Wednesday, May 12, 2010

More Grim Reading

Posted by B_H_B on RAOTL

The State of Liverpool FC – An Idiots Guide

While "senior sources" at the club (Christan Purslow) try to facilitate a smear campaign against the manager, pretend everything is rosy at the club and briefs the press to headline the Rick Parry pay off on the day the club's financials are tactically released on election results day; here's what's really going on at Liverpool Football Club:

The figures released on Friday 8th May 2010 indicate that Liverpool FC is in net debt to the tune of £351m; an increase of £52m from last year’s figure.

A total of £233.996m is owed to RBS, in addition to an inter-company loan of £144.441m owed to “Kop Cayman”; a company owned by Gillett and Hicks based in the Cayman Island for tax reasons; a company that have loaned Liverpool FC £144.441m at an interest rate of 10%. This is the “own money” that Gillett and Hicks claim to have put into the club. In reality, they’re just charging the club 10% interest for lending that money through an offshore limited liability company that they aren’t even personally liable for – Liverpool FC are.

Liverpool FC are not paying the interest off on that £144.4m however. It is being charged as a “compound interest”, meaning the interest isn’t paid, but is instead “rolled up” to the grand total. For example, this year (if I’ve got this right):

£144.4m @ 10% interest = £14.44m payable this year.

Instead of paying that £14.44m, it is rolled onto the total making the outstanding debt owed to Kop Cayman £158.88m. The following year this is then charged at a further 10% interest:

£158.88m @ 10% interest = £15.88m payable next year.

Instead of paying that £15.88m, it is rolled onto the total making the outstanding debt owed to Kop Cayman £174.76m. The following year this is then charged at a further 10% interest:

£174.76m @ 10% interest = £17.76m payable next year.

Instead of paying that £17.76m, it is rolled onto the total making the outstanding debt owed to Kop Cayman £192.52m etc etc etc...

The debt soon spirals out of control, as you can see; and don’t forget, this only concerns the £144.4m owed to Gillett and Hick’s Cayman Islands company – it doesn’t concern the huge £234m owed to RBS.

The financial figures released last week are for the 2008/09 season.

Those figures declare the club made a loss of around £52m for that year, due to the interest repayments on the loans and another £22m spent on the new ground; on what that was spent on we have no idea. There’s nothing to show for it anyway – and the total spend on the new ground now exceeds £50m. To put that into perspective – Sunderland managed to build the 48,000 seat Stadium of Light for a lot less than that. We have a few fences up at the back of the Anfield Road End!

Anyway – we made a loss of £52m that year despite finishing 2nd in the league and reaching the latter stages of the Champions League. The accounts also declared a profit made on player transfers (despite Purslow telling us we don’t need to sell players to balance the books and service debt, and Rafa being accused of wasting millions on players – the accounts prove otherwise).

What are next year’s figures (which will reflect the financial state we’re in today) going to look like with a 7th place league finish and an early elimination from the Champions League? We will also have an increased debt to service as explained above.

Then what about the figures for the next financial year when there’s no Champions League money at all coming in? 

While the current owners are in place, we are going to continue to fall further and further into debt. We cannot meet the repayments on the loan as it stands now, and with our revenue due to fall with the lack of Champions League football, we’re on the brink of going into administration. 

Anyone with hopes of making any signings in the summer or any future transfer windows needs a reality check. We are going to be very lucky to be hold onto the players we’ve got, never mind being able to bring anybody else in.

Gerrard and Torres don’t want to leave because they don’t like the manager (Purslow is feeding this story to the media to whip up the “Rafa Out campaign”); they want to leave as they know there is zero chance of any new players of any quality arriving at the club in its current state. They also know there’s zero chance of any top class manager coming to the club if Benitez decides to walk or is pushed; no manager worth his salt would come to work at the club under these conditions. They know the club is only going one way.

Until Gillett and Hicks are removed from the club, we’re only going to decline. It really is as simple as that. Nothing else matters. 

And remember – these debts haven’t been accumulated through overspending in trying to buy success and compete like was the case at Portsmouth, Leeds and various other clubs – they are entirely generated through debt loaded onto the club just so Gillett and Hicks can own us and bleed us dry with expense claims, management fees, arrangement fees for every refinance deal and wasting over £50m of the club’s money on a non-existent new stadium.

This isn’t the result of bad individual club management as Richard Scudamore of The Premier League claims; it is the result of a leveraged buyout that has loaded the cost of buying the club onto the club to repay. Something The Premier League, The FA, UEFA and FIFA should be doing everything in their power to prevent ever happening again.

2007: £44m debt (£3m per year to service)
2008: £350m debt (£36.5m per year to service)
2009: £378m debt (£40m per year to service)

Those are the levels of debt on the club, with it being only £44m before Gillett and Hicks bought the club. Therefore the club’s profits were able to be invested back into the squad, allowing us to compete on the pitch. We’re now crippled by debts we cannot service, when that £40m leaving the club each year in interest repayments should be being spent on new players.

£76.5m has left the club in interest repayments alone in the past 2 years – and in that time – the manager has not spent a single penny on new players. It’s been a sell to buy policy, with profits being made on transfers in the past few transfer windows as the books needed to be balanced; all while the clubs around us are spending to strengthen. How can we be expected to compete under those conditions?

The debt is growing with every passing day. As a result of the lack of investment in the squad (as well as bad luck with injuries / poor decisions / players out of form etc), we’re paying the price on the field with declining performances which will therefore reduce the club’s revenue even further – giving us even less money to service increasing debts. A vicious circle. It’s unsustainable. 

Liverpool FC is paying £110,000 every single day in interest repayments to service a debt we should never have in the first place. That’s £110,000 a day of the club’s money that me and you generate, that we should be seeing spent on new players or developing the club; instead – we are standing back and watching the club being raped in front of our very eyes.



Anonymous said...

RAFA OUT, YANKS OUT!!!...LFC will be a better club if these three characters are longer associated with us..

LFC4Life said...

Get rid of the lot of them, they have all conspired to kill our beloved club. Rafa with his poor managerial skills and the other two with their corrupt greedy theft of our funds.

Khan said...

And do what next? How would we be a better club?

Rafafool said...

Rafa has been proven a failure in the EPL. There's no place for a failure like him in our great club.


gary said...

And do what next? How would we be a better club?

Anonymous said...

I suggest LFC do not fire Mr Benitez. In fact LFC should extend his contract until 2020 so that Mr Benitez can take LFC down to the fourth division.

That would be a real achievement isn't it. All Benitez fans will rejoice on such a mean feat!!!

Khan said...

Still don't see the big picture..still with the 'benitez fans'...sigh

Anonymous said...

There are 2 major problems at Liverpool. 1. the owners 2. Rafa Benitez.

Both are cancer that ought to be removed immediately.

Anonymous said...

And Anon 10.05PM will both take over as the owner who will pump in billions and the manager who will win us the title and trophies

Anonymous said...

I fully agree with Anon 6.05pm that we need a manager who can pump in billions into LFC.

But if I were the owner I certainly wont trust a manager of Rafa's mentality who will certainly bleed our coffers with sub standard buys.

Money and Rafa Benitez will spell disaster for LFC.

Khan said...

Bleed our coffers? Are you serious? The reason we have sub-standard players is because Rafa was NOT given the money. geez...

Anonymous said...

When Rafa is given the money, he tends to buy duds...We all know who they are.

Btw Rafa has been given 6 years to manage LFC. Are we nearer to winning the league? Maybe season 2008/2009 but then Rafa messed it up..In all other seasons, pre and post American owners, LFC were non contenders.

Together with the 2 owners, rafa is killing the club. Rafa certainly thinks of himself only. He wants the 16 million compensation before leaving LFC.

Please God, save us from this greedy manager.

Khan said...

Then pray tell when was Rafa given the money? He had almost always had to sell to buy and 'real' money was available, he did bring us Torres and Mascha who are no duds. The 'duds' as you mention is when he did not have enough money to buy the Torreses and the Maschas. I don't think you know which players he was targeting every season but could not buy because he was given the money, hence the players were scooped by other clubs. But of course these are old news, and I do wonder where have you been all these while for not knowing all this.

Anonymous said...

Mr Khan,

It seems that you are the only one who knows everything re the "suffering" of one Mr Benitez.

Funny isn't it?

Khan said...

Apparently to me you seem to not know what others do, and that's funny too.

Anonymous said...

I know for sure that Benitez is killing the club. he is the most arrogant, greedy and useless manager we've ever had.

gary said...

so what is the solution?

sack rafa, and appoint who? klinsmann? hiddink?

putting someone else in the same shit hole?

i don't think so. the odds are not looking good.

when parry is in charge, rafa wanted simao and alves, they say they have no money. i wonder why, because the two of them only cost us about 24m GBP.

suddenly rafa was presented with keane. he came with 20m GBP price tag!

gutted, yet he managed to keep his cool. so, did he sulk? no. he stay composed.

like you all said, sack him. and do what next? how would we be a better club?

the main problem is the OWNER. get rid of them.

Anonymous said...

Too bad Gary. Your beloved Rafa has been sacked.

Now will you stop supporting LFC just because Rafa is no more?

Anonymous said...

Just because the club is in financial dire, doesnt mean that the manager shouldnt be sacked because they have to work with limited resources.

The manager is ultimately accountable for the performance on the pitch. Do not try to shift the blame entirely on the owners for the failures of our manager.

Anonymous said...

btw, this is the best piece of news in a while. Good riddance.

Next, the owners.

Khan said...

Oh right, now the owners. That will happen after a new yes-man is appointed as manager, LFC has been sucked dry, players sold off to pay off the debts, and LFC plummets to the bottom of the league and put under administration. Oh yes, it was all benitez's fault for not allowing to be bullied and for not being a yes-man. Talk about being blind to what's going on. Pathetic really.

Anonymous said...


Grow up please...are you telling us that you will no longer support LFC now that your beloved Benitez is gone???

Maybe you should start supporting Inter Milan, in case Benitez is hired there.

Anonymous said...

The time for Benitez to blame the owners for his failures has passed.

Actually Benitez had a "marriage of convenience" with the owners. They were using each other for their own benefit. Benitez knew in advance of the poor financial situation at Liverpool but he nevertheless opted to sign an extension.

In the case of Benitez, he would use excuses like not getting financial support from the owners whenever Liverpool played very badly or lost matches even against mediocre teams.

Khan said...

The growing up should be on your part, shifting the goalpost whenever you cannot provide a good argument

Khan said...

Anon 4.03PM

and with that statement, you have shown that you don't really know what is/was going on behind the scene at LFC, despite numerous times it has been highlighted. Typical...

Anonymous said...

I hate to say this but unfortunately you are so obsessed with one Mr Benitez that you cant argue things objectively and see things in the proper perspective.

However i do have alot of sympathy for fans like you. I know you are now torn between supporting LFC or break ranks with LFC just to be on the side of Benitez.

Anyway, as far as LFC is concerned, Mr Benitez is now history.

Khan said...

And I feel pity for you for not getting it..still.

You are still delusional that we 'pro-Rafa's support LFC because of Rafa, whilst not understanding the simple fact that Rafa was all that stood against the evil twats who claimed themselves as the custodians of LFC (yeah, custodian mt a**). You lap up the bollocks thrown at you by the media whilst not understanding the notion of the way these venture capitalist leeches worked to get rid of Rafa so that they can install a yes-man and suck LFC dry. Maybe you will eventually stop supporting LFC when we have to sell big and get relegated?

Your kinds have helped to get rid of that man, who is wanted by so many big clubs, so feel proud of yourselves. But you fail to see the ramifications (why am I not surprised)of your actions.

Now, where are the Hiddinks and the Mourinhos that were supposed to take over Rafa's job? At least some people were/are doing something to get rid of the leeches, unlike the so-called 'most knowledgible' arm-chair-pundits-whose-greatest-gift-is-hindsight fans who screamed all year long for the head of the most successful manager in our history of last 20 years, whose f-ing 'expert' views were used again and again by the freaking media.

Anonymous said...

You are really stubborn, Mr Khan.

As we've said before., there were three who are not wanted at LFC .i.e. the 2 owners and Rafa Benitez. All three of them are the cause of LFC's failings.

Ideally, all three should go at an instant. However, we are grateful that Rafa is gone for now. He was the one responsible for our dismal showing. After 6 seasons in charge, we are a team still relying on 2 men. We have a squad worse than when he first came. So much for Rafa being a genius!!!

Sadly, people like you are the ones bringing down this great club with your blind faith in the manager.

Of course you lot are forever in denial because you simply refuse to believe the truth. Instead you rely on people like Tomskins.

All said, good riddance to Benitez. He'll no longer be with us to further damage the club. Not all the problems are solved but one of the major problems is solved.

So have you stopped supporting LFC now that Benitez is gone?

Khan said...

It is you who is stubborn, not surprising here because you gobble up the shitty journalism from lazy journalists that is thrown at you. You have failed to do enough research and I can also see from your comments that you do not really read enough to give a credible position. I also suspect you do not know much of the current issues at LFC and what is really going on. Either that or you are just a plain non-supporter of LFC who is here just to ruffle some feathers.

You last comment here shows precisely how you are lost. You say of 3 people that needed to go but you fail to realise how the whole board is killing the club slowly. You believe the lies thrown at you in the media, namely a former player's comment, about Rafa leaving a team worst that the one he took over six years ago when 13 players from the squad we have at LFC are at the World Cup, which is a fact. Now, should I believe you and the media with an agenda or should I believe my own senses based on what I have seen and seeing?

You can say what you want about Tomkins or of anything about LFC because it is your prerogative, but sir/madam, your opinion doesn't really interest me at all now since you have and are still refusing to be educated at all. Since no amount of reasoning could ever reach your goodself, it is better if you go ahead and support LFC in your own way and I will do it my way.

Anonymous said...

It looks like you are the one who conveniently choose not to believe the truth.

in your defence, you state as if we are so gulible to believe the media and that we havent done enough research on the state pf position LFC are in.

I am shocked that we have such a narrow minded people who claim to be a fan of LFC.

There is enough reason to believe that you may not be a true fan of LFC at all but rather a fan of Benitez. If that is the case, we feel really really sorry for you.

Our advice is if you persist with your support of Benitez, go ahead and join him at another club.

In LFC, we trust.

Anonymous said...

Cmon la, Mr Khan....

Benitez is a failure and will never be LFC's saviour.

You are deluded if you think that Benitez is the angel among the evils and that he could stand up against the owners.

I'd advise you to have some faith in LFC. Do no believe all the doom and gloom spewn out by the prophets of dooms and the wannabe journalists.