It looks like D-day for Liverpool. “D” for decision, not “DIC”. A decision on where the club’s future lies. And the options on the table now seem to be more limited than previously thought. More to the point, the options won’t all be there after midnight tonight.
DIC chief executive Sameer al-Ansari confirmed interest in buying the club earlier today: “It’s no secret that we have been in discussions with the current owners. It’s not easy because the owners are in dreamland about valuations at the moment.” He later clarified his definition of “owners” plural, saying that one of them “had come out of dreamland” now. He didn’t say which one, but it’s not hard to guess who he meant.
This was the first time that DIC had publicly admitted to their interest, although they’ve been making it known off the record for some time, as reading most newspapers will prove. The comments followed on from a story overnight that Amanda Staveley, a senior partner of London-based private equity organisation PCP, had made a formal offer on behalf of DIC to buy the club from the current owners.
It has been known for some time that much of the work on the bidding and other discussions have been done by English-based representatives, and last night’s article, by Oliver Kay, confirmed Staveley has been in charge of that work, and reports directly to the ruler of Dubai, the ultimate “boss” of DIC, Sheikh Mohammed bin Rashid al Maktoum.
Now the Liverpool Echo’s Tony Barrett has been told that DIC will withdraw their offer if it is not accepted by midnight tonight. The price quoted in the Echo is £400m, to include the total £350m debt on Liverpool FC and its holding company. This leaves a £25m profit for each of Hicks and Gillett if accepted.
It has been reported recently that DIC only want to buy into the club if they can have a controlling interest. At the very least they need 50%, which would allow them to put pressure on their partner to sell more.
But it is now believed that Hicks can actually prevent them from buying 50% without having to buy Gillett’s half. Hicks has first refusal, as part of their initial agreement, to match any offer Gillett accepts for his share. To do that would set Hicks back £200m, one way or another, and of course that’s not an easy amount to raise. But hints have now been made that original agreement also allows for Hicks to buy 1% of Gillett’s shares at the time of a sale to a third party. In effect, if Hicks exercised this right, DIC would only be able to buy 49% – and would not have control of the club.
It remains to be seen if this is indeed true, but the terms of the offer that have been reported talk only of a sale of 100% of the club.
It’s not clear if this midnight deadline is on Dubai, UK or Texas time, or if it was imposed at the time the offer was made. It is reminiscent of the first time DIC were set to buy the club. It was alleged at the time that on hearing of other interest (Gillett and Hicks) through the press they gave David Moores an ultimatum, to accept their offer within a matter of hours. Moores refused and soon the US offer, of around £500 per share more than the DIC offer, had been accepted. The difference for Moores was around an £8m increase on what he’d have got from DIC. Rick Parry is often reported as having been given a £500k bonus for seeing the deal through.
Much of this battle between DIC and Hicks has been played out in the media. Hicks has clearly been angered by the timing of some leaked information regarding the talks, as some of his own responses have shown. But now it seems the media’s role has changed.
The information released by DIC came in three phases. First of all The Times got the headlines after naming the person responsible for the offer, and it also mentioned she would be a part of the club’s future set-up if DIC were successful. Next came the quotes from al-Ansari. Now comes the real pressure – the Echo report of the midnight deadline. And the three phases so far may just be the start of what could be a busy few hours.
So why are the options limited? Well previously it was thought that DIC would buy half of the club if Gillett was willing to sell – but their offer seems to be only for the full 100%. If Hicks can impose a rule that he can buy as little as 1% at time of sale to a third party by Gillett then that’s little wonder. DIC want 50% at least, preferably control and certainly not a minority holding.
And of course if this does fall through then Gillett has no other investors waiting to buy him out, other than Hicks. Gillett is then faced with accepting whatever Hicks offers him, or staying on board and fighting Hicks in the boardroom. A mess, in other words, and one that will cause serious problems for the club. And that may yet happen regardless of what Hicks wants – there is still no saying he’s got the means to buy Gillett out.
If the DIC offer does fall through but Hicks buys the full 100%, then it would show his confidence that the risk is worth taking. He obviously feels that £25m profit is much less than the club will make him in the longer term hence his decision to risk the potential £25m.
But knowing that DIC are the only serious bidders will also be a worry for Hicks. He sees a day when a first season in a new stadium heralds the start of increased revenues from ticket sales, corporate sales, merchandise sales, sponsorship, naming rights, and extra events to be held in the stadium, not to mention the potential of the Premier League finding ways of making money that have less opposition than the 39th game. But before that can happen there will be a period of uncertainty on issues such as how well the club can perform in the league, how that might impact income, whether he can get funding for the new stadium, even getting permission for the new stadium given its increased capacity and reduce parking compared to the version of the plans that were approved. Hicks now has to decide how confident he is of seeing the club through to the end of that first season in the new stadium, summer 2012 being the first chance to see how well his plans worked, four-and-a-half years away.
He also has to ask himself if the pressures of listening to abuse from the supporters who’ve turned on him, and the negative press that follows him, is worth imposing on his children and his wife Cinda and if it has the possibility of messing up future business deals for him. Is all that aggravation worth the difference between a guaranteed £25m and his lowest estimate for a return at a later date?
One of the biggest decisions in the club’s history could be made today, unless DIC grant an extension.