleared of names like Torres, Gerrard, Mascherano, you would get to £150m fairly quickly.  That’s of course as long as someone is willing to buy, which is the current problem with the club itself.  You can tout all day long that it is worth £600m, but if no one is willing to pay that and the bank is demanding you pay the mortgage, you suddenly find yourself in a worthless situation.

The strategy with Hicks and Gillett always hinged on the new stadium.  They promised that it would be built and more than likely had every intention of building it, because that was the only way they were ever going to be able to pay for the club.  More seats would mean more cash flow and then the club could basically finance itself.  Unfortunately, the global banking system fell apart, mostly from banks making loans to stupid people who can’t really afford to pay them back,² and now we have the Royal Bank of Scotland demanding that the debt be serviced.

If new investment isn’t found, then the club will be forced to sell off assets to meet its financial obligations.  What assets?  Why, players of course!  The new sponsorship money will probably help a little, but more than likely, Torres or Gerrard would have to be shipped out as they would fetch the highest price.  All that would do is delay the inevitable and the same thing would happen again next summer.

The Royal Bank of Scotland might be willing to extend the current deal by six months with the understanding that there must be a buyer for the club.  If it is confirmed, then the job of finding a new owner would be Martin Broughton’s new part-time gig in between cheering for Chelsea and negotiating labor contracts at British Airways.  It is also rumored that Barclays could refinance the loan themselves for £300m, thus saddling the club with more debt.  Again, the club really has no way to come up with large sums of cash, so the inevitable would happen.  Hopefully, the current owners are realizing that there is no credit fairy to give them a bunch of money with a low interest rate.

Now, my own personal theory is that the only reason RBS refinanced the loan with Hicks and Gillett last year was to maneuver the club into a position where it would be forced into selling.  It would not surprise me if there were a few suitors lurking in the shadows, waiting for the right pressure to be applied before they swoop in to save the day.  This would be a very underhanded move by RBS, but not unheard of and Liverpool is a prime candidate for that type of deception.  If worse comes to worse, assets are sold and they still get their money.  It’s a pretty safe move, even in the current financial climate.

This summer will decide if the club emerges next season with a mission to rebuild or whether it will continue the downward spiral.  This is reminiscent of another club that was once owned by Tom Hicks.  If you’ve never heard the story of Corinthians in Brazil, it’s just a Wikipedia click away.

In 1999, Hicks, Muse, Tate & Furst bought Sport Club Corinthians Paulista, a successful Brazilian club team. The club initially succeeded under the new ownership group by winning the FIFA Club World Cup. Before the purchase of the club, the ownership group assured the fans that a new stadium was in development. This never materialized and after legal/financial troubles and partner infighting, Hicks retired from the company and the ownership group eventually sold Corinthians. The ownership group drew the fury of Corinthian’s fans due to financial decisions, the introduction of corporate sponsors on the players’ uniforms and the changing of the club’s colors. The club was eventually sold and left in a worse position after they were relegated to a lower level league.

Sound familiar?

-CSD

1. remember what it was like to play in that? [↩]
2. like these two idiots [↩]