By David Bick, Chairman, Square1 Consulting
Liverpool has potentially reached its most important historic point. The Club has now gone 20 years without winning the English League title. It has never won the Premier League. It was drummed out earlier than expected from this year’s Champions League and now, as one of the world’s biggest clubs, faces the ignominy and reality of failing to qualify for next season’s premier European competition. This is the barely believable backdrop to a club with a footballing history to die for and what Liverpool legend Alan Hansen describes as the best fans in the world.
Why has it come to this? What is to be done?
We live in a litigious world, so it is difficult to call a spade a shovel. But, to my mind, the people running the club over the last two decades must bear the bulk of the responsibility and the brunt of the criticism. On a recent visit to Anfield to watch my team, West Ham, play like a pub team with a Force 10 hangover, one had only to look at the stadium to see the years of dreadful neglect at first hand. Unbelievably, there are still pillars holding up one roof!
Whether it comes down to incompetence or thoughtless arrogance at Liverpool, we have seen the club left behind by the other great clubs like Arsenal, Manchester United, Manchester City, Chelsea and Spurs. They have rebuilt their stadia to high standards and, largely speaking, to capacities that accommodate their substantial fan bases. Yet all Liverpool fans have heard is talk and a string of broken promises. The other clubs have built their revenue streams or attracted owners that have given them the wherewithal to compete effectively at the top of the modern game. It seems to me that the Liverpool fans are being treated to a ‘product’ that is rooted in the 1970s.
Sadly, in very recent times, Liverpool has also been owned by people who have said much and delivered little of the stated vision. Replacing them is a very urgent imperative.
Liverpool claimed in a recent statement that it has “…overseen a significant improvement in the financial performance of the club since 2007.” Well, that’s difficult to assess. The management has not published accounts for Kop Football (Holdings) Limited – the main trading company – since the filing for the year to 31 July 2008 and, in that year, the business showed net losses of over £42m and net interest payments on debt of £35m not covered at all (let alone adequately) by operating profit – pre-player amortisation and trading – of £25m. Debt remains stubbornly near a reported £240m, so what profits are produced do not leave much, if anything, for the manager to work with, even if we believe rumours of a £35m profit for the year that will end this 31 July. In short, Liverpool’s financial structure can’t work in my opinion and, since the sale of the club in 2007, it was never going to.
If the manager cannot operate competitively in the transfer market, he has no chance of competing regularly in the Top Four. We have now seen the first concrete sign of this with the failure to even stay in the Top Four. Manchester United, a club manfully trying to cope with a similarly onerous financial structure will also, I believe, start to experience similar problems, although their state of decline is nowhere near as advanced as Liverpool’s.
What about the role of RBS in all this? One of Liverpool’s principal lenders nearly brought the entire banking system down. Previously run by a man of monumental arrogance, this bank nearly had us all wiped out and in penury. The immediate collapse of our economy was only arrested in the nick of time just under two years ago. The bankers at RBS who are responsible for the debt exposure to Liverpool can’t be blamed for that. But they can be held to account for propping up a club regime that has signally failed to deliver new investment so far. They should think very carefully before renewing a facility to a corporate customer when other comparably struggling businesses find it almost impossible to raise working capital from banks at anything other than punitive rates of interest. RBS should be part of the solution, not part of the problem. Charging another fee – this time rumoured to be around £10m – won’t help the club for the sake of a six month extension to its banking facilities.
It seems axiomatic to me that Liverpool needs new, responsible owners and new top flight, football-experienced executive management.
It will not be beyond the wit of man, the new well regarded Chairman included, to find such a new owner. But first of all, Liverpool needs to stop spinning silly numbers. Rumours abound of a price being asked from £500m up to an incredible £800m, the lower of which is, in my view, way over the top for a club in its current condition and by any sensible comparison with Arsenal or Manchester United. Financially at least, Liverpool must have a new stadium if it is to have any hope of restoring past glories. But the finance for that, and any subsequent financial benefit to owners, must accrue to those who put up the money. In any case, this will not be a conventional acquisition of a football asset – it is more likely now to be a rescue.
The new owners will need to be people of high calibre. They will need to have access to very large sums of money to build the new stadium, revitalise the management and allow for a well thought through strengthening of the playing squad. They will need to have a vision and a clear understanding of what this great football club stands for. They will need to embrace and listen to the fans. Liverpool fans have a deep understanding of football and they have an unquenchable thirst for success based on a game played to its finest traditions. They are a real 12th man. The new owner will also ‘inherit’ a truly global fan base, so will have an immense platform to build on.
Right now, Liverpool is at risk of losing its manager and some of its best players, demoralised by a recent Europa Cup semi-final defeat and a poor season. While no-one is irreplaceable, such an exodus will leave a new owner with an even more difficult task. Therefore, the new Chairman of Liverpool needs to act with some swiftness. Once decline becomes precipitous, even money may not prevent the decline spiralling into permanency.
Published with full permission of the author.