The battle for control of Liverpool Football Club seems to be gathering more momentum in the media than it is in reality, with no real sign yet of any change in position from any of those involved. To summarise, Hicks says he won’t sell and wants to buy; Gillett says he wants to sell but not to Hicks; Dubai say they are going to buy the club soon.
Last week saw Rafa speak of a positive meeting with Tom Hicks over transfers, and although the Spaniard did point out that co-owner George Gillett and CEO Rick Parry were aware of what was said, he made it clear they didn’t attend the talks. Further hints from Rafa suggested the transfer budget would be minimal, but despite that he spoke of being happy he could get the targets he wanted. Time will tell if he’s happy it can make a difference to a league challenge, or just happy that when the names are revealed, nobody will expect a league challenge.
Any chance of increasing that budget depends on the resolution of the ownership situation. Only a takeover leaving one party with a controlling interest would see the transfer budget boosted.
This is where the club still finds itself – in a position of no change. Although some aspects of the club’s operations can continue during this stand-off, it’s still not able to operate as it could under the control of one entity.
Tom Hicks insists he can find a way of taking control, either by raising the finance to buy George Gillett out himself, or more likely by getting investment to allow him to become majority shareholder with another – or more than one other – investor or investment company. He refuses to sanction any 50:50 ownership deal, and claims he can block any attempt by Gillett to sell his half to anyone else. It is believed that with Gillett still not having formally accepted an offer from Dubai, nothing has yet been tested anyway.
George Gillett has given various reasons for his stated refusal to sell to Hicks. He admitted himself in a Canadian radio interview that he had been previously willing to sell to Hicks, but this was no longer the case. He mentioned having given Hicks time to come up with the goods to buy him out, but having run out of time. He mentioned death threats warning him not to sell any part of his share to Hicks, or else face the consequences. He claimed having almost 2000 emails a day from supporters who didn’t want him to sell to Hicks. Most recently he said he wouldn’t sell to his partner, and that “we need to find a way forward that is properly funded and truly in the best interests of Liverpool Football Club.”
In broad terms DIC haven’t changed their stance either, which is basically that they won’t pay any more than the price they’ve offered, and that they feel sooner or later Gillett and Hicks will have to concede defeat. Very little of what is attributed as coming from DIC is ever from direct quotes, and some contradictions are heard from time to time. Whether this is down to a misunderstanding on the part of those being spoken to, or a case of DIC’s people telling each different person whatever it is they want to hear isn’t too clear. But with no direct quotes it’s unlikely they will ever explain it anyway.
One piece of information that has recently started to filter out of the Dubai camp sounded very much like a piece of information said purely to placate those listening to it.
DIC the investment company.
Even back when DIC were losing their first attempt to buy the club it was often pointed out that DIC are an investment company looking to make a profit. The fact that they were under the wing of the wealthy Dubai Government and that their CEO was a Liverpool fan was nice to hear, but not nice enough to accept them with open arms and no worries. Their website changed its description of their dealings to hide the phrase so often used to attack Tom Hicks, “leveraged buy-outs”, but still showed they’d bought Tussauds for £800m and sold 80% of it two years later for £1bn, a quick-and-easy £200m profit without actually selling their whole stake. They admitted themselves on their own website that it was a leveraged deal, the kind of deal Hicks and Gillett struck to buy LFC.
DIC has only existed as an entity since 2004, so its good track record in terms of making money is only based on a relatively short period of time. The infamous leaked “Project Oslo” document was alleged to have shown a DIC plan to sell up after seven years at Anfield, and it’s worth noting that they’ve not yet had seven years ownership of any of their investments so far.
There are then still unanswered questions, despite many theories, as to why they were prepared to let the club slip out of their hands in 2007 for around half what they will have to pay now. Also worries from some that their reliance on this perception that Tom Hicks is in a precarious financial position sees them fail to make an offer that Hicks would even consider changing his stance for. But with DIC being an investment company, there is a ceiling at which they would feel the investment is either too risky or just not profitable enough, so they wouldn’t raise their price much higher anyway.
The focus has been on how bad Tom Hicks is, but few have stopped to look at DIC’s potential pitfalls. That said, there are more voices starting to raise concerns, more people starting to ask questions.
It has to be remembered that finding fault with DIC, or to be more accurate potential faults, doesn’t make Tom Hicks any better or worse. If a Tom Hicks fault is also one that it turns out DIC have, then it doesn’t mean it’s suddenly not a fault. It’s just a fault both candidates have, and we should be more interested in what they might do to rectify it.
One such fault is the approach to the hiring and firing of managers.
One day we’ll read an autobiography or two and find out exactly what went on in the lead-up to Jurgen Klinsmann being asked if he fancied Rafa’s job. It doesn’t matter how you interpret the events or how you apportion the blame, what matters is that any of those involved who do remain at the club know their own part in what happened, and they should recognise where they were at fault. If they remain at the club in the long term they need to ensure they don’t allow such a situation to develop again.
Over the weekend, timed impeccably just days ahead of a clash with Jose Mourinho’s former club Chelsea, came a story that Mourinho had been lined up by DIC to take over the manager’s job if DIC got control. A carefully-worded denial was swiftly issued, with “sources at DIC” denying that they had ever “offered the job to Mourinho, or met him to discuss it”.
Although the timing raises obvious suspicions that it’s an attempt to unsettle Rafa and his boys for Wednesday night, it isn’t the first time such claims have been heard. It remains about as strong a rumour as the Klinsmann approach was before German officials spoke about it and Tom Hicks admitted it; the rumour was little more than gossip until then. DIC obviously can’t offer Mourinho a job that isn’t theirs to offer, but could well have indicated at one stage that he was in line for it should they win their battle. And they can do this without meeting him – by phone or through his agent. The denial doesn’t cover that kind of approach, and with DIC still remaining pretty much unwilling to speak in public their intentions remain clouded in mystery.
And although a majority of fans are still supportive of DIC, this mystery is starting to have a negative impact on a small but growing number of supporters. It’s not a case of sharing points out between Hicks and DIC, taking a point from DIC doesn’t necessarily boost the points total of Tom Hicks. Added to the mystery is the clear evidence that DIC is still an investment company, still looking to make a profit, still not trying to buy the club just to make people happy. It does start to reduce the gap for some supporters, or more accurately, it moves DIC closer to the point where their presence becomes a serious worry. But they started from such a strong position that there is quite some way to go yet before worries are strong enough to protest against them.
Still, it does now seem to have been recognised by the powers-that-be at DIC that some fans are worried about how this deal would work.
First of all, let’s make it clear: DIC have been the entity looking to buy Liverpool FC since this latest saga began. It’s never been about the Sheikh of Dubai buying the club to put alongside his horseracing hobby. After all, much has been made of how Sameer Al-Ansari is a big Liverpool fan and how his presence would ensure Liverpool weren’t messed about again. Sameer is the CEO of DIC. All along these talks have been between DIC and the current owners. Amanda Staveley of PCP Capital Partners has been negotiating on behalf of DIC. The leaked email from Tom Hicks that appeared in the Telegraph last month was to Al-Ansari, in his role as DIC CEO, to his office at DIC’s HQ. And that’s where the meeting was held, between Hicks representatives and DIC representatives. It could of course just be a coincidence, but a Liverpool-supporting DIC executive was sacked just after that failed meeting. Al-Ansari has been rarely quoted on this issue, but he has been quoted.
DIC not to buy LFC?
But now it’s changed. The FT has reported what has been getting rumoured quietly for the last week or two. DIC aren’t buying LFC. It’s the Sheikh himself, or at least it’s coming out of his own money!
The report says that “Sheikh Mohammed bin Rashid Al Maktoum, the ruler of Dubai, is playing an active role in negotiations over Liverpool Football Club.” It adds that this could see LFC “wholly owned and guaranteed … by a sovereign state.”
The FT says that although DIC have been the company the talks have “been channelled through”, their information is that this is no longer the case. As ever, there are no names mentioned in terms of the source of the information, but “people close to the situation say… Sheikh Mohammed has taken a close personal interest. He receives personal regular updates on developments by PCP Capital Partners”.
PCP are of course the partnership whose representative Amanda Staveley has been involved in talks on behalf of DIC with the club’s current owners. She met representatives of SoS last week, before attending the Chelsea game with Al-Ansari.
The FT report also speculates that “the club’s future may become clearer tomorrow night if the team fails to win the second leg of its Champions League semi-final at Chelsea.” This may of course be true, but based on last year’s figures a place in the final was worth an extra £3.2m, which is hardly the kind of money to be a deal-changer in a transaction worth anything from £400m to £500m. Even winning the competition would bring £5.5m, again not a significant figure in a deal of this size. That said, an article in the Express today speculates on why the end of Liverpool’s CL run could be significant.
The FT also make a claim about the Sheikh’s own support of LFC. The “boyhood Red” claims of a few months back are now changed to “Sheikh Mohammed is a Liverpool supporter dating back to the early 1980s.” The boyhood Red claim always seemed a touch unrealistic, given that he was 15 by the time Shanks won his first Division 1 title with the club in 1964. Shortly after this he did spend some time studying in the UK, but even this 1980s claim has been played down privately by “those close to the deal”.
But at least his son is a fan, says the FT article: “Hamdan bin Mohammed, his 25-year-old son, who in February was named crown prince, is a fanatical supporter.” There’s no easily-found evidence of Hamdan being a supporter of any team in particular, but his older brother is happier to show his colours. Sheikh Rashid bin Mohammed Al Maktoum was pictured in a Manchester United shirt last month.
With 17 children it must be tough for their father to keep them all happy, so Rashid is less likely to get his dad to buy him a football team!
The FT goes on to say that LFC would now not be owned by DIC after all, and tying in with other information coming from the PCP camp it would be owned by “a vehicle of the Dubai government – partly via PCP”.
This of course, if true, does make some of the fears about Dubai ownership a little less pressing. There’s hardly been any doubt that the state of Dubai’s finances are in good condition, or that DIC wouldn’t have the amount of money to put in from their plans. The worry was their plans, as an investment company, would not have “fans with smiling faces and a full trophy room” even on the first page, let alone as a main priority. More needs to be explained by Dubai, or PCP, and not from behind the safety of anonymity, but for the first time, since even before the first DIC bid, there is a possibility of investment being made in the club without profit as the top priority.
Questions still need to be raised as to why this has only just become the case. Why were DIC the original interested party, and why has it only now been taken out of their hands? There are endless possible reasons for why, including the fact that by owning up to the funding coming in effect from the Sheik’s own wallet that the two current owners would be able to try and hold out for more. Instead of being fobbed of by a DIC business plan showing a return over seven years leading to an exit from the club, the owners would see that LFC were being bought without such restrictions in mind.
Step up the attack?
Some people are already asking why, if the Sheikh is personally involved and determined to become the owner of LFC for reasons other than profit, he’s not dipped a little deeper into his personal fortune with his bid. The most-commonly quoted figure of £400m suggests a profit of £25m each for Hicks and Gillett, which does not compare favourably with the amount of money to be made each year by LFC on fulfilling its potential commercially. Rather than let the club be dragged through a mess that all parties have helped ensure was played out embarrassingly and in public, a higher bid might just have tests Hicks’ resolve not to sell.
DIC, or Dubai, have believed for some time that Tom Hicks is about to run out of time in terms of not only getting the money to buy the rest of LFC, but also to keep his other sports interests afloat. Their strategy has certainly been based in part on that assumption.
Today’s Express carries a story that has been heard before. No, not a Diana story. Harry Harris: Bankers tell Hicks to sell talks of how US firm JP Morgan has “told Tom Hicks ‘time is up’ on his huge loans and are calling on the Texan to sell his 50 per cent stake in Liverpool.”
Another Hicks-on-the-brink story.
Harris writes that Morgans are “getting jittery at Hicks’ failure to raise the required capital to buy out co-owner George Gillett, who has agreed to sell his share of the club to Dubai International Capital.”
The story that his US loans are due to be called in has been doing the rounds for some time, although it’s not getting much coverage in the US for some reason. Harris it seems has also been speaking to Dubai’s people, saying “Sheikh Mohammed bin Rashid al-Maktoum (is) taking a personal interest in the end game of their proposed Anfield takeover.”
He also says he believes Hicks’ visits to Melwood and Anfield last week were “a facade – that Hicks is playing hardball, merely trying to hang on for a bigger offer before selling out.”
Again using figures that were bandied about a few weeks back, around the time of the Arsenal away leg in the Champions League, he writes: “He values the Hicks Sports Group… at £1billion, with the Premier League club making up 75 per cent of that figure.” And before anyone points out that he didn’t use JP Morgan to get his half of that £350m finance package in January, Harris says: “it is JP Morgan who bankroll the group.”
The reason for their worry, according to Harris, is “they see a buyer and worry it may fall through”.
And he says he’s getting the information from a “well-connected City source” who tells him that “Hicks is being so heavily squeezed by JP Morgan he may be forced to sell sooner rather than later.”
Then comes the explanation of why tomorrow night’s result matters: “They are sensitive to Liverpool’s bid to reach the Champions League final and will not pull the plug on Hicks’ loans until that campaign ends – tomorrow or after the final in Moscow on May 21.”
Hicks may well have issues with his US finances, it’s been rumoured often enough, but that last statement is difficult to believe. As was mentioned above, winning tomorrow night would only guarantee LFC an extra £3.2m, possibly £5.5m if they went on to win outright in Moscow. At most Tom Hicks gets an extra £2.75m if the Reds go all the way, or £1.6m if they are runners up.
Those Harris figures seem odd too. According to what he’s written, Tom Hicks’ half of LFC is worth 75% of £1bn. This of course would be £750m just for 50% of LFC, making the club worth a total of £1.5bn. Where does this figure come from? And why would a possible £1.6m make a significant difference?
It would be good if a source in the US financial arena could comment, but Harris says his man from the city had this explanation: “Hicks’ bankers are getting very nervous about his ability to finance his debt. They can see a buyer for his Liverpool shares, and as there is only one out there, they are worried it might fall through. They cannot allow that to happen. He owes the banks, and they want him to sell up. Hicks has had his chances to raise money, but in the current markets he has been unable to do that.”
If Hicks has agreements in place for finance, and is keeping to the agreements, for example making any regular payments, then it’s difficult to see how the banks would interfere. There might be a credit crunch going on, but the last thing they need to do is turn away somebody who is actually paying them money to help keep them afloat.
The “well placed source” admitted that he had been told Hicks’ existing finance had two years to run: “Hicks’ camp continue to suggest he doesn’t need to refinance until 2010, but that doesn’t add up with Hicks trying as hard as he has been for some time now to find other partners.” Yet it does add up with Hicks trying to get control of Liverpool FC, with the help of third parties.
The club currently has £60m sitting in wait to start work on the new stadium. This is part of the £105m finance that was put onto the club’s books in January. It’s widely believed that LFC would have no problems raising the remainder of the finance for the stadium, as and when required during the life of the construction project. Not according to the “well-placed source”, who claims: “If Hicks can hold out until 2010, then he hasn’t got the personal resources to either add anything to the transfer budget or raise more loans to build the stadium. That again applies even greater pressure to his personal financial situation.”
Another missed deadline.
Harris is hardly the most favourite of journalists for Liverpool fans, but there’s a danger that many fans will believe what he says on this story – because they just want it to be true. There’s no harm in wanting it to be true, to wish for an end to the mess, but it’s dangerous to take such stories at face value. Harris wrote in February that “Liverpool will be Arab-owned within a month” before going on to explain how he had written the story after he had “seen confidential financial analysis of Liverpool’s predicament, commissioned by DIC”. And that would be impartial analysis too no doubt.
Cynics will dismiss it, but back in the US Hicks has seen a link between winning things and selling tickets. Past quotes from Hicks have suggested he felt winning wasn’t important, fans would turn up no matter what, but the latest quotes suggest he realised this isn’t the case. His Dallas Stars hockey team are progressing well in the Stanley Cup playoffs, which is the big prize for those in the NHL. They currently lead 2-0 in a best of seven matches “Conference Semi Final”, and if they can win two of those next five games would be into the “Conference Finals”. That itself can lead to the “Stanley Cup Finals”. There’s still some way to go, but Hicks says the success so far is attracting supporters to commit themselves: “We’re getting our season-ticket base back, and that’s what it is all about. Dallas is a city that loves winners. Whether it’s the Stars or the Mavs or the Cowboys – and hopefully someday it’s going to be the Rangers again – there’s a lot more interest when they feel like you’re going to win.”
But who’s going to win the battle for control of Anfield? Are those in the running actually trying hard enough? Is Hicks trying hard but still having a run like Dirk Kuyt’s hard-working low-scoring mid-season spell? Are DIC just sitting back complacently thinking the game’s already won, risking an unexpected own goal just as it looked to be over?
It’s like listening to the last part of a match on the radio, with no clear idea of how long there is left to go in the match, trusting others to describe what’s happening and nobody telling you the score “if you’ve just got in”. Listening and listening for a clue to what the score might be, to how long is left, hoping the commentators going to use words like “Liverpool trying to extend their lead” rather than “Liverpool nearly getting themselves an undeserved point”.
Dubai have now brought their sub on, or their secret weapon, the player with a reputation in other games that says he’s got the potential of having what it takes to put this one beyond doubt. But potential on its own isn’t enough, neither is reputation, and if this Dubai star can’t put the ball in the net soon then the less-fancied guy for the other side might just sneak a winner. And if that less-fancied guy thinks he’s capable of sneaking a winner, he needs to start shouting for the ball.