Notes from the AGM

Notes from the AGM

The following are a series of summations, edited together and commented upon by me, on last Thursday’s AGM - taken from people I know who attended and from various LFC sites …

Interesting wages comparisons

In 1999, we paid out £36m in wages on £45m turnover which is 80%
Now, our wages are about £57m but turnover has increased exponentially due to our extended runs in Europe in the previous two seasons and the sales of certain players (Robbie Fowler chief amongst them). Our wages/revenue ratio is now a very healthy 57%. This compares to 89% for United, 121% for Arsenal and a staggering 183% for Leeds.

Reebok

New deal is imminent, although this is now being driven by the US corporation rather than
the UK subsidiary - they now see LFC as a 'key global property' to sit alongside
the NBA and NFL, so they are looking for an international push for us (as are
Carlsberg, as the new deal is also with the Worldwide division)

New stadium

55k was used in the new stadium details and planning as this enabled them to
make a 'fair comparison' with a redeveloped Anfield. Rick Parry said that 'the most likely outcome is 60k seats'. He also said 'the whole purpose is to generate EXTRA revenue... nothing to do with building monuments'. A shareholder quizzed him on what market research had been done to show we would fill 60k seats - the answer was effectively 'er, we guessed'! Which is a bit of a curious one - Parry is known to be a sharp cookie in a business sense, it seems out of character that he should be spearheading an initiative such as this on the basis of, effectively no market substantiation (certainly, we won’t get 60k on current form! ) Further expansion beyond 60k will NOT be possible legally, due to site restrictions

Stadium borrowing

American banker Stephen Schechter, the godfather of football securisations, is in pole position to land the deal to mastermind Liverpool's new stadium. He pulled off the first major stadium mortgaging at Newcastle United four years ago, and has done a string of other deals during his career at Schroders and Lazard.

If planning permisson is fast-tracked, Liverpool hope to begin building the stadium in Stanley Park this summer with the aim of moving in for the start of the 2005-06 season. The club has yet to finalise how it will finance the stadium but, a flotation or placing of shares with cagey equity investors having been ruled out, securisation is reckoned to be the likely option, with Schechter the man tipped to land the deal.

Securisation works much like a household mortgage. In return for a lump sum - normally from investors such as pension funds who want stable if unspectacular returns - the deal is secured on future gate money. Such securisation bonds are often set with annual interest repayments of about 7% over perhaps 25 years. Schechter, who runs his own Mayfair-based specialist boutique, is likelyto be the first port of call for Liverpool's finance director Les Wheatley, who was finance chief at Newcastle at the same time as the Schechter inspired £55M deal that expanded St James Park to a 51,000 capacity. Schechter has since masterminded the securisations of Southampton, Leeds, Leicester and Ipswich and most laterly, the refinancing options of Spurs to fund the redevelopment of White Hart Lane.

He wil however, face stiff competition for any mandate from former colleague David Reitman at Lazard, the new player in the market, US investment house Bear Stearns which recently engineered the £44M Manchester City and £30M Everton securisations, as well as Merrill Lynch and Schroder Salomen Smith Barney. Schechter disagrees with fans on the Kop who say Liverpool wil be selling the family silver. "If you own a house, are you mortgaging away the future or are you making a sound, prudent investment in the future?" he says.

Other deals he and his rivals are chasing include the mandate to securise Arsenal's £350M move to a 60,000 capacity site at Ashburton Grove and the eventual financing of the new National Wembley Stadium.

Borrowings

LFC have increased their borrowings in the last year, which roused a small amount of debate - I was reassured as this money is owed beacuse of capital investments (the Academy and Melwood). We have about £20m of borrowings - to be paid over 5 years - not horrendous. By contrast, both Chelsea and Leeds owe £80-90m - and that was on players, not on lasting capital projects such as youth institutions. Worryingly though, a shareholder noted that Liverpool had spent £64m more than they earned in the past four seasons, an average of £16 million-a-year overspend on revenue. This was offset by a £42m investment by Granada, but clearly continual qualification for the Champions League is a very definite prerequisite for the club as we enter a period of sustained, heavy expenditure on the stadium and team.

Ged's speech

Excellent, forceful, positive
Clealry he is going nowhere, he offered a barbed criticism of the press and injected a good deal of humour - much at his own expense. Basel defeat - 'now realise had a significant effect on the team' Roma - 'with hindsight I returned too soon'. Mellor - 'has made tremendous progress'
Signing 2 keepers on the same day - 'wisdom of that move is evident now' Anelka - 'made a valuable contribution'. Diouf - 'comparisons with Anelka are unfair'. Diao - 'transfer brought forward because I was not confident of getting a whole season out of Didi Hamann and Steven Gerrard'. Cheyrou - 'will add the creativity any side needs, especially since the departure of Gary Mac and Jari.’ Duff - ' I rate him but we will not pay ridiculous money for anyone' Duff was the only target mentioned by name, so I reckon that means he must be the LEAST likely player to join us! 'We've moved the club off the front pages and onto the back pages' He cited the Villa game in the Cup as a 'significant moment' for the team - ‘5k fans waiting hours in the bitter cold to support the team’. He stressed that the word ‘supporter’ contains a crucial first two syllables.... Results - 'of 6 games we have lost, only 2, both in the North East, saw us play poorly'.