Ownership Saga: Are we sold, again? [R]

Re: SOLD?? Hicks and Gillett signal intention to sell to DIC.

I have just heard that DIC are not fond of Rafa and the direction he is taking the club. Probably just mutterings from the tabloids and internet.

 

Guardian reports that Hicks is holding onto his share, DIC to buy Gillette out:

http://football.guardian.co.uk/News_Story/0,,2259995,00.html

 

aha rumours gillett sells 49% to dic and 1% to hicks

 

Re: SOLD?? Hicks and Gillett signal intention to sell to DIC.

Maybe they realize that despite all the Champions League success we have, he's not going to get us to a Premiere League Title.

 

Re: SOLD?? Hicks and Gillett signal intention to sell to DIC.

On the official site Hicks resolutely denies any plans to sell or let DIC look at finances. However, everything he said was first person singular, which will help fuel talks that Gillett is selling.

 

Re: SOLD?? Hicks and Gillett signal intention to sell to DIC.

Yea. I hate this friggin' nob.

 

There is no mention of Gillett in this press release, and he has not released a statement himself. This is probably significant. I am guessing that DIC will buy out George (as Hicks cannot afford to do so) and will buy out Hicks a bit later than that. We'll find out within a month the truth of the matter.

 

I have read various sites (skysports, BBC, FoxSports, ESPN Soccernet, SI, the Echo, and LFC.tv), and none of these sites say exactly the same thing. We're completely sold, we're partly sold, we're not sold...I am thoroughly confused.

 

Hicks says i may buy the whole thing. Bargaining position?

http://football.guardian.co.uk/News_Story/0,,2260991,00.html

 

If Masch signs this week ... is anyone going to start backing off the Hicks criticism? At that point he will have funded the Torres, Skrtal and Masch (highest signings ever for forward, defender and midfielder respectively) transfers, as well as paid for a bevy of prospects. And the stadium is still on course.

Hicks should have taken Football Media Abroad 101 before he started talking to the press, but at least he isn't Doug Ellis, Ken Bates or Freddy Shepherd. And how long was it before the Glazer's opened up the pocketbook for transfers at Man Utd? They raised the ticket prices a ton and took out debt before doing any spending and without needing to build a stadium.

I am totally ambivalent regarding whether Hicks leaves or stays at this point. It seems as if he is being strong as well as stubborn and Rafa is either copacetic about Hicks and his influence or he is at least being a shrewder politician.

Furthermore, the new LFC.tv has been great (without grossly commercializing the club) and is a great way to expand the commitment level of fans around the world (shame on all ya'll bit torrent/internet feed pirates who don't pony up the dirt cheap 44 pounds a year to get access to it).

In the immortal words of Gerard Houllier, Hicks may yet turn the corner.

 

Except he won't have. Torres and Babel were mostly bought with money from the Champions League, sales of Bellamy, Cisse and a few others. Mascherano and Skrtel will [most likely] be funded from the sales of Sissoko (and possibly Alonso), Carson and a host of other lesser known lights. If there is a positive to all this at all, it may be that Benitez has been forced to overhaul his trasnsfer policy and focus on quality rather than quantity.

As for the stadium, I'll believe it's on when the earthmovers move onto site.

 

I'm ambivalent on Hicks versus DICs, but RB they could've simply taken the money from those sources and pocketed it! or applied it to buy down the loans.

 

Fair point.

By the way, I also cringe when some fans openly chant for DIC. Liverpool_SC may have nailed it when he said "Hicks may yet turn the corner". In fact, maybe better the devil you know ...

 

We have been in Champions League for several years running now and never spent half the scratch on a single player that we spent on Torres. Some of the recent purchases have helped offset new transfer signings, but that has been the case forever. You cannot with a straight face say that Hicks has not put money into building the squad.

The whole fear is that debt servicing is going to make it impossible to keep building the squad and all that 'Pool has done since Hicks and Gillett came is by elite and elite prospects. So far there has been no sacrifice, unless you count an extra month or so of uncertainty with Masch and Khaladze (sp) who was never intended to be more than a stop-gap and is no longer needed once Skrtal was signed.

 

I can. Because he hasn't. As others have pointed out, the majority of the spending in the summer and since then is self-financing - and any additional funds were made available to the club through the debt that G&H incurred to buy the place. Indeed, the amount borrowed explicitly included money to finance squad changes. Not a penny of their own money came anywhere near LFC until they were required by Wachovia and RBS to personally guarantee a third of the re-financing done a month ago. And even that is only theoretical money, as opposed to actual cash. Meanwhile, the debt already in place is serviced by Liverpool Football Club.

As to the stadium being "on track", let's not forget that once we actually start building the thing the plan is to go back to market for another round of debt - it's not like Hicks is keeping his wallet dry so he has enough to buy us a stadium.

 

well Matt I have a question about that -- other than Chelski-- what owners are spending their own personal funds to buy players? Aren't all of these transactions based upon the ongoing proceeds and underlying assets of the various clubs?

And I am sincere since all the English fans seem to think that some how borrowing funds against assets and the future sucess of the business is some how bad -- but that is the way all businesses operate. If I buy a pub I expect that the business of the pub will pay the mortgage, pay for the staff, and generate income for me. Whether I put a dime of my money into that is between me and my banker. As long as the craic is good and the price of food and drink reasonable why should the punter care???

 

Well, for a start few clubs are owned by individuals in the way we and Chelsea are. But as you ask, Portsmouth's spending spree under Gaydamak was almost exclusively funded by him personally. Randy Lerner at Villa coughed for Ashley Young. And the Glazers even, essentially, are sanctioning player purchases now (Nani and Anderson) that come out of their net profits, so that's a pretty close equivalent. Hicks and Gillett, by contrast and as I have already stated, just sliced off a bit of the loan they initially got to pin up the purchases we made last summer. Debt which is now being serviced by the club, so it's not something we couldn't have done without them anyway.

But that's not really the issue: no one is saying that all clubs should be run by people that finance all operations out of their own pocket. Even in the good old bad old days, that was never the case (although it did happen far more than now, because the money in the game was still in proportion with society at large and benevolent owners could be found in every club boardroom). What we're disputing here is that we should in some way pay greater credence to Hicks and Gillett because they bought these players. They didn't. That is manifestly false.

At best, the arrival of Torres and Babel etc are indications of the club's greater capacity to acquire credit, now that they have a billionaire behind them. But as I've also already pointed out, that "support" is fractional in size and entirely theoretical in nature.

 

Thanks --- I still feel their is more than a tad of financial niavete and nostalgia around the "loading debt on the club" outcry. But truly it is a better argument to say that little more than a year ago Hicks knew less than zero about football and has invested little to nothing in the club and stands to make a huge profit from his dealings. But if supporters are mad about that they should aim their anger at Moores and Parry.

 

Right on. Hicks maybe one of the worst if not the WORST owners in American sports. The Moores and Parry must have known this and if the didn't then they are stupid. My blood boils every time I think about their "we're doing what is best for the club" lies. They just wanted to cash out to the highest bidder and sold us to the worst candidate because they offered the most coin. I hate Hick and I mean that but I am very angry at Parry and the Moores.

 

No there isn't. It's got nothing to do with nostalgia and it's hardly a context for naivety. The fact is that very few clubs in the English game have taken the route of Liverpool and sold themselves to people who use debt as a means of funding and maintaining the acquisition, so taking exception to it is entirely justifiable - it is an exception. For Liverpool, of course, it was all the more specifically an exception - Manchester United, for instance were at least bought off the open stock market onto which they placed themselves.

But there's nothing to be naive about - we knew it was going to be done this way and most of us (me to the fore, certainly, check my posting history) were against it. Likewise, DIC are to be viewed with caution for similar reasons.

True. The deal with the Yanks was preferred partly because they were offering cozy guarantees about their continued involvement with the club that DIC would not commit to. Whilst that was highly unlikely to have swung it per se, it was doubtless a consideration.

But ultimately, it goes back to what I've already said: you can be sanguine about the debt approach (I'm not), but you cannot claim that Hicks and Gillett have delivered on their initial promises OR done things which benefit the financial health of this club, ahead of their own investment - because that's demonstrably not the case. And that's what the premise of LiverpoolSC and others appears to be: "they bought some players" (they did not), "they're buying us a stadium" (they're not), "of course they're using debt, but that's normal" (it's actually not).

 

Well done Matt. Allow me to play Cassandra and say this: We will not win anything of significance as long as Hicks is involved in our club. We will only get a glimmer of hope now and again; just enough to keep the revenue flowing into Hick's pocket. This is the way of Hicks.

If the club exists to win us trophies and we exist to support the club then what does it mean when the owners fall down on the first part?

 

As far as I have read it ... Gillett and Hicks bear ALL THE RISK above the £105m that is centered on LFC. If LFC does not qualify for UCL next season and our revenues drop, Gillett and Hicks will have to cover the interest expense for Kop Holdings whether the club has the revenues or not. They have fiduciary responsibility. Not the club. Under Moores, the club had a debt load as well.

Debt leveraging is used in many different entities for all kinds of reasons. DIC is a huge proponent of debt leveraging. At least Matt is consistent in acknowledging that DIC is just as big a crapshoot ... but until LFC sees evidence (declining cash flow due to dividends to Kop Holdings) it is being impacted heavily by the debt - I remain skeptical of the sky is falling scenario. Evidence is that Kop Holdings is incurring liabilities to purchase assets ... . Kop Holdings is not the club ... it is Hicks and Gillett.

 

Well, first, I wrote "I still feel there is more than a tad of financial niavete and nostalgia ". I hope you will grant me my own personal emotions and thoughts.

Second, as I wrote earlier, other than in English football clubs, owners of businesses seldom use personal resources to buy assets for encorporated entities. They borrow. And pay back through the cash flow of the corporation. This is why corporations were developed in the first place. So that assets that might be exposed in old-fashioned partnerships could be protected and the debt and risk "could be loaded on the" corporation.

Would I prefer that Bill Gates was a mad Liverpool supporter and wanted to simply give Rafa a billion or two to buy players, and Parry another billion or two for a stadium? Yes. Do I expect that to happen? No. Or another billionaire to show up? No

I continue to assert that Hicks is avaricious, and bombastic, with a questionable record in sports ownership; and that Gillette is a nicer guy whose pockets are not as deep as we might wish. All of this should have been there if Moores and Parry pursued adequate due diligence. Moores settled for the most money and a seat in the owners box. Parry steered the sale to the people he thought would be most reliant on him, and most likely to keep him around. That is the truth and I don't think any of us would dispute that.

 

That is odd logic. It is impossible to conclude a direct correlation between Hicks and the 'club failing' At the worst, the actions of Hicks are an example of mortgaging the club's future in order to acquire assets in the short-term. Note that this is exactly what Steven Gerrard has been asking for. That is exactly what Benitez (give me money for this player give me money for that player) has been demanding. Gerrard and Rafa both want to see a side that can compete right now ... rather than when Gerrard is 32. This entire meme about the LFC fans that the club must embark in a slow growth process is pollyannish. Rafa will have to settle for a job with Atletico rather than Real if he cannot win it with LFC. Gerrard will be burdened with 'what ifs' if he has to play out his contract at LFC without a title. However the financing is occurring ... it is not a Leeds situation even remotely. Hicks is less leveraged than the Glazers were. And Hicks is bringing assets into the club.

Arsenal and Man Utd (at the least) are improving at least as quickly as LFC. If LFC does not invest or however you want to describe it within the next 2 - 3 years, they will be behind Arsenal's and Man Utd's youth generation (whether developed or acquired) in sporting terms and infinitely behind them (declining revenue growth) in financial terms.

The approach that Hicks is taking is certainly not without risk, but Hicks has lots of assets apart from the club and his butt is on the line for Kop Holdings. He is doing what he can to leverage his ability to generate funds to increase the earnings potential of the club.

Matt likes to talk about LFC being in the top 8 on the rich list and such ... that doesn't really matter. The rich list is disproportionately weighted towards EPL teams due to their TV contract anyway. What matters is the club's relative turnover/profits relative to its EPL brethren. Should Spurs continue to creep up the list (without hardly a sniff of European football until this year), should Arsenal, Man Utd and Chelsea continue to grow ... and LFC remain in Old Anfield (again as Matt belives is viable) ... the club is not going to be able to build the squad, pay the wages top players demand and retain foreign players who will always be attracted to glamour teams on the Continent.

At that point, Torres will go to Milan, Alonso and Reina wil go back to Spain, Maschareno will go wherever, we won't be able to afford adequate English replacements and Steven Gerrard and Jamie Carragher will be left playing out the string with 'affordable' squad players like John Arne Riise and Dirk Kuyt rounding out the lineup.

 

Liverpool_SC, could we leave off the use of the word "stupid"? Poor logic or logically erronreous would be better.