Football finance – Liverpool Football Club: Barbarians at the Kop
It’s fast shaping up to be one of THE stories of the decade, a collision of the much-maligned worlds of football and finance. The battle for ownership of Liverpool Football Club has drawn in some of the biggest names in global finance. Controversial US club owners Tom Hicks and George Gillett have been desperately trying to refinance £325 million ($512 million) of debt, lent by RBS to the holding company through which they own the 18-times English championship-winning club.
Hicks and Gillett have fallen out with their board, which has appointed Barclays Capital to find a new owner for the club.
At the same time Hicks has been seeking help from his friends in private equity to refinance the RBS loan and maintain control of the club. In surely the first report of its kind, Blackstone was prominent in the lead sports story of the UK’s most popular red-top tabloid, the News of the World, under the headline "A-Kop-alypse now" – a reference to the famous stand where Liverpool supporters congregate to cheer on their team.
Throw in the club’s new sponsors, Standard Chartered, which has forked out at least £20 million a year to emblazon its brand on Liverpool’s famous red shirts, and you’ve got a veritable premier league of financial institutions all involved in the club’s travails.
StanChart would have expected a better return on its investment than the lowly 16th place Liverpool occupied in the Premiership at the end of September.
Surely this has the makings of a best-selling book – titles such as Barbarians at the Kop or Scousers’ Poker spring to mind.
One fan’s comment posted on the NotW website could provide a working précis: "I’m going to buy Barclays Bank with a 100% loan from HSBC, guaranteed by the value of Barclays. My business plan is to repay the interest from Barclays profits, putting the rest of the profits in my pocket. If there are no profits, I will sell assets to pay the interest, or simply increase the loan. My five-year plan is to sell for twice the price I paid. A fairy tale in the real world, a real tale in the fairyland of football."