The ownership saga at Liverpool took another turn on Wednesday as reported in the Daily Mail. The search for new investment by American co-owners Tom Hicks and George Gillett is stalling leaving the club in a precarious position.
The banks that have funded the owners in recent seasons have demanded £100 million by the summer, resulting in the search for new investment. The owners have over-stretched themselves with the purchase of the Anfield club and as such can not fully afford and also are not willing to cover the repayments themselves. The brief given to Managing Director, Christian Purslow, was to find the £100 million to pay off the banks in exchange for a 25% share of the club.
Purslow is quoted in the Mail;
The £100m investment will be made by the issuance of new shares, and will not go towards anything else other than paying down the debt, reducing it to £137m. This new investment will also mean a dilution of the current ownership.
There are now around five or six potential investors with whom we are talking.
Purslow’s task however, as revealed in the disputed minutes of a meeting he had with the Spirit of Shankly (SoS) fans group, has proved a difficult one. Potential investors, who are aware of the American’s financial trouble, are holding out for a higher return for their money. They are requesting a 34% stake, becoming the majority shareholder at the same time.
With the difficulties faced by Hicks and Gillett and their unpopularity, it seems unrealistic that they will receive funding on their terms. Investors who have £100 million available are invariably fairly shrewd businessmen and can see a financial sinking ship in desperate need of help. Hicks and Gillett may be well advised to accept the investor’s demands and gradually cut their losses. So long as this handover is correctly managed, avoiding the perils of Portsmouth, then Liverpool fans will be pleased.
Despite constant claims to the contrary, the on field performances this season have been dire at times and the boardroom politics can not be healthy for Liverpool. The fans support of the team can never be questioned at Liverpool, yet a growing unrest has to be transferred onto the players to some extent. A serious worry for fans is that without new investment star players may need to be sold to help fund the banks. Fernando Torres could raise £30+ million, but a club of Liverpool’s stature should not have to operate under the guidance of a bank.
So long as the investors are thoroughly vetted and are bona fide then Hicks and Gillett have little choice than to accept their offers. If the American’s decide to hold out for a better deal then Liverpool fans will fear that they won’t have much of a team left by August 2010. After Liverpool’s best league performance in a recent memory last year, the legacy and potential of that team and Rafael Benitez is threatened by mismanagement in the board room, and a new investor will hopefully prevent such a fate.