A press release issued in Dallas overnight UK time will add more weight to the claims that Liverpool FC co-owner Tom Hicks will not be able to find suitable finance to purchase the other half of the club from partner George Gillett.
The Glorypark project in Arlington, Texas, is to be delayed due to financial concerns.
The Dallas Morning News quotes Hicks as saying: “We’re in the most difficult credit crunch I’ve seen the last 20 years.”
The press statement, from Hicks Holdings, said that “financing and construction of a proposed mixed use development between Rangers Ballpark and the new Cowboys stadium in Arlington has been put on hold because of ‘extreme conditions’ in the country’s financial and retail markets.”
It goes on to say that “the nation’s economic markets today have made it impossible to come to terms with lenders for Glorypark, a half billion dollar (approx £257m) project.”
Hicks Holdings’ development partners on this project are Steiner +Associates, and the statement says that S+A have “been unable to secure a firm and final commitment from an anchor department store.” It’s reported in the Dallas media that S+A have been in lengthy discussions with Dillard’s department stores.
Now, the statement says, “The developers do not plan to exercise a May 15, 2008 option to extend a letter of commitment to underwrite bonds for roads and parking garages. As a result, construction mobilization will not begin this spring as planned.”
Tom Hicks is quoted in the statement: “We have put an enormous amount of time and money into Glorypark. In the end, the dream can’t become reality without the right financial package. We will pursue alternative funding options and examine our reprogramming options.”
Hicks compared it to another project he was a partner in, the Victory Park project, a similar initiative sighted alongside the American Airlines Center, home of his Dallas Stars NHL side. “This is extremely disappointing to me, personally,” Hicks said. “It’s almost the exact situation we had at Victory when we were ready to go, but the financial markets were in deep trouble after 9/11. That’s when we had to regroup.”
Of the Victory Park project, the statement says: “After two years, Victory did re-emerge although the project has evolved and continues to evolve.” Last week Ross Perot Jr’s company announced their plans to build a 43-storey hotel on the Victory development were being delayed, also due in part to the condition of the financial markets.
Hicks said in the statement that the land between his Texas Rangers baseball stadium and the new Dallas Cowboys stadium would still be developed: “When my family purchased the Rangers, we pledged to invest in a development around the Ballpark. We are still committed to doing that, but we may have to re-examine what should be built and what actually can be built if the market conditions continue.”
Hicks said he contacted Arlington’s mayor, Robert Cluck, about their decision: “These events are in no way related to the City of Arlington. The city did absolutely everything possible to facilitate negotiations while, at the same time, protect the taxpayers’ interests. We all must take the long view for this important piece of real estate between two great sports venues.” The Fort Worth Business Press says: “The city of Arlington has approved several zoning changes to make way for the development and the city had planned to contribute about $135 million through various taxing districts.”
According to Hicks, the developers will now be most likely to concentrate on attracting dining and entertainment businesses to the site: “We have had enormous response from those business segments at Glorypark. I believe reprogramming will produce a plan that is more incremental and includes those elements as well is specialty retail, residential and office components.”
The statement says that Hicks Holdings has invested “almost $50 million into the improvements, design studies, and master planning of the area around the Ballpark.” It also says “plans will continue for the development and opening of the 310-room Westin Hotel and condominium project that was previously announced by Hicks Holdings and Gatehouse Capital. It will be located across Johnson Creek from the new Cowboys stadium.”
Glorypark was due to open in March 2010. The Dallas Morning News talks about how Dallas and the rest of the US have felt the pressures of the current financial environment: “Since last summer, lenders have increased requirements for virtually all types of real estate loans. And some debt sources that previously financed office buildings, hotels, high-rise condos and such have exited the market. The so-called credit crunch is expected to significantly reduce the amount of speculative development this year in Dallas and cities across the nation.”
According to the same paper, this isn’t the first holdup to the project: “The completion of Glorypark, which would have included restaurants, retail, office space and residential, had been delayed at least twice previously.”
As well as needing to raise investment of around £200m (approx $389m) to buy George Gillett’s half of Liverpool FC, Hicks also needs to raise the funds to continue with the building work on the club’s new £300m (approx $584m) stadium, due to open on Stanley Park in 2011. £60m is already in place to commence the work, but the other £240m (approx $467m) still has to be found.
Much can be read into this announcement.
On the one hand it does add weight to the various claims Hicks had been struggling to get finance for his Liverpool FC needs, but on the other hand it suggests the Texan could now be in a stronger position to get the finance for LFC – the total borrowings of the Hicks Holdings group of companies won’t now include this figure in the immediate future.
Again, on the one hand this announcement adds weight to the claims that the US banks Hicks does business with have been looking to call time on his borrowings, but on the other it could be said that recent talk of Hicks approaching hedge funds related to his quest for finance for Glorypark rather than Liverpool FC.
Is it possible Hicks has sacrificed this phase of Glorypark for now in favour of finalising the LFC situation?
The fact remains that Hicks is adamant George Gillett cannot sell without his say-so. This would leave Dubai relying on Hicks hitting financing problems as their only means of getting control of the club. If their assumption turns out to be true then sitting it out could eventually see them take control for the figure they’ve already decided is their top price. But if their assumption is wrong, and they don’t make a substantially higher and tempting bid, George Gillett may just go back on his vow not to sell to his partner rather than sit in this state of limbo for too long.
Star-Telegram – Hicks puts Arlington’s Glorypark development on ice
Fort Worth Business Press – Arlington’s Glorypark development on hold
Dallas Morning News – Arlington will have to wait for Glorypark development near stadiums