• Liverpool Message Board

  • Jason Jason Oct 11, 2010 03:05 Flag

    The Court Case

    A legal entity with no ties to the court case, speaking on terms of anonymity has weighed in with the following: (This may be produced, or already been circulated in the UK, if so, my apologies for redundant information).

    The court hearing is expected to last approximately 2 days, after all evidence reviewed. If the hearing, which is expected to go in favor of LFC s appealed by Hicks, the process could add an additional 72 hours, which would push it up to the Friday deadline. It is expected that should the original ruling go in favor of the club, the appeals process would simply be a ploy at delaying the inevitable and be a futile attempt and failure again by Hicks, with Liverpool / Broughton successful, and NESV to complete the sale.

    Though the cards look stacked in LFC favor, anything can happen, and should Hicks be successful, Liverpool apparently have a back up contingency plan, which they are not prepared to make publicly known until or unless needed.

    Fingers crossed everything is sorted quickly and painlessly Tuesday, and concluded Wednesday! I will celebrate with a nice tall pint of Carlsberg!

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    • Try the stella mate, its far nicer, and far more effective :) oh & yeah its already been aired here.

      There does seem to be alot of mis-information being banded around as well between the fans (on facebook etc etc), i think alot of people are worried etc


    • Robert, it doesn´t matter how deep the owner´s pocket is, no-one can or will keep lending to prop up a failing financial model be it business or football club. That is precisely why nesv are the right choice for LFC since they believe in winning on the pitch and making a profit at the same time. It can be done, and watch this space, I think you´ll find it will be done. LFC have one of the highest player wage bills in the premiership but, unlike some, without the debt, are still profitable. In the long term they and those like them will prove the most successful FACT.

    • Robert, take your point that it’s not uncommon for football clubs to have financial issues, and the system in which they do business often seems stacked against them, but that does not make it normal, anymore than having rich oilmen run your clubs until they get bored and go onto something else.

      There is only one simple reason why clubs like Liverpool and Man U have been bought and loaded up with debt; simply because the market allowed it. The market allowed it because it’s potentially hugely profitable to do so, and before the credit markets all but seized up this type of transaction was happening the world over in businesses outside of sport. Private equity and the leverage take over is not something unique to the football world.

      But its effects are also well known. It can generate huge profits for the brokers and investors in these schemes, but has a limited record of actually turning business around. Fact is many businesses are worth more either by being broken up, or bled out. IMO if it was not for the credit crunch and RBS calling the note, H&G would have kept going bleeding off an annual return either until they were able to flip the club for a profit to someone else, or until there was nothing left to bleed. Same thing IMO will happen to the Mancs (and honestly I don't take pleasure from that). While they keep winning they keep generating record earnings, but as soon as that ends, the Glazners are unlikely to reinvest. Instead they'll try to sell if they can, or let it whither away, taking their own slice of the pie as it declines.

      What you describe as normal is local charity to stroke the ego of the local big wig. And I'd agree it’s been the model of the football league for well over a 100 years. But within that model there have also been many clubs who have made money, which is what all those poor saps you talk about have been chasing all those years.

      But what is happening now is raiding, as the owners are making money. Not from a model of let me invest to make this club successful on the pitch so it will put money in my account. But more this club is successful so let me buy it with someone else’s money and siphon off its value.

      It’s up to you to decide which you really think is normal, but its pretty clear to me which one is right.

    • "its pretty clear to me which one is right"

      Yes, it's clear that you like the Chelsea / Man City model. That's excellent.

      For me, there's nothing wrong with people buying assets and trying to make profit from them. If someone can buy something, take some profit and sell it then the only thing that was wrong was that the price may have been too low. And that's not even clear. There is risk in buying things for profit and the greater the risk the greater the potential reward needs to be. (Anyone who thinks there isn't risk needs to look at the potential loss facing H&G.)

      If it is to be thought that owners of football clubs have a moral obligation to finance those clubs (directly by putting money in, or indirectly by getting a smaller return than if their money was invested elsewhere) rather than treating them as investments, then football clubs should be constituted a different way. But while they are limited companies, private or public, more Glazers and H&G's are inevitable.

      And again, the big problem for football finances is not the owners but the ridiculous wages paid to the players.


    • Robert I think you missed my point.

      There is nothing wrong with someone buying a club, or anything and trying to make money. In fact buying, investing and trying to build value so that its profitable to the owner is exactly what I meant by which one I think is right (although I'd take a rich oilman so long as he does not get bored after a while!).

      But investing and adding value is not exactly what H&G have done. What they tried to do is buy cheap with a leveraged buy out, and then flip it to make money. They had no interest in investing in LFC to increase value; all they were seeking was an arbitrage opportunity, which because of the credit crunch (and an increase in financing costs) blew up in their faces. Even to this day, they are not looking to hold on to LFC in order to make it a profitable business, all they just want is a better pay day because they don't like the price the man they brought in, is trying to sell the club for.

      I agree with you that owners don't have a moral obligation to finance clubs out of their own pockets for the benefit of the fans. They would not be very good business men if they did. But, like in most businesses they do have some obligations, and lying to fans, for which you can read customers if you like to extend the analogy, is usually one most markets frown upon.

      The world is full of H&G's and the likes of the Glazners, and they are not just the product of football. There will be more of them, so long as the practice of leverage buyouts is allowed. So the question again is, if we have regulations in other areas of the market, from borrowing restrictions for nations, down to credit checks and minimum down payments for home buyers, why not a bit of similar regulation for prospective football club owners? Its not investors I’m suggesting we limit, but pure and potentially dangerous speculators which is the category I’d put H&G.

    • I think you're making a distinction which I don't recognise.

      Investor good, speculator bad is a bit too Orwellian for me. Was Hanson an investor or a speculator? To the stock markets and shareholders and managers who made money on his back, a brilliant investor. To the people who were made redundant along the way, probably an evil speculator.

      If you accept the need to allow investors to buy clubs for primarily financial reasons then I don't think you can prevent people who you might call speculators getting involved. Should football clubs have special protection? I can't see why. The worst case is that people with an emotional sense of the football club's importance get disappointed. Well, big deal. I don't see that should be a cause for legislation.


    • When I say result ?

      I mean a victory .


    • The distinction I'd make is that an investor is looking to buy a business so it can earn him a profit as a going concern. A speculator on the other hand is not interested in the business as a going concern, but only as an asset that will be sold on at a higher value.

      I admit it maybe splitting hairs, but it comes down to what is the motivation of the purchasing party. Do they want to run a business, or flip an asset?

      Now that maybe very hard to determine, and therefore even harder to regulate. However a simple principle of putting "skin in the game" is a way of at least trying to separate pure speculators versus longer term investors. Therefore I'd suggest while it can't eliminate people like H&G and the Glazners coming in and hollowing out clubs, limiting leverage buy outs would go a long way in limiting it.

      The fact of the matter is H&G loaded the entire cost of buying LFC back onto the club via the holding company. In essence they purchased the club using the clubs own money (or actually collateral for the loans), so the risk to the owners all but disappeared. In fact the only reason H&G stand to loose any money is that they allowed the debt to balloon higher than what the club is worth, but its still a paper loss in that they never put their own money into the club.

      All I’m suggesting is that at a minimum a down payment should be required (in cash) for any owner to buy a club. It’s a standard in the housing market, why not in the buying and selling of football clubs

    • I'm not sure the housing market analogy helps your case. We have booms and busts in the housing market, encouraged by what you would probably call speculators and I would call investors.

      You're right - even if there were ageement that nasty evil speculators should be kept out, the regulation of it would be pretty much impossible on your terms. Someone is going to be set up as a regulator and he gets to approve deals based on the prospective buyer promising to be a good boy and buy some new strikers? It's not going to happen, is it.

      I think you have contradicted your objection to H&G. Plainly there was great risk to them. When you leverage purchases you are expanding your buying power at the expense of higher risk. There is also risk to the lender of the debt and this ought to act as a brake on investors making silly purchases.

      In the end, I don't think that leveraged buyouts are the general problem, or indeed your problem. LFC doesn't really suffer from the financial agreement between H&G and the bank. Either H&G or the bank does or a buyer is found who funds it all. What LFC is suffering from is simply having owners who don't want to, or can't, invest further in the club. And that's nothing to do with the leverage per se.


    • Mysteron ,

      Its clear you aren't a football fashion victim with a wise attitude towards transfers like that & I applaud you for it .

      That said , personally I'm not against signing quality as it becomes available to us .

      What I am against is throwing new signings straight into the 1'st team .

      #1 They haven't earned their place , making us look like a bucket side any old signing can walk into & improve .

      #2 Unless they are exceptional it risks upsetting the balance & harmony of the squad .

      #3 It makes us look desperate & panic buying , which in effect we have been doing under the Yanks . Rafa done a great job of keeping the unit performing but was undermined by the board at every turn .

      New signings have to prove their worth & character by battling it out with an established 1'st teamer for a place , otherwise there is no competition for places & we continue to be a bunch of soft excuse making spice boys with nice jerseys just here to make up the numbers & make UTD & Chelsea look better than what they are .

      There can only be one king of the Castle , long live Kenny Dalglish !


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