Liverpool FC’s future ownership is likely to change somewhere in the next two-to-six weeks, but there is still no clear idea of how it will change. George Gillett will sell his share, and unless Tom Hicks pulls off an unexpected trick, DIC will become at least part owners of LFC.
If the only change made is that Gillett sells his share to DIC, then we find ourselves still in the awkward situation of being owned fifty-fifty by two partners who aren’t 100% trusting of each other. Both parties therefore want to be in a position to have a majority holding in the club, with the control and final say that brings.
It’s difficult to imagine a scenario where George Gillett would be willing to agree to a sale of part of his share to Hicks, which would give Hicks control. He’s hardly in a mood to give Hicks any favours, and this would reduce the value of the rest of his share DIC’s eyes, their bid would then be reduced or even withdrawn. But it’s equally difficult to see how Hicks could afford the whole 50% and still be able to take the club forward into a profitable future. Hicks needs to buy in full if he’s to buy at all, but he hasn’t got the means.
Hicks and Gillett found it a nightmare to get their hands on the £350m loan in January, even when pooling their resources and finding whatever assets they could between them as guarantees for the finance. For Hicks to buy in full not only would he need to buy Gillett’s half, including a profit for Gillett, he’d need to find funding for the new stadium. The new stadium was always vital if Hicks and Gillett were to be able to make worthwhile profit from the club – if it makes a profit at all. To cover existing loans, to buy out Gillett and to finance the new stadium, Hicks would need to borrow a massive £675m. In US currency that’s around $1.3bn, which is equivalent to the whole of the Texan’s estimated worth.
Had Gillett and Hicks stayed on in partnership they would struggle to get finance for the new stadium, according to those who deal with the banks at those levels on a regular basis. So clearly Hicks would struggle yet more had he taken on Gillett’s debts alone. Without a wealthy third party coming in to help him it’s difficult to see how he can do any more than hold on to the 50% he currently has.
The existing debt arrangements mean that the two banks are heavily involved in any negotiations over Gillett’s share. DIC are believed to have made good progress with the banks in terms of getting the club out of that £350m debt should they take over, but it’s less clear how this works if Hicks remains a joint owner.
DIC have made it quite clear that they only have eyes for Liverpool. This isn’t a regular investment opportunity for them. That said, their feelings for the club still won’t see them throwing money away “like a drunken sailor”, as someone once said. They’ve also got a lot more patience than they might have on other deals, and if they have to will buy the 50% now and work on getting more at a later date.
Unfortunately a joint 50-50 shareholding doesn’t help anyone. Even if Hicks and Sheikh Mohammed become best friends overnight there will be big decisions they just don’t agree on. It’s difficult to operate when there is no casting vote to settle differences.
DIC (or Hicks for that matter) could invest extra money into the club and in doing so increase the split in their favour – but unless the other partner agreed this couldn’t be done.
In focussing on what seems to be a battle between DIC and Hicks for control of the club, it’s important not to forget the potential of the Share Liverpool FC initiative. The idea was that enough fans across the world put £5000 each (or as part of a group) into the club then £500m could be raised and in turn the owners removed and the club pointed back in the right direction.
Share Liverpool FC say they’ve had almost 10,000 responses from people indicating a definite willingness to be involved, and a similar amount who are interested but need more information.
They’ve now got two well-known former players on board, former centre-back and assistant manager Phil Thompson, and former striker John Aldridge, have both pledged £5000.
As well as five grand, Thompson gave this endorsement to the scheme: “Liverpool Football Club has always needed its fans, now more than ever. Not if, but when our current owners decide to sell, we as fans need to be in a position to help. The biggest thing that people ask is: ‘Can the Share Liverpool scheme really work?’ To this I say one word: Istanbul.
“That fantastic victory could only have happened to a club like Liverpool. Why? Because the fans believed it could happen – and with their help we pulled off one the greatest miracles in the history of club football. So, if we believe we can make Share Liverpool work, it will happen, too. Get on to the website now and pledge your support just as I am doing.”
Aldo was equally supportive of the idea: “What a great concept. I’m glad to sign for Share Liverpool FC. This is a fantastic opportunity for the fans who dearly love the club to own it for themselves – and set the standard for other fans to follow. It would be terrific if it led to other fans owning their clubs too.”
SLFC now has an 18-strong steering group in place, which includes experts in areas such as finance and law. The financial director of Ethel Austin is one, alongside a senior partner from Price Waterhouse Cooper. One of the representatives of the Liverpool Supporters’ Union, Spirit of Shankly, has also taken up the offer of a place in the committee.
Dr Rogan Taylor has played a big role in getting this scheme off the ground, and has been delighted – if a little snowed under – with the response so far. He said: “This puts Share Liverpool FC on to a proper footing. We have brought together the different skill sets in areas such as finance, law and marketing that are needed if we are going to succeed in this venture.”
Although the original intention for Share Liverpool FC was to take the club over completely, the possibility of a partial shareholding must be considered. With DIC and Hicks heading towards a 50-50 ownership of the club, perhaps the inclusion of this fans group would help avoid stalemate in the board room. At the often quoted valuation of £400m for the club, 16,000 supporters could buy a 20% share of the club, and in time this could be increased.