Parry: We shook hands to sell Liverpool FC to Dubai - but they'd have been a disaster too
12:18, 16 OCT 2015
BY ANDY KELLY
George Gillett and Tom Hicks arrive at Anfield, with Rick ParryGeorge Gillett and Tom Hicks arrive at Anfield, with Rick Parry
Former Liverpool FC chief executive Rick Parry has revealed in detail how wavering in Dubai allowed George Gillett and Tom Hicks to begin their disastrous stewardship at Anfield.
This week marks the fifth anniversary of a High Court judge ending the Hicks and Gillett era at Liverpool Football Club and the stewardship of Fenway Sports Group beginning.
But how did they get there in the first place?
Parry, who was Redsâ CEO from 1998 to 2009, has spoken of how then-principal LFC shareholder David Moores shook hands on a deal with Dubai International Capital (DIC) but was eventually forced to walk away from it.
It was the arrival of Roman Abramovich at Chelsea and the need for a new stadium generating significantly improved levels of revenue that had convinced David Moores that outside investment was needed into Liverpool.
And Parry himself was always keen that Dubai was the place to look for it.
Parry said: âI was always keen on the idea of investment from Dubai, on the basis Iâd been there a lot, I knew quite a few people there, quite a lot of the high ranking people there, within the Jumeirah Hotels group for instance, were big Liverpool fans.
âEvery time youâd visit Dubai it had changed, theyâd built half a city, so you think these are the kind of people that get things done.
âAnd we had quite a few false starts with people claiming they could introduce us to senior Sheikhs and it turned out they couldnât and mythical interest.
âIt wasnât that uncommon to go for two days and come back not having met anyone at all. We spent so much time kissing frogs and wasting time.â
We first met DIC in Istanbul
It was Liverpoolâs famous Champions League triumph in 2005 which allowed the club to solidify interest from the Middle East, says the former Anfield supremo.
âOne of my very good friends was going to come to the Champions League final in 2005, but couldnât get his son out of school and asked âwould it be OK to give my ticket to the guy who runs DICâ?
âI said absolutely, he sounds like just the fella we ought to be meeting. I made contact with him in Istanbul. The thing that was always a concern with DIC â and this isnât just with hindsight, it was a concern at the time â was that the amazing thing about Dubai is the speed with which everything happens and the breath-taking pace with which the city is transformed.
âBearing in mind the first conversation was in Istanbul, we were still negotiating with DIC in February 2007. And if thereâs real commitment from the top in Dubai things donât take that long. Theyâd come, then theyâd go, then theyâd come back again with a slightly different deal and then theyâd go again.
âBy December 2006 when they finally come back and say âhereâs a dealâ and David said itâs acceptable, theyâd been working with us for 18 months.â
The need to work in the January transfer window of 2007 as well as progress the stadium meant Liverpool were keen for DIC to increase the speed at which they were moving.
We needed steel for the stadium and to act in the transfer window - but DIC still wavered
Parry said: âWe accepted their bid early December (2006) and we said thereâs a transfer window coming up, there is steel to be ordered for the stadium, this all has to be signed, sealed and delivered by the 31st of December.
âYou canât possibly need much time for due diligence because what else is there to do, youâve been pouring all over the club for 18 months, you've got all the financial models.
âThey said that would be fine. As we now know, we then got into February, weâd missed the transfer window, and weâd got really exposed over a steel order.â
The Liverpool board was frustrated and becoming increasingly anxious about whether DIC would move forward at the necessary pace.
Parry recalled: âWe had a board meeting in late January 2007 and â it sounds crazy now â but we were racing to get the stadium built, delivered and in place by 2009 and of course, thereâs a real critical (time) path to do that.
âAnd if we were to have any chance of hitting the close season, we were told we had to order the steel, about ÂŁ10m worth, in the January. And still DIC hadnât completed.
âAnd we spoke to their number two guy to try to push things along. We said âweâve got a board meeting, we need to discuss the steel order, whatâs the board to do about the steelâ?
âAnd he said âweâll underwrite it, donât worry, go ahead, order it and tell the board that DIC is underwriting the steelâ.
This wasn't feeling like Dubai and David Moores had to lend us the money to buy Dirk Kuyt
âThen literally the next day the boss of DIC says he had no right to say that. And you think, âhang on thereâs got to be a degree of good faith in this, what is going onâ?
âWeâve placed the order, weâre exposed and youâre saying we had no right to do it and the deal still isnât finalised.
âBearing in mind the pace of Dubai, the growth, the amount they invest when they want something to happen, this wasnât feeling like Dubai and also youâre starting to think if itâs like this before the dealâs done what will it be like afterwards.â
The questions were mounting up about the DIC bid and Moores was forced to dip into his own pocket for players.
Burj Dubai, the world's tallest building, seen at centre, in Dubai, United Arab EmiratesBurj Dubai, the world's tallest building, seen at centre, in Dubai, United Arab Emirates
âWe were missing the transfer window, weâve got David (Moores) literally lending the club the money to buy Dirk Kuyt to keep us going and there was just something about it where everyone was thinking this is not feeling right.
âWe had a board meeting at West Ham away. The very strong feeling of the board was âenoughâs enoughâ. Weâd said the 31st of December was the deadline, we missed that, we missed 31st of January.â
The Liverpool board had originally rejected George Gillett in favour of the sovereign wealth of Dubai but he returned with what appeared an improved offer.
The board felt DIC had been given long enough
It was considered by a board that included Moores as its chair, Rick Parry and Les Wheatley as the working directors, Terry Smith, a representative of shareholders Granada and director Keith Clayton, as well as lawyers and financial advisors from within the clubâs professional team.
Parry said: âGeorge Gillett, whoâd weâd rejected in December, hadnât gone away. Heâd taken on board some of our concerns â sadly â about him alone up against the riches of Dubai.
âSo heâd come back in with a stronger and wealthier partner â we all know who that was â and ostensibly more money, more money available for players, an absolute commitment to developing the stadium.
âAnd the very strong view of the board was weâve got to go with this one, DIC have had long enough.â
Yet even then David Moores did not want to walk away from Dubai, insists Parry.
David Moores and George GillettDavid Moores and George Gillett
âThe dissenting voice was actually Davidâs, because his view is once heâs shaken hands on something heâs committed to it and he wasnât going to let that go lightly and obviously he was the majority shareholder.
âThe strong view of the non-execs, the professionals, we were pretty much united in the common sense view that the DIC deal doesnât seem right. But Davidâs view was that âIâm shaken hands, Iâm not going to be rushed, I want 48 hours to sleep on itâ.
You're not going to blackmail Liverpool Football Club
âI went to Davidâs house the following morning with Keith Clayton and he said âweâve got to let DIC know whatâs happeningâ. And he phoned Sameer al-Ansari (chair of DIC) and David said âlook Samir weâre in a bit of a mess, everythingâs gone pear-shaped, youâve missed deadlines, thereâs a strong view on the board that we need to go in an alternative directionâ.
âHad I been Sameer Iâd have said âDavid Iâll be on the next plane we can sort this outâ. Sameerâs response was âif you donât commit to DIC by 5pm today, weâre walking awayâ. David then says âyouâre not going to blackmail Liverpool Football Club. No-oneâs going to treat us like that, weâll call your bluff.
âIt was that that pushed David in the other direction.
âThe other problem weâd had with DIC was this article that had appeared in the Telegraph a few months before that theyâd been touting the deal around the City Of London as a leveraged buy-out which frightened the life out of David, understandably, because it was completely at odds with what weâd been expecting.â
The problems with the Dubai deal now sent Liverpool towards George Gillett and his new partner, Tom Hicks.
George Gillett and Tom Hicks at Liverpool FC back in 2007. Picture by Andy Stenning
Parry said: âGillett weâd known for many months, weâd been over to Montreal and spent three or four days with him.
âAnd the interesting thing about George when we went there was he said literally âhere are the keys, wonder round, go and talk to whoever you wantâ. We talked to the sponsors of the Montreal Canadiens who were a major Canadian brewery, he brought the commissioner of ice hockey to one of the games and left us with him half an hour to talk through whether this guy was a decent owner.
The idea we didn't Google Tom Hicks is ridiculous
âThere were literally no constraints, that was fairly convincing. The idea (from some fans) that we didnât Google Tom Hicks is faintly ridiculous. Of course we did, we were aware of a lot of the history of his involvement with Corinthians in Brazil where if he made a mistake it was in investing too much money which wasnât the worst sign.
âAnd bear in mind we had our financial advisors and lawyers who were doing due diligence, we had their financial advisors and lawyers, we had the statements they made in the offer documents which went to (Liverpool FC) shareholders, the guarantees that they werenât going to base the deal on debt, it was all going to be family money.
âAt the end of the day if people donât tell you the truth thereâs a limit to what you can actually do and itâs all easy to look back with hindsight and say âhe didnât tell us the truthâ but you tend to take things at face value particularly when they are underpinned by your whole professional team who are talking to their professional team, financial advisors who are giving all the assurances and weâve got the certificates of all their assets.â
Parry rejects any suggestion that Liverpool were suffering negotiation fatigue after various possible deals had possibly arisen and then fallen through, including the likes of Thai prime minister Thaksin Shinawatra and Redrow founder and Liverpool shareholder Steve Morgan.
Redrow founder and Liverpool entrepreneur Steve MorganRedrow founder and Liverpool entrepreneur Steve Morgan
âIt took us just two meetings to realise Thaksin Shinawatra wasnât real. In 2004, David with great sadness and reluctance had actually agreed the deal with Steve Morgan, then it went into due diligence. David had shaken hands and resigned himself to it, but on the back of the due diligence, Steve tried to reduce the offer and David said âno, Iâm shaken hands on a deal, Iâm not accepting a lower offerâ and that was the end of that one.
âWe spent six months getting to know George Gillett, our professional team had vetted him. Clearly there was a need for a degree of speed, the desire to get the stadium funded and given the commitments they gave to funding and building the current design, it all sounded good.
âAnd it was a fairly careful analysis, he wasnât rejected out of hand at the beginning, he was a credible individual but it was felt a Sovereign Fund with deeper pockets was a better deal than one individual.
âThere were highly respected business people who we worked with saying you canât deal with faceless organisations, itâs better dealing with entrepreneurs, this (Hicks and Gillett) will be better for the club.â
The deal with Hicks and Gillett was finally agreed but Parry said his alarm bells were ringing even before they were unveiled at Anfield on February 6, 2007.
âIt rapidly became clear (the problems). It was actually day minus one, even as we were planning the press conference. We were looking at the running order of announcing the deal.
âWe thought weâll have George going first. But Tom just said âIâm going first or Iâll never get a word in edgewaysâ and you think âmmm, interesting.â And then in pretty short order after that we have Tom Hicks saying âweâre not building that stadium, weâre starting all over againâ despite the assurances about spades in the ground.
Press conference to announce sale of Liverpool FC - from left, George Gillett, Rick Parry and Tom HicksPress conference to announce sale of Liverpool FC - from left, George Gillett, Rick Parry and Tom Hicks
âSo it wasnât long before it was clear the two owners were not at one. And if youâve got two 50/50 owners who are not at one, thatâs not a recipe for harmony or success.
âWe could have decided weâre not doing a deal with anyone but then weâre right back to square one.â
The pair had also used borrowed money to finance the deal â effectively leveraging the cost against future profits the club would make to pay it off.
And Parry believes the ready availability from the banks of such finance was at least in part to blame for the terrible mess Liverpool Football Club later found itself in.
âWithout question, banks lent money too easily. I remember Stephen Hester, chief executive of RBS, coming up to Liverpool. This was several years later and he came out with the brilliant phrase, âwith hindsight some of our borrowers borrowed too muchâ and you think âhang on isnât the right phrase we lent them too muchâ. Why wouldnât they borrow too much if youâre irresponsible enough to give it to them.
I wish we hadn't done it but you can only go on the information at the time
âFor me Hicks and Gillett has to be the classic example of that. At the end of the day, football doesnât really lend itself to highly leveraged buy-outs. Anyone could see that. Itâs not like buying Weetabix, whatever Tom Hicks might say.
âItâs the easiest thing in the world to say we shouldnât have done it â and I wish we hadnât â but you can only evaluate by looking at the information you had at the time, not on what has happened since.â
Former Liverpool chief executive Rick ParryFormer Liverpool chief executive Rick Parry
While Parry deeply regrets the decision to sell to Hicks and Gillett, he believes DIC would have been just as disastrous.
âI dearly wish that the rulers of Dubai had been committed to the project. We flew out to Dubai around October (2006), ostensibly to meet the Maktoum family, and low and behold we didnât meet any Maktoums. And David got really cold feet about DIC.
âTo say we should have gone with DIC is complete and utter nonsense, that would have been a disaster too.
âDIC as a vehicle has imploded since.â
http://www.liverpoolecho.co.uk/sport/parry-shook-hands-sell-liverpool-10272793?