Liverpool FC in severe financial trouble

Our hope is for the Indian GMR to buy the club..

We're fu**ed.

All it needs is the Yanks to declare bankruptcy and then any hopes of number 19 are runited.

Get out of our club the pair of you. Absolute cu*ts.

Someone will surely buy the greatest football team in the world though?

What's worrying me is that if Rafa is only being given minimal transfer funds, then all his targets will be out of reach.  Can Rafa walk out on his contract ?  I know it would cost money, a lot of money, but he must be sooo angry right now, just like the rest of us.

He won't walk.

He's got the fight and determination to keep going.

He cares about the city, the club and the history of the club. He cares about anything to do with Liverpool Football Club.

Shame the two tw*ts in charge don't.

He won't walk.

I agree, I'm sure he was fully aware of the dire financial straits the club is currently in prior to signing his new contract. If he wanted to walk he would have done it already.

Even though this looks terrible, I'm hoping that they will sell up to a much better suited and caring owner who will give the fans what they want, some dedication.

They have until July is it?... They must look for a buyer for that time surely...

The yanks will be forced to sell LFC by middle of next month in order to pay their company’s debts or the RBS bank will put the club under administration

The banks will try, or either have an obligation to try make them find a possible takeover bid before the thought of administration.

Our hope is for the Indian GMR to buy the club..

Well we've had the cowboys so why not now the Indians.

Why would they and why would RBS force them they are making £36 million a year off us and as long as we qualify for the Champs League we will be able to pay them interest repayments, the Yanks are holding on hoping the worldwide recession resides so they can take ever more loans saddling us with more debt.  If they ever manage to build the stadium they know our value may soar. They know our potential that is why they are holding on.

Now would be the perfect time for a take-over / buyout move from a financial big hitter ! with the club finances all over the media i think if the middle east consortium came back to the table they could take the club over and sort out the finances ,it's become clear the two yanks are greedy people who don't give a toss for the club or the people involved with the club ,players or supporters ,until this is sorted out then we cannot enter any transfer market or retain all of our stars ....wouldn't be keen on another american tbh these two clowns in charge put me off that

Let's have a look back to around this time last year. 10th June 2008:

Reckless Americans Bleeding Liverpool Dry

http://www.anfield-online.co.uk/lfc-news/2008/reckless-americans-bleeding-liverpool-dry/

Kop Holdings, the debt laden company set up by Hicks and Gillett which effectively owns Liverpool Football Club, has published details of its accounts for the first seven months of the new American regime.

The figures which only go from December 06 (takeover date) to July 2007 (nearly one year ago) make disturbing reading.

The two owners themselves cost Liverpool FC a staggering £1.5 million in travel expenses and legal costs (you don’t expect them to pay for those flights themselves do you?!) Liverpool had to shell out another whopping £10.3 million on the failed first stadium design.

Of the £1.5 million, around £1.15 million was spent by Gillett, with the other £300,000 spent by Tom Hicks.

In the year to July 2007, a year you may recall that saw Liverpool participate in the Champions League final, the club made an astonishing LOSS of £32.3 million before tax.

Nearly 18 months have passed and the stadium construction that the Americans promised to begin ‘within six weeks’ is still waiting.

Liverpool will now have to find £30 million a year to pay back interest on the huge loan that the Americans have taken out to try and make their money out of the club.

Liverpool FC is being bled dry by two men failing to act as ‘custodians’ of the club.

The disgrace continues.

We will go down an even worse road if these two carry on with their grasp on our club.

It's clear that even if the banks want to carry on financing these two owners, the owners simply wont be able to carry on because the more the banks sanction the finance, the more the terms of the finance will get stricter and will involve them putting more of their own cash in.

This is getting on my nerves,

They're living on borrowed cash, running the club with virtually nothing and just saddling debt onto the club.

And all these started from Liverpool 'fans', Moores and Rick.

Make the right decision will you the both of you. Rick, I know you let them in because they offered you a 500,000GBP bonus. Glad to see the back of you, you'll never be welcomed here back again!!

And to the yank tw*ts, out NOW!!

http://www.youtube.com/watch?v=kVB3SnX1MLc

They don't care about Rafa,
They don't get about fans,
Liverpool Football Club,
Is in the wrong hands

http://www.youtube.com/watch?v=G0OFAXPyBO4

Get out of our club,
Get out of our club,
You lying bas**rds,
Get out of our club.

http://www.youtube.com/watch?v=VGJEBwqydeE

Gillette & Hicks, are full of sh*t
Gillette & Hicks, are full of sh*t
they're full of sh*t, sh*t and more sh*t
Gillette & Hicks, are full of sh*t.

Get out of our club
get out of our club
you lying bas**rds
get out of our club!

what do we want? YANKS OUT
when do we want it? NOW.

They just care about money
they don't care about fans
liverpool football club
it's in the wrong hands

Recent articles in the British media, with their stupendously immature financial analysis have been linked on our boards and reading through these threads, it strikes me that majority of the supporters are very concerned about the financial future of Liverpool FC.

I wanted to make a thread explaining, both some inaccuracies in the above reports, as well as my opinion, as to where we stand.
Disclaimer: I am not a Liverpool FC insider; hence all the 'facts' below are based on publicly reported data. I merely am analyzing and presenting some opinions that I feel the supporters of our great club, deserve to know.

"The parent company of Liverpool FC, owned by Tom Hicks and George Gillett, lost £42.6m in the year to August 2008."

So what? Loss as reported for tax purposes reflects very little about the club's or the holding co's actual operational ability. Sure, profits would be very welcome, but it’s NOT at all unusual for holding companies, created especially for Leveraged Buyouts (LBO), to avoid any tax payments.

What matters is Cash and one would expect that since Liverpool FC as a club reported '£10.2m pre-tax profit' it clearly indicates that the club had all the cash it needed and more i.e. Cash profit is never reported in filings, but is the key to operational welfare of any entity.

Accounting Profits take into account 'Depreciation' (of assets), a NON-cash expense. Hence, it means nothing when its reported that the holding company has reported a loss.

All business entities generate Cash and then owe that Cash to three parties - its Equity Holders (i.e. shareholders, in the form of dividends), its Bond holders (or debt holders e.g. banks, in the form of interest and debt repayments) and the Government (in the form of taxes).

I don’t understand! The owners are sucking my club’s wealth dry!

They’re actually not. Theyre merely doing what every single Private Equity shop in the world does i.e. use debt to buy firms, use the firm’s ‘free cash’ to repay the debt, then sell the firm for a profit. If they can ‘operationally optimize’ the club along the journey, that’s a bonus. This is a classic LBO.

The principal behind an LBO is to ascertain the cash generation capability of an entity (in this case LFC), and then accordingly value the firm (with various financial models, e.g. 'Free Cash Flow' and 'Discounted Cash Flow'). The magic of the LBO is that prospective acquirers don’t pay a PENNY from their pockets. The acquirer simply 'levers the acquired entity' i.e. Hicks and Gillete walk into a bank, raise the 300M required to acquire LFC and use 100% debt to buy the club (using the club's cash generation to repay loans and the club's assets as collateral).

You and me could form a holding co. and do the same, theoretically. The difference being, that when we walk into a bank, they will laugh us out the door. But Hicks and Gillete, apparently, experts in 'sports management', a background in managing franchises and a financial history, obviously can raise this debt.

So they did and they bought the club and then use all the 'Free Cash' generated by LFC to 'service this debt' (i.e. pay the interest and principal repayments). This is nothing to be suprised about. Since 2007 the world should’ve expected this to be the modus operandi at LFC post the LBO.

"Annual accounts for Kop Football Holdings show how much money is being drained to service the costs of the parent company's loans - with interest payments accounting for £36.5m of Kop's losses"

The above is mere sensational reporting and again, as explained above, should be expected since the 2007 acquisition.

When the 36.5M Interest is paid, rest assured its the 'Free Cash' generated by the LFC and this INCLUDES all the expected CASH expenses a club endures during the year - from wages, transfer, maintenance etc. (as per whatever ‘business plan’ was presented in 2007 pre-acquisition. So e.g. if the plan outlined 30M cash each summer for transfers, that’s what Rafa gets each year + anything from player sales). Hence these reports should have NO impact on Rafa's transfer dealings on the club's regular operations over the year.

What does this mean for the fans?

Not much, except, the new stadium will NOT arrive till we have new owners. Why? Because H&G planned to raise even MORE debt to finance the stadium. But since the economic meltdown around the globe, with collosal defaults, the risk of debt has soared, and hence the willingness of banks to issue new debts has dipped, while interest rates on loans have soared.

Then there is the issue of debt repayment. Each debt has two portions, interest and principal. How much of each has to be paid, at what time, depends on each individual deal between the banks and the borrowers. H&G use LFC’s ‘free cash’ to pay off the interest, but I would assume , are not being able to pay-out the principal, the first of which is due very soon. I expect a refinancing deal to be struck soon or for some entity to pick up minor equity at LFC and provide the owners with the cash to pay the owed principal.

Apart from that, these recent reports should have no bearing on the operations of LFC. Expect business as reported i.e. Rafa has a set transfer kitty and any spends over that require him to first sell, then buy - just as has been reported in the past months.

H&G will NOT sell LFC until the entire point of the LBO is achieved i.e. make a handsome profit. Its usual practice to lever acquired entities for 5-7 years, repay the debt and then sell them for a large profit. Hence, I don’t see H&G selling LFC unless this ‘large gain’ is to be had. How large is obviously anyone’s guess – I would wager a min. return of 15-20% i.e. for about 600-700M in the next 12-18 months.

The Bottom line

Yes, new owners, with more wealth would be welcome. We could start building a new stadium that competes with the 70,000 seater at OT and Real. We would sign more than one 'Torres quality' (i.e. 25M+) player in 2 years. Despite both of these luxuries we still pushed MU to the last few games this year, with far lower debt, a far lower wage bill and far lower transfer spends. Thats the talent of our Manager and our wonderful team.

I just wanted to explain that there is no cause for ‘new’ concern. These reports are typical, ill informed, immature, sensational British journalism - based on incomplete financial data from a year ago, analysed by someone who doesn’t know the difference between A and B. According to me, life and mood at LFC should be the same, as it was 1 week ago.

Good reading.

Its time for them to sell up and get the f~@k out!

The article Resilvo did quote just showed how damn stupid Liverpool was to get in touch with these two American fellows. Ok, just for you, retarded LFC management: WE DON'T NEED BUSINESSMEN TO TAKE OVER OUR CLUB THAT TRY TO DO BUSINESS WITH THE CLUB, WE NEED BORED BILLIONAIRES LIKE ABRAMOWITSCH THAT JUST PUMP BIG MONEY INTO THE TEAM

I tell ya, ManU catched up with us  because they were just smarter over the last decade...sounds tough, but that's a fact.

WE NEED BORED BILLIONAIRES LIKE ABRAMOWITSCH THAT JUST PUMP BIG MONEY INTO THE TEAM

That's why we finished above Chelsea?
That's why we Man City achieved F**k all?
That's why Villa fell behind Arsenal and Everton?
That's why QPR didn't even make the play-offs in the Championship?
That's why Newcastle went down after the money they've spent?
That's why Sunderland's huge summer spending spree saw them just avoid relegation?

Huge billionaires don't mean success. What we've done under our current owners proves that. What we're lacking is consistantcy and no billionaire owner can buy that.

Top class mate, you said everything needs to be said. Let's hope these yank tw*ts F**k out of our club before our situation goes beyond repair.

Anyone willing to start a petition to kick the fat wankers and Rick out??

Rick is out now so he'll be better off f**king elsewhere. But now the two pricks, the fat tw*ts are an absolute disgrace. Fans of this club? Kindly f**k off, we dont need fans like you, bringing shame about you and the club.

Disgraceful, and the f**king yanks dont see it themselves. Just for his f**king pocket Rick, you choose money than the lifelong future of Liverpool FC. That is why our finances are in dire straits, cu*ts like you that ruin the glorious club for choosing buyers like these.

Get out, we'll shut the door onto you and you'll never be back. Simple.

I get your point. Yeah, money isn't everything. But when you have money, good players and a good coach like Benitez, Fergie or Wenger or Hindick THEN money makes the difference. Villa, ManCity and others just get the money but don't have the personal to make things happen...we would have...give Rafa 100 IMO. to spend and you have a triple the next year!

What we're lacking is consistantcy and no billionaire owner can buy that.

More consistancy = better players => to get them resp. not to take high risks every year in buying average guys in hope that they break through as stars we need more money.

What we're lacking is consistantcy and no billionaire owner can buy that.

Pippen has a point.

What we're lacking is consistency, yes, but we're also lacking strength-in-depth - billionaires can buy that.

Besides, I'd do anything to get rid of these yanks.

Pippen has a point.

What we're lacking is consistency, yes, but we're also lacking strength-in-depth - billionaires can buy that.

Besides, I'd do anything to get rid of these yanks.

Strong squad depth breed consistency. Billionaires buy squads, managers create depth. We had sh*te managers before Rafa, and then sh*te owners when Rafa is here. Cant things proceed smoothly for our next title? All these news just had to happen when we're becoming consistent, playing beautiful football and looking to wrap up our next title in 12 months' time.

I dont think its respectful to a manager who won 5 trophies in one year to call him sh*te.Before him Roy Evans produced a team playing fantastic attacking and flowing football.
We missed the boat with DIC and now quite frankly we are stuck with these 2 as they will refinance as LFC is a world wide profitable expanding brand. Sadly there is nobody on the Horizon with the type of cash we need and I just hope we dont get sucked into a "anybody but Hicks and Gillette mode" as we could end up being even worse of if we are not careful .These are worrying times for all of us and there is little we can do to help now its all out of our hands and thats the most depressing thing of all.

What we're lacking is consistency, yes, but we're also lacking strength-in-depth - billionaires can buy that.

That's the same point I've been making for years on here.

I appreciate that you don't win trophies by throwing money at just any club. You need the right manager, the right personnel behind the scenes, good tactics, even a good old-fashioned bit of luck now and again. Success has a lot of different factors, but in this day and age, money has it's place whether we like it or not.

It has been proved that with an excellent youth academy and scouting system young players can be bought cheaply and millions can be saved on transfer fees, but no manager can create an entire first XI and complete squad this way, it's not realistic. The manager still needs full backing in the transfer market, to make the correct signings at the correct price. Again, not silly money like Man City, but still tens of millions of pounds.

Much of this money could be raised through good business sense in marketing and sponsorship, and a new stadium would go a long way to bringing in more money through ticket sales. But even in the perfect system, investment in the continued improvement of a squad is essential, and we know the price of players at the top end of the market. And we haven't seen much of that business sense out of the owners so far.

We will be hard pressed to stay at the top if the current situation continues. We have an excellent squad, as well as an excellent tactical manager. But if he isn't backed up transfer-wise we will be struggling to remain where we are whilst other teams improve. After that, it's a slippy downhill slide and difficult to climb back up.

Besides, I'd do anything to get rid of these yanks.

Me too.

Get Gillett and Hicks out before our progress stagnates, never mind dropping down the table. I'd hate our excellent last season (in terms of progress) to be all for nothing.

How the F**k did the future go from being so bright to so uncertain in just a couple of days?