The future ownership of Liverpool FC is once again a big story in today’s media, with George Gillett on his way out according to all the reports. How much of the club each of Tom Hicks and Dubai International Capital will hold is still unclear, but certainly in the shorter term it’s unlikely that DIC will be able to complete a full takeover.
Oliver Kay’s report was the first to hit the net last night, and was the lead story on the back page of this morning’s printed editions of The Times. We’ve already discussed the article on this site (DIC granted due diligence, but Hicks still hanging on). Although The Times report was headlined “Liverpool’s American owners set to sell,” the story acknowledged that despite due diligence being given the go-ahead, Hicks was still yet to commit to selling any of his shares. It did suggest that at least a partial sale of his shares alongside a full sale of Gillett’s shares was likely, giving DIC control of the club.
In fact it must have been a busy day for Square1 Consulting, and their Square1 Sports division. They are the PR company working on DIC’s behalf to liaise with journalists, and the story has been in most of the morning’s papers in one form or other. Of course it’s not just the people from DIC who will be giving information to the press – both the Hicks and the Gillett camps have different reasons to release different versions of events to suit their own needs.
The Telegraph’s headline, online at least, has changed from “Americans on verge of selling Liverpool” to “Tom Hicks and George Gillett to sell Liverpool“, but David Bond’s report remains unchanged. And again the headline doesn’t exactly reflect the story that sits beneath.
He writes: “Liverpool’s American owners, Tom Hicks and George Gillett Jr, are understood to be just weeks from agreeing a deal with Dubai International Capital which could see the club change hands for the second time in just over a year.” And he also claims that DIC have been in talks with the two banks who gave the US duo their £350m, the source of much of the Liverpool supporters’ anger towards the owners.
Although the £350m isn’t all secured on the club, it is all likely to have to be serviced by the club, and at estimated annual interest alone of £30m per year it seems to leave Liverpool with little-to-no money for transfers. Last year, 2007, Liverpool’s net spending on transfers was around £20m, and it’s hard to see where any money for transfers could come from in future. And this finance includes only a tiny fraction of what is needed in order to build the new stadium.
Bond reports: “DIC are increasingly confident that they will… reach an agreement soon… with the two banks, Royal Bank of Scotland and Wachovia.” If the loans, set to run for a total of 18 months, are settled early, there will be penalties to pay. DIC are negotiating to reduce those penalties in a way that still satisfies the two banks before they would pay the loans off. It seems likely that in doing so their share of the company would increase: “DIC plan to dilute his (Hicks’) holding,” Bond writes, “initially by injecting further funds into the club to not only cover the new 18-month bank loan but also to help pay for the proposed new stadium and buy players. DIC want to secure a deal where Hicks sells out completely later on.”
This article talks of the takeover being in two parts, which eventually would be “worth between £400m and £450m and includes provision for the club’s increased debts.” It also, like The Times report, talks of permission for due diligence to begin soon, in this case “In the next few days.”
It’s hardly a secret that the long-absent George Gillett has decided to sell, and this report says Gillett is, “understood to have already agreed in principle to offload his 50 per cent stake.”
Hicks has denied wanting to sell his stake all along. His first denial was a little misleading, because it seemed to contradict later admissions that he’d been in talks with DIC about them buying a share of around 15% of the club late last year. But still the story remains, whether he sells part of his stake or not, he is not looking to sell the whole lot. Bond writes: “But Hicks is refusing to sell out in one go. In the short term, at least, he is expected to remain on the board.” It’s very possible that Hicks could stay as a minority shareholder without actually being liable for any of the club’s debt, or only a very small amount.
Despite becoming a minority shareholder in this scenario, Bond says that Hicks is still demanding he retains control at the club, but that DIC have “rebuffed” this demand.
Bond also reports that Hicks was in Dubai last week, which again has been widely reported. But like The Times he’s also mentioned there being talks held in London between DIC people and himself.
Hicks has been looking to buy Gillett out himself with the aid of contacts in the US. He’s got first refusal effectively, Gillett must offer Hicks the chance to buy at whatever price he’s agreed with a third party. But Bond says this proved to be out of the reach of Hicks: “Hicks has tried to raise the money to seize complete control but with the credit crunch hitting his businesses, he has failed.”
Bond also says that if successful in their bid one of DIC’s aims would be to “restore stability to a club after a period of unprecedented turbulence.”
In The Guardian, Andy Hunter’s report is very similar in content, but the headline is a little more realistic than that imposed on the stories in The Times and The Telegraph. “Hicks determined to keep his hold on Liverpool.” He quickly explains that DIC and Hicks are both confident of getting what they want, which of course can’t actually happen – one of them has to accept less than they would like. He says that DIC’s confidence in getting their hands on the full 100% of the club is based on “progress made in negotiations for the 50% owned by George Gillett.” Gillett wants out, and a quick and easy profit will see him go quickly. But DIC’s hopes that this would pressurise the Hicks camp into selling up seem to still be rather optimistic, with Hunter writing that “The Texan, however, has no intention of selling his stake in the immediate future and has, in fact, attempted to increase his family’s influence on club affairs in recent weeks.”
He also points out that the effort made by Tom Hicks Jr to speak to supporters at the Sandon shows that they are determined to try and “appease fans infuriated at the debt on the club and by the admission of an approach to Jürgen Klinsmann about the manager Rafael Benítez’s job.” Of course those who are sceptical of the Hicks desire to really stay on at the club would argue that the Sandon visit was nothing more than a publicity stunt, for the attention of DIC in an attempt to get them to cough up a little more money. But Tommy actually went for a quieter drink with certain supporters later in the evening, which was both an opportunity for those fans to voice their concerns, yet also to give the Hicks side of the story an airing off the record, along with their plans for the future. That wasn’t publicised, although the fact it happened didn’t remain a secret for long, suggesting that perhaps Tommy really does fancy a crack at winning the fans back. Hunter suggests that Benítez would probably appreciate having Hicks’ son around at Melwood, given Rafa’s acceptance that Hicks really does now support him despite their past fall-outs. Gillett’s son Foster was hardly a great deal of use when he was in Liverpool, and having disappeared some time ago is of no use at all now, but Tommy could “fill the void” says Hunter. Hunter adds a little more weight to the owners’ perceived attempts to show more commitment, saying, “Another of Hicks’ siblings, Mack, was present for last week’s Champions League victory over Internazionale and the Liverpool co-chairman is believed to be prepared to give a speech about investing in the city at a property and regeneration conference in Cannes next month.”
Meanwhile if Tommy does fancy a few pints after a game, or after a busy day of meetings at Anfield, he’s been told he’s still welcome at The Sandon. At least that’s what the pub’s general manager, David Gaul, has said. Gaul has looked back at CCTV footage of Tommy’s short visit, and with the claims of violence reported in some quarters has offered the footage to the police if they want to come and collect it. They’ve not asked for it so far, and according to Mr Gaul there wasn’t exactly very much to see, and the singing can’t be heard anyway: “Mr Hicks was having a drink at the bar and some fans started talking to him. As far as I can see from the footage, which of course does not have any sound, there was no animosity at all and he didn’t leave in a hurry. Any of the Hicks or Gillett family are welcome to come in to the Sandon and enjoy a drink with all the fans.”
Gillett is certainly not likely to take that offer up, having gone from wanting to sit on the Kop with the fans to wanting to be as far away as possible. But for now at least, it seems that DIC’s valuation of the club isn’t high enough for Hicks to sell up completely, and that’s before they inspect the books.