For the second time this week a Tony Barrett story in the Liverpool Echo has revealed news that is shaking fans of Liverpool Football Club. This time it may be good news, although that remains to be seen.
On Monday Barrett exclusively revealed the owner’s secret decision to offer Jurgen Klinsmann the manager’s job even though current manager Rafa Benitez was in the middle of a winning streak and still unbeaten in the league. Today he’s revealed the news that the Crown Prince of Dubai, Sheikh Mohammed bin Rashid Al Maktoum, through his investment group Dubai International Capital are set to make an offer to buy out the Texan half-owner of the club, Tom Hicks.
The Echo were told that DIC senior executives were given the green light by the Sheikh to make an offer to buy into the club, just under a year since their first attempt was brought to an end by the late offer of around an extra £1000 per share by Gillett and Hicks. That extra £1000 a share meant multi-millionaire owner at the time David Moores got an extra few multi-millions to add to his account by choosing the Americans over DIC. But it wasn’t just the money for Moores; he fell for promises from Hicks and Gillett that they clearly have not kept.
According to the Echo, “an offer has been agreed in principle,” but it’s not clear yet whether the agreement refers to the Sheikh approving the offer, or if it’s an agreement in principle between Hicks and DIC.
DIC were considering obtaining a shareholding of around 15% from the club before Christmas, but backed out when given a price that would have valued the club at an unrealistic £1billion. They are willing to become joint owners with George Gillett, owning around half the club if not a little more, at a much more realistic price.
The Echo quote a source close to DIC as saying: “It is a very delicate situation but DIC has reignited its interest in Liverpool Football Club. The terms of the offer, which will be made to Tom Hicks, have been agreed and DIC are hopeful they will be finally be able to invest in Liverpool.”
There have already been reports this week that DIC had entered into a period of due diligence, and it seems that is now over. The source went on: “The offer is now being written up and it should be only a matter of time before it is delivered to Hicks.”
Hicks and Gillett are fighting to get some new finance to replace their 12-month loan with RBS. After promising not to put debt on the club, it’s now no secret that this plan changed in the autumn when they were trying to tie up the fresh deal. Amidst rumours of a falling out between Hicks and Gillett, it seems Hicks got his way in at least attempting to negotiate a new finance package and if they could get approval, hundreds of millions of pounds worth of debt would be secured on the club and its assets. The club quickly denied the pair had fallen out, but the rumours persisted.
There is little doubt that a new deal would be harmful to the club. Gillett and Hicks are either unwilling or unable to put enough of their own collateral into the deal to enable a reasonable rate of interest to be negotiated. This would leave the club facing interest payments in the region of £30m a year, if not more. By paying that, then paying the owners any dividend they decided to take, there would be very little left each year for new signings – especially in the early years when the stadium was still to be built. And this was not a loan to pay for the whole of the building work on the new stadium, which means a further loan would be necessary further down the line, with interest payment increasing accordingly. Hicks’ aim is to make a profit, and he seems to feel he can do this without actually winning anything, because the fan base are loyal and will keep coming to games even if the league isn’t being challenged for each season.
Revelations of what the owners were doing behind the scenes have been leaking for some time, but after being hurt by newspaper lies in the past many supporters are wary of believing much if anything of what they read in the press. This is a dangerous line to take, because for every Didier Baptiste there’s a true story waiting to come out. And the likes of Chris Bascombe, Oliver Kay and Paul Joyce – amongst others – aren’t likely to make up damaging rumours about the club they all love like we do.
It was Monday’s admission that Jurgen Klinsmann really had been offered Rafa’s job that finally allowed a lot of Reds to see the light. Those who’d trusted the papers were finally glad to see some proof, those who’d been sitting on the fence fell off it, and those who’d not believed a word were left with jaws dropped at what they were hearing. Not only was there the admission about Klinsmann, but also an admission that DIC had indeed been approached about buying into the club, despite denials from Rick Parry. It wasn’t the only denial that later proved to be false by what Hicks admitted on Monday, Hicks himself had also claimed that reports he wanted to fire Rafa had been made up by the press.
There’s no guarantee yet that Hicks will sell. However it does seem unlikely that the board will approve his plans to refinance the club’s debts in the way he wishes, and without that approval the deal can’t go ahead. The offer Hicks will receive from DIC will be for substantially less than his pre-Christmas £1bn valuation, but would still leave him with a profit. What remains to be seen now is whether Hicks’ ego will allow him to accept the offer and leave the club.
With Gillett, his son Foster, Parry and Moores all reported to be against Hicks, it’s clearly not a comfortable place for the Texan to be right now.
Hicks’ word is clearly not worth a dime. He denied wanting to sell any shares to DIC back in December: “I just want to clear up with you that I am not selling any of my shares to anybody. I have no idea why anyone would think that. It was just rubbish.” On Monday the Echo reported that he had tried to sell some of his shares to DIC after all. And it was reported in the articles that came from Hicks’ interview.
Also in that interview, Hicks told the Echo that he was confident of a deal with RBS and Wachovia being sealed within days. If it is then he may well turn down the offer from DIC. Acceptance of DIC’s offer now would give him a good profit, but he may feel he can earn more in the long term. If the reported levels of interest the club will have to pay turn out to be true, it will take some time for him to see any real profit from the club, especially in light of the fact that team improvements will be restricted.
Hicks, Gillett, Parry and DIC have all remained quiet on this story so far today, with none of the usual denials that are issued when a story claims Hicks is either selling up or struggling to get finance. A club spokesman said: “We do not comment on speculation.” This used to be true of course, until recently.
The owners, Hicks in particular, have now lost any support they had from the supporters. Too many broken promises had already put them in a precarious position, but their treatment of Rafa took all of that away. Especially in light of the revelations also proving other statements had not been truthful.
To most Reds Hicks is the more dangerous of the two owners, the one most likely to disregard the traditions of the club, to see it as just another Weetabix. Gillett was present at the Klinsmann meetings, so is far from squeaky clean, but if he sticks to his guns and refuses to allow debt to be loaded onto the club then there’s a small chink of light that might just allow him to start again in earning some respect from the fans. But Hicks, certainly, has come out of this lucking like a bully, and is unlikely to find favour with fans ever again.
As things stand, the owners are in for a rough ride from fans. How effective they would be is difficult to predict, but boycotts of merchandise and other anti-owner acts are already being discussed. Tuesday night’s banners, such as the one asking for the “Yanks” to leave and calling for an SOS from Dubai were produced hastily by supporters with the news coming so close to the FA Cup tie. Monday’s match with Villa may well be a different story.
It’s still of course questionable just how good for the club DIC would be. If the US owners had done everything the promised and implied then we’d not be in this situation now. Rafa would have got the players he had told them he wanted, meaning there would be no need for an outburst in May as the owners delayed in admitting to him that they weren’t really going to give him that kind of budget after all. Even if their plans had changed because of circumstances they couldn’t control, some honesty might have helped. But it’s clear that what Hicks and Gillett say and what Hicks and Gillett do are two entirely different things. We gave them our trust, they repaid us with deceit.
This means our trust won’t be so forthcoming if and when DIC come into any level of ownership of the club. They’ll be given the benefit of the doubt initially, and will be carefully watched, but supporters now know without any doubt that promises don’t have to be kept. DIC still want to make money out of the club but now seem to be the only organisation capable of doing so without putting the club under dangerous financial pressure. They also seem likely to ensure an experienced member of their organisation is here at all times, and communication issues should not be the problem they have been with Hicks. It’s also unlikely that they would tell Rafa – assuming he stays -one thing about his budget and then later admit that this wasn’t actually true. Overall, DIC seem a far better option, but fans will be wary to start with.