The State of Liverpool FC – An Idiots Guide
While "senior sources" at the club (Christan Purslow) try to facilitate
a smear campaign against the manager, pretend everything is rosy at the
club and briefs the press to headline the Rick Parry pay off on the day
the club's financials are tactically released on election results day;
here's what's really going on at Liverpool Football Club:
The figures released on Friday 8th May 2010 indicate that Liverpool FC
is in net debt to the tune of £351m; an increase of £52m from last
A total of £233.996m is owed to RBS, in addition to an inter-company
loan of £144.441m owed to “Kop Cayman”; a company owned by Gillett and
Hicks based in the Cayman Island for tax reasons; a company that have
loaned Liverpool FC £144.441m at an interest rate of 10%. This is the
“own money” that Gillett and Hicks claim to have put into the club. In
reality, they’re just charging the club 10% interest for lending that
money through an offshore limited liability company that they aren’t
even personally liable for – Liverpool FC are.
Liverpool FC are not paying the interest off on that £144.4m however.
It is being charged as a “compound interest”, meaning the interest
isn’t paid, but is instead “rolled up” to the grand total. For example,
this year (if I’ve got this right):
£144.4m @ 10% interest = £14.44m payable this year.
Instead of paying that £14.44m, it is rolled onto the total making the
outstanding debt owed to Kop Cayman £158.88m. The following year this
is then charged at a further 10% interest:
£158.88m @ 10% interest = £15.88m payable next year.
Instead of paying that £15.88m, it is rolled onto the total making the
outstanding debt owed to Kop Cayman £174.76m. The following year this
is then charged at a further 10% interest:
£174.76m @ 10% interest = £17.76m payable next year.
Instead of paying that £17.76m, it is rolled onto the total making the
outstanding debt owed to Kop Cayman £192.52m etc etc etc...
The debt soon spirals out of control, as you can see; and don’t forget,
this only concerns the £144.4m owed to Gillett and Hick’s Cayman
Islands company – it doesn’t concern the huge £234m owed to RBS.
The financial figures released last week are for the 2008/09 season.
Those figures declare the club made a loss of around £52m for that
year, due to the interest repayments on the loans and another £22m
spent on the new ground; on what that was spent on we have no idea. There’s
nothing to show for it anyway – and the total spend on the new ground
now exceeds £50m. To put that into perspective – Sunderland managed to
build the 48,000 seat Stadium of Light for a lot less than that. We
have a few fences up at the back of the Anfield Road End!
Anyway – we made a loss of £52m that year despite finishing 2nd in the
league and reaching the latter stages of the Champions League. The
accounts also declared a profit made on player transfers (despite
Purslow telling us we don’t need to sell players to balance the books
and service debt, and Rafa being accused of wasting millions on players
– the accounts prove otherwise).
What are next year’s figures (which will reflect the financial state
we’re in today) going to look like with a 7th place league finish and
an early elimination from the Champions League? We will also have an
increased debt to service as explained above.
Then what about the figures for the next financial year when there’s no Champions League money at all coming in?
While the current owners are in place, we are going to continue to fall
further and further into debt. We cannot meet the repayments on the
loan as it stands now, and with our revenue due to fall with the lack
of Champions League football, we’re on the brink of going into
Anyone with hopes of making any signings in the summer or any future
transfer windows needs a reality check. We are going to be very lucky
to be hold onto the players we’ve got, never mind being able to bring
anybody else in.
Gerrard and Torres don’t want to leave because they don’t like the
manager (Purslow is feeding this story to the media to whip up the
“Rafa Out campaign”); they want to leave as they know there is zero
chance of any new players of any quality arriving at the club in its
current state. They
also know there’s zero chance of any top class manager coming to the
club if Benitez decides to walk or is pushed; no manager worth his salt
would come to work at the club under these conditions. They know the
club is only going one way.
Until Gillett and Hicks are removed from the club, we’re only going to
decline. It really is as simple as that. Nothing else matters.
And remember – these debts haven’t been accumulated through
overspending in trying to buy success and compete like was the case at
Portsmouth, Leeds and various other clubs – they are entirely generated
through debt loaded onto the club just so Gillett and Hicks can own us
and bleed us dry with expense claims, management fees, arrangement fees
for every refinance deal and wasting over £50m of the club’s money on a
non-existent new stadium.
This isn’t the result of bad individual club management as Richard
Scudamore of The Premier League claims; it is the result of a leveraged
buyout that has loaded the cost of buying the club onto the club to
repay. Something The Premier League, The FA, UEFA and FIFA should be
doing everything in their power to prevent ever happening again.
2007: £44m debt (£3m per year to service)
2008: £350m debt (£36.5m per year to service)
2009: £378m debt (£40m per year to service)
Those are the levels of debt on the club, with it being only £44m
before Gillett and Hicks bought the club. Therefore the club’s profits
were able to be invested back into the squad, allowing us to compete on
the pitch. We’re now crippled by debts we cannot service, when that
£40m leaving the club each year in interest repayments should be being
spent on new players.
£76.5m has left the club in interest repayments
alone in the past 2 years – and in that time – the manager has not
spent a single penny on new players. It’s been a sell to buy policy,
with profits being made on transfers in the past few transfer windows
as the books needed to be balanced; all while the clubs around us are
spending to strengthen. How can we be expected to compete under those
The debt is growing with every passing day. As a result of the lack of
investment in the squad (as well as bad luck with injuries / poor
decisions / players out of form etc), we’re paying the price on the
field with declining performances which will therefore reduce the
club’s revenue even further – giving us even less money to service
increasing debts. A vicious circle. It’s unsustainable.
Liverpool FC is paying £110,000 every single day in interest repayments
to service a debt we should never have in the first place. That’s
£110,000 a day of the club’s money that me and you generate, that we
should be seeing spent on new players or developing the club; instead –
we are standing back and watching the club being raped in front of our