Liverpool cannot afford to get this DEAL wrong

Amidst an initial flurry of activity on the takeover front, all seems rather quiet on Anfield as the Liverpool takeover rumours have appeared to have died down. This is because managing director Christian Purslow has taken time to consider the club’s options as any potential deal could be a pivotal one in the future of Liverpool Football Club.

Christian Purslow has been given the task of finding a buyer for Liverpool for want away owners Tom Hicks and George Gillett who have amassed a sizeable £273 million debt during their hugely unpopular tenure at the helm of the Merseyside club. In addition to these debts, the club also has interest payments totalling £40 million. Despite substantial profits from TV rights, merchandising and sponsorship money from Liverpool’s lucrative £80 million shirt deal with Standard Chartered, the income generated by the club is being used to pay off the interest rather than investing in the club.

With debt threatening to envelop the club, it is essential that Liverpool find a potential owner who is able to finance the deal without borrowing money and is genuinely passionate about the club; two things that current owners Hicks and Gillett were sadly unable to fulfil.

In recent weeks, there have been a number of candidates put forward by the media as being interested in buying Liverpool but the only one to have publicly confirmed his interest is Chinese businessman Kenny Huang.

Huang has reportedly tabled an offer in the region of £400 million for the club but there have been question marks surrounding his financial backing for the deal. Little is known about Huang’s fellow investors after Chinese Investment Corp (CIC), which is the Chinese government’s global investment arm categorically denied being part of Huang’s bid. Furthermore, there are uncertainties over Huang’s business credentials.

According to the FT, Huang’s CV isn’t as extensive as he claims to it be. His total investments so far amount to a minor league Chinese basketball team, a basketball magazine and two sports marketing companies and not the vast sports business empire that his PR people would lead you to believe. These uncertainties surrounding Huang’s business dealings are exactly the reason why Purslow and the Liverpool board are exercising their due diligence over any potential takeover bid.

Key factors in any bid would be to guarantee the clearing of all of the club’s debts, the building of a new stadium, along with assurances that resources would be put into improving the team. Liverpool were on the brink of losing star players Fernando Torres and Steven Gerrard after Hicks and Gillett’s broken promises of further investment in players that didn’t materialise. Current manager Roy Hodgson has shown his willingness to allay Torres’ fears in strengthening the team by signing Joe Cole and Christian Poulsen during the transfer window.

However, all of Hodgson’s improvements to the team would mean nothing if Liverpool found themselves in administration, a scenario made all the more possible due to Hicks and Gillett’s unrealistic asking price for the club. Hicks has put an estimated value on the club at £800 million; double what Huang is proposing and this disparity is threatening the progress of any deal.

Hicks and Gillett have been attempting to refinance their existing debt repayment with RBS to free themselves from the October 6th deadline to pay back their £272 million debt before the club falls into the hands of the taxpayer. Refinancing the debt would allow the pair to stay on past the October 6th deadline and possibly get more money for the club.

With so much at stake for Liverpool, it is vitally important that any deal that does go through is in the best interest of the football club.

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