Tuesday, June 29, 2010

Good Article on Gloom on LFC

Fans forgotten, troubles extended

Posted on May 9th, 2010 by Andy Heaton

By Andy Heaton and Jim Boardman.

Fears amongst Liverpool supporters that the appointment of Martin Broughton was little more than a ploy to buy more time from the banks certainly won’t be eased following Sunday Times revelations that the latest loan extension from RBS was for a full 12 months.

New chairman Broughton was ostensibly brought in to facilitate the swift sale of the club, a sale in his words that should be completed in “a matter of months”. If fans believed him (and a few did for a short time, until reality slapped them in the face again) there’d have been something to finally celebrate in a season no Liverpool fan has enjoyed. But the likelihood of that happening at Torres speed looked extremely slim following a report in the Wall Street Journal claiming Tom Hicks still expected the club to sell for up to £800m. That was before the Reds’ accounts were sneaked out last week showing overall debt of a staggering £473m and dashing supporters’ hopes of an end to this torture yet further.

To now find that the bank gave the owners at least 12 months to find a buyer who was willing to not only pay that outrageous asking price but to deal with that frightening debt leaves fans with heads in hands convinced there is no end to this nightmare. Have the owners persuaded the bank to stay off their backs long enough to see if the world markets recover?

The accounts showed the majority of the Reds’ debt was to the bank – an overall £238m outstanding but with a facility to increase that up to a potential £297m. Overall the club found itself hit with a £43m bill for interest during that year ending 31 July 2009, making an interest bill totalling £76m for the past two years alone. To put that into perspective, when Liverpool announced details of a 60,000-seater stadium in 2002 the whole cost, of the whole project, was estimated at between £60m and £70m. In two years the club has paid more in interest than that stadium would have cost to build.

Staying on the subject of the stadium, despite it still not actually existing, it’s costing more and more money every time another set of accounts is sneaked out. This time another £22.3m went into what remains a figment of a Dallas architect’s imagination. Shovels never went into the ground, “large swimming pools” never started to take shape, but Liverpool have so far thrown £45.5m at a stadium that might never be built. The last attempt at building a stadium resulted in the club writing off £10.3m for the abandoned plans inherited by the current owners, bringing the money wasted so far to £55.8m.

Fans are understandably angered at these figures. £76m in interest for two years, £55.8m spent on a stadium yet to even have one ounce of steel bought for it, a total of £131.8m spent by the club since the new owners came in on the very thing they were brought in for. And they’ve not it brought it. They’ve just taken.

Coincidentally that pretend stadium figure is very close to the amounts the owners had claimed they’d put into the club so far out of their own pockets. Co-owner George Gillett Junior was recorded speaking to a supporter late last year about the state the club was in and claimed that he and his partner had put £128m in. It wasn’t all he claimed.

It’s common knowledge, recorded in legal documents, that the two owners borrowed the money to buy the club, a total of £298m was made available to them. But Gillett likes his fairy tales: “When we bought the club it was with our own money. Cash.” That comment alone was astounding, even by Gillett’s standards.

Twelve months later and that loan needed to be refinanced but – Anfield Road believes – Gillett’s financial situation wasn’t quite as rosy as he’d said when that first loan was taken out. One of the sticking points in getting it refinanced was that Hicks was no longer keen on signing a finance agreement on a “joint and several” basis and so began a feud that still hasn’t ended. The refinancing went through eventually with all but the initial purchase price put directly onto the club.

This half of Liverpool’s ‘Brothers Grimm’ continued with his stories: “The club is extraordinarily good financial condition. Far better than United, Chelsea or Arsenal. We have put more money in than anyone, more than Man City with the craziness they have got.”

If you hadn’t heard the recording yourself you’d assume this was all made up by someone out to smear Gillett as a madman, so wild were the claims. But he made it all up himself. And he wasn’t finished: “The vast majority came from Tom and me and our personal cash, not the club, not from borrowings.”

It wasn’t his only gem: “If I told you that Arsenal by law cannot spend as much as we do, United cannot spend any more than we can, would you say we are under spending? We didn’t do what Man United did. They took all of their money from the player sale and owed so much money they had to use it to pay down the debt.”

Even when he eventually got something right he made it wrong: “We have put £128 million in to buy players on top of what’s come in in the last 18 months.”

Even Rafa’s most loyal supporters would struggle to accept a season like the one now ending had he been given £128m – plus the money coming in from any sales – in the space of 18 months. Most of that money went on appeasing RBS by reducing some of that debt.

A few months later the Managing Director Christian Purslow backed up Gillett’s claims about the owners’ investment into the club. He told Spirit of Shankly that “last summer [2009] a large amount of debt was paid off by the owners personally. At the same time, they having by then invested some £130m, it was agreed we would fund our transfer spending for the time being out of our own resources.” Let’s repeat again, they’ve not thrown anywhere near £130m of their own money into the pot for transfers.

The £130m shows up in the Reds’ accounts as £145.3m, but it shows as a debt. , they didn’t put the money in as equity. It’s a loan from Kop Cayman, the overseas parent company, and for all we know was borrowed by them from some other source somewhere. However they got hold of it, they charge the club 10% interest on it. And with none of the interest paid so far, the debt is growing at a sorry rate, hence the reason the £130m is now £145m.

Is there anything else the club could use the odd £15m for? Players, perhaps?

Whilst the headlines of the last few days have again been dominated by Hicks, Gillett, Broughton, Purslow, part sales, full sales, boardroom showdowns past, boardroom showdowns present, transfer spend, ins and outs but a distinct lack of Sheikhs about, the only ones seemingly not worthy of a mention are the ones who are really financing this whole sorry charade; not the banks, not the owners, but the fans.

Any deal that has the potential to keep afloat the bankrupt regime of George Gillett and Tom Hicks can only be described as horrifically bad for the real custodians of the club as they are consigned to yet another season of soul-destroying stagnation on the pitch.

In the vast majority of other businesses, such disdain for the paying customer and corporate rape would have seen a company fail long ago, as customers took their “business” elsewhere but, as we have found to our considerable cost, football is just not “any other business”.

The emotional blackmail of giving up on something that has been part of your life, and has given you so much for so long proves too much to bear, as we pay hand over fist for our season tickets, Sky and ESPN.

We are the marketing man’s wet dream, the ultimate brand devotee, and don’t those at the top just know it?

It’s hardly as if we are going to write a strongly worded letter to the customer services manager threatening to start watching Everton is it?

How they must laugh as we pay our £38, are told to sit down, shut up and that we mustn’t protest; not that it matters though, because they’ve had our money anyway, and like a victim of systematic domestic abuse, we always come back for more.

And remember, that is OUR £38. It’s not a £38 that we borrowed off somebody else, to be paid back by somebody else, with us making a nice profit out of it having never even stuck our hands in our pockets. We made sacrifices to find all those thirty-eight pounds. Like we make sacrifices if we decide to buy our children all three of the brand-new kits that will be out in the summer. And for some fans you’ll need to multiply that £38 by at least ten, because that’s the kind of money it costs to buy the ticket along with a £50 hotel room from Thomas Cook, the club’s official touts.

Of course, families like the Hicks’ and the Gillett’s wouldn’t get where they are in the world without trampling on a few (thousand) people along the way; it’s extremely doubtful we are the first or that we will be the last victims of these particular snake oil sellers.

We should have seen them coming, and undoubtedly we won’t be so easily fooled again, but ultimately, we are powerless to make a tangible difference, despite the admirable efforts of Spirit of Shankly and a handful of clever, resourceful and determined individuals who have, at the very least, been a major irritant to those guilty of tarnishing the name of Liverpool Football Club.

Change will only occur when they either find someone who is willing to pay the vastly inflated asking price for a struggling business or the Royal Bank of Scotland decide to step in a put a stop to the corporate abuse of England’s most successful football club.

Wachovia are no longer involved with Liverpool Football Club, charging LFC £3.6m to be freed from existing agreements before RBS quite willingly assumed their £60m+ exposure last summer.

George Gillett quite happily dismissed the spending of some Spanish clubs: “That money is all borrowed from the government,” he said, criticising the practice. But RBS are now publicly owned and the fact they continue to support, nay, encourage the current owners of LFC is a stunning indictment of just how much risk banks will take chasing the mighty dollar, how little they have learned from past misdemeanours and exactly what they think of the people that had to bail them out to the tune of £45.5 billion pounds.

A bail out that that was down to, in the main, irresponsible lending, twisted accounting practices and greed.

Sound familiar?

Article from: (http://www.anfieldroad.com/news/201005093636/fans-forgotten-troubles-extended.html/

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