By David Bick, Chairman, Square1 Consulting
Once again, the accounts for the main operating company of Liverpool FC, namely Kop Football (Holdings) Limited, do not make attractive reading.
The net loss of £53m is up on the loss of £42m for 2008 and the bulk of this is accounted for by interest charges of £40m (actually £43m when capitalised interest is taken into account – which doesn’t get shown on the profit and loss account). Over two years, the company has racked up losses of £95m of which interest charges make up a whopping £76m. These substantial losses seem at odds with a recent statement by the club that profitability had been improved since 2007. The interest charges are a combination of those paid to RBS and those due to Kop Football (Cayman) Limited, a company controlled by George Gillett and Tom Hicks.
There is a negative net worth on the balance sheet of £128m, a further decline from a minus £75m in the previous year.
Net borrowings have climbed substantially and stood at £351m, up 17% on the previous year. Included in these outstanding debts is £144m owed to Kop Football (Cayman) Limited and this figure has climbed £86m in one year alone, although no explanation is given as to why.
The borrowing agreement with RBS was only renewed for 6 months last July through to 24 January this year and then, again for reasons not explained, for less than 6 weeks to 3 March. It is also not explained how and to when the borrowing facility has been extended since that date.
The auditors again write a going concern paragraph and make clear that the business is dependent on short term bank facility extensions.
If the interest charges are at similar levels for the year which will end this 31 July, and estimated operating profit turns out to be as has been reported, further losses are going to be difficult to avoid.
Within the stated income, it is not clarified how much was contributed from the participation in the European Champions League, which is income that will clearly be missing next season.
All in all, these numbers – and the auditor’s observations – speak for themselves.