Liverpool going bust ?

Covered End

From BBC site

Liverpool FC owners lose £42.6m

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

The loss was mainly due to the £36m of interest payments that Kop Football Holdings had to make to service the debt taken on to buy the club.

Its auditors warned that the need to refinance loans by 24 July cast "significant doubt" on the future of the group as a going concern.

But they added the club's owners were confident they would secure the funds.

The US owners bought Liverpool in February 2007, promising to build a new stadium.

Player sales

In their accounts, they say they are "committed to building a new stadium and actively seeking funding to complete the project".

But they admit that "the opening of the new stadium will be delayed until 2012".

The parent company's loss came despite the £10.2m pre-tax profit reported by the football club in the same period.

The profit was helped by increased television revenues and the sale of players such as Peter Crouch, John Arne Riise and Scott Carson.

The results for the parent company showed net debt on 31 July 2008 of £300m.

Oggy Red

Livepool £300 million in debt.
Accrington Stanley just £300k.

And it's Accrington who face the winding up order.

stonemuse

... and that says more about the state of footbal than almost anything!

addick1965

It sound crazy that Accrington could go under and Liverpool 1000 times worse off wont,but it's down to potential income and what the club have as assets etc i think it's been mentioned on here before somewhere.Still sucks though!

Ledge

We can but dream.

Aas Keegan would say - I would love it.

More chance of charlton winning the Premeier League though

ken from bexley

quote# 2
Livepool £300 million in debt.
Accrington Stanley just £300k.

And it's Accrington who face the winding up order........

2 clubs divides by an overdraft, and sweet FA else.

LenGlover

[cite]Posted By: ken from bexley[/cite]quote# 2
Livepool £300 million in debt.
Accrington Stanley just £300k.

And it's Accrington who face the winding up order........

2 clubs divides by an overdraft, and sweet FA else.

It is all a matter of to whom the money is owed.

I take your point though. The accrington thing is a disgrace.

BlackForestReds

[cite]Posted By: Oggy Red[/cite]Livepool £300 million in debt.
Accrington Stanley just £300k.

And it's Accrington who face the winding up order.

Yep, but Accrington can't service their debt or reschedule it. Liverpool can - for the time being, but their problem is that they have is that borrowed the money off RBS who are currently in no position to be in any way generous about re-scheduling the debt. If they do de-fault Liverpool will be sold and I think even in this climate quite easily, they have a big brand name and the company itself made a profit this financial year. The problem is paying back the interest on the loans and the two Yanks are not only not on talking terms with each other, but have very little capital to tide the club over unless they sell some of their US assets.

BlackForestReds

From the Grauniad:

Hicks Sports Group, had defaulted on debts of $525m (£325m), money raised against his US sports franchises, the Dallas Stars ice hockey team and baseball's Texas Rangers. Hicks was served with a default notice after missing a $10m quarterly interest payment, but insisted the decision to miss the payment was a negotiating tactic with his bankers.

bingaddick

I heard this stuff about Liverpool a while ago as the principal backers of Hicks are RBS and we all know whats happened to them recently. They have pulled the plug and require their money back, hence the need to obtain new finance. It may be that Hicks/Gillett holding arrangements go bust but the entity that is Liverpool FC will no doubt be sold to the highest bidder. That just leaves the FAPL to rubber stamp no points deduction like they have recently done in the case of West Ham.

BlackForestReds

RBS will extend the loan for six months - if H&G are paying £36m a year in interest payments then RBS might prefer to delay the problem and take the risk that they'll default and in the meantime receive a guaranteed £18m or so for six months. Liverpool are in next season's CL and they have a guaranteed revenue stream from Sky/Setanta and season ticket sales etc. If things do go pear shaped then they can sell Xabi Alonso or one of their expensively assembled squad.

I don't think that Hicks and Gillett will be around for the start of the season 2010/11 though. Their plan was to borrow £350m off of RBS (and I think Wachovia?) to buy LFC, build a new stadium to rival Old Trafford/Emirates, sell Anfield for re-development and then sell the club in a few seasons for vastly more than the price they paid for it. In the meantime debts/interest payments would be serviced entirely by Liverpool FC and their on-going operations. As far as I know they haven't put any of their own money into Liverpool - it's all been borrowed from the banks (and we the taxpayer now have a stake in RBS which means that if things really do go wrong for them then the UK could end up owning a football club). My guess is that they'll sell on Liverpool within the next few months to the highest bidder and escape back to America nursing a loss, but no doubt all the richer for the experience of owning a franchise in the Premiership.

SoundAsa£

At the end of the day one suspects that despite the debts if it comes to it Liverpool would attract buyers of the very highest calibre(dare I mention Zabeel?) and not have too much difficulty in finding a host of likely takers.

ColinTat

It's not really that much different to recent years. Ok the numbers have probably doubled but Liverpool's been a loss making concern for many years. David moores was constantly pumping money in. It means that they need a set of richer owners to pump more money in. Maybe the banks might be crucial in forcing that through.

A lot of the initial debt via RBS was for the stadium, so lord knows what has happened to that. We may very well discover Hicks and Gillet have done some accounting which others claim is farud.

ken from bexley

Is this not the same model that the banks used...... lending money to business and people who could not repay the interest charges...... or that the value of the loan was greater than the assets secured against!. Not that Liverpool are alone Chelsea are £600 million plus in debt/securred loan I understand. A few years back Peter Kenyon claimed that the club would be run in the future on good finance practices, whatever that means.....What happens if Roman Abramovich's millions are frozen due to fraud in Russia say! .......

Quite why RBS should be allowed to consider to carry on this support is a nonsense! ( while receiving taxpayers money) If it wishes to piss the money up the wall of there shareholders is one thing, if they think it such a great thing ask the directors to invest there pension funds in it....... but don't hold your breath.

As Vince Cable stated months ago, the Goverment need to 'get a grip'...... with our money