How was Broughton brought in?

By Tom Wilson

Liverpool have a new chairman, Martin Broughton, a highly-respected businessman with a reputation that suggests he’s not going to make a mess of his new role at Anfield. Which begs the question – how did Liverpool’s current owners – Tom Hicks and George Gillett – persuade him to take the job?

It’s just a matter of weeks since Spirit of Shankly posters went up around Liverpool describing Hicks and Gillett as cowboys, around the same time as meeting notes were being released that suggested Christian Purslow and Royal Bank of Scotland shared similar views of the much-despised duo. Although Purslow wouldn’t approve the original version of the minutes, he never denied anything attributed to him in that version.

And in that version was the claim that RBS were tired of Hicks and Gillett, tired of how they’d run the club since they arrived in 2007.

They were demanding an investment of at least £100m to reduce the debt the club and its owners had got into, and although details were never really released as to what would happen if the investment wasn’t forthcoming, the suggestion was that it wouldn’t be nice for the owners.

The only serious offer reported was from the Rhone Group, a bid of little over £100m for a larger percentage of the club than either owner wanted to give them. But with the messages being sent out by RBS, through Purslow, it didn’t seem like the owners had much choice really.

But the Rhone offer was allowed to expire, and an Easter deadline from RBS became a summer deadline.

And then the whole situation changed.

The owners found help in the shape of a very highly-respected name from Wall Street. Michael Klein, former vice-chairman of Citi Group and advisor to Barclays Capital on their takeover of Lehman Brothers. Michael Klein, formerly of Citi GroupThe Rhone Group offer was knocked back, the owners were no longer worried about the banks. Not in terms of their Liverpool FC interests anyway. And Purslow went very quiet indeed; has he had his wings clipped?

Suggestions were made that Barclays had refinanced the LFC debts, giving the owners a package worth £300m to replace the £237m already in place. Later on came suggestions that RBS had offered to extend the finance on terms the owners were very happy with because of the risk they’d lose that business to Barclays.

As it was the Barclays’ involvement was officially announced on Friday – their investment arm Barclays Capital were to find the club new owners, with Martin Broughton appointed chairman to oversee that process, and the existing bankers providing finance on terms that would ensure that sale process wouldn’t be hindered.

Klein had introduced Hicks and Gillett to Broughton. The owners were extremely impressed with what they saw, and Broughton was very much willing to do the job he’d been offered. He feels sure he’ll find a buyer for the club, and although he won’t confirm the price publicly it’s believed to be in the region of £300m (excluding debt), a significant rise on the purchase price paid of £175m (excluding the club’s debt at that time). This does seem to contradict comments by Hicks published earlier today where he suggested he’d get four times his investment back. Perhaps the issue is just how big his investment actually was.

But what about the new stadium? The whole reason the club was sold in the first place was so that Anfield could be replaced by something far larger that would bring in far larger revenues from each match.

Is it possible that Klein has agreed £300m worth of finance for the club with Barclays after all? Not in the sense of a straight loan for £300m, but as part of a deal to sell the naming rights for the new stadium.

The two largest deals ever struck in the US for stadium naming rights featured companies linked to Klein.

His former bosses Citi Group paid $400m to sponsor the new home of the MLB’s New York Mets. Now known as “Citi Field”, the stadium opened last year.

And Barclays paid a reported $400m to become the named sponsors of the new stadium in Brooklyn for the New Jersey Nets basketball outfit. To be called the Barclays Center, construction is still under way. The first shovels were in the ground last month.

The Liverpool announcement on Friday made it clear that efforts were to be made to get the stadium project back underway. Is that going to come about through finance made available independently of any sale?

As always with the soap-opera surrounding the governance of Liverpool, nothing should ever be taken at face value.

23 thoughts on “How was Broughton brought in?”

  3. I’m not a red but If I were I’d be alarmed with the whole timeing of the liverpool ‘s for sale announcement. I’m sure there is people who would prepared to invest in LFC if the price was right. From press reports the yanks are asking an unrealistic price though. with the debt mounting and a new stadium to bebuilt and payed for the champions league qualification disappearing over the hill. the progress that city and spurs have made, plus the need for new blood on the pitch. the future looks bleak. I think the yanks will still be therein august unless they cut there loss’es which would be a total reverse of there style.

  6. Interesting article. Hi Jim and MR – hope you’re ok? It’s been a while.

    Out of curiousity – who is Tom Wilson, Jim? Just wondering what the significance of him posting this article is – has he posted before?

    Thanks mate

  7. Hicks & Gillet could out manouvere RBS by getting a loan from another bank. That has to be our biggest fear because that could drag on for more years. More years of us being in the wilderness. Our only saving grace is that without CL football, our income is diminished, making it less attractive to a buyer unless the two idiots agreed to sell due to the pressure from whoever they loaned from.

    What Liverpool fans should do is just stop going the match. Obviously they can’t give up there season tickets but if they had it organised. An empty Anfield, especially if it was a televised game would send out a huge message around the world. It would be big big news and the Yanks would come under huge media spotlight.

  8. If H & G could get a loan from another bank then they would have done so already. RBS have forced them to back off running the club and bring in Broughton, so far so good. Hicks is quoted as saying there will be no quick sale and he thinks the club has tripled in value in 3 years, this is Texas bullshit or he’s losing it. Let’s hope its the latter.
    How did these 2 complete chancers get hold of our club ?
    David Moores should be banned from the ground.

  9. The fact is Merseyside Police cannot guarantee their safety in Liverpool anymore, they are taking a big risk in entering the city. Some people are just plain stupid, they have been in some dangerous situations already’ just go now!!!!!!!!

  10. chelsea fan to rescue liverpool – and passes on trade secrets to the blues. you couldn’t make up this saga.

    who’d have thought ‘snoogy doogy’ could have led to this:

    outside the top 4
    out of CL into europa
    only hope of winning trophy is europa
    torres bare-ly played any games
    gerrard still recovering from his court case
    johnson injuries
    beach ball-itis against sunderland.
    aquilani doing a darren anderson aka sicknote….

    a season with so much hope buried under a couple of charlatans who’ve done far worst for american in the eyes of scousers than george bush juniour has ever done…

    surely 2010 season can be no worse,,,,,,,,surely?!!?

  11. Martin – there were some pieces on the site by Tom Wilson a couple of years back, but when the site got converted from one system to another they’ve either dropped off or the author information was lost.

    Meanwhile I recommend reading this article today from Tony Evans of The Times. Take note in particular of how a serious proposal to fund the stadium died off when it was passed to Purslow to follow up – we might have actually had some shovels in the ground by now if that proposal had been taken seriously by Purslow. Hicks is believed to have taken it seriously, but it was down to Purslow to take it further. (One question not asked in the piece is whether Purslow was on some sort of contract that made it unattractive to him, or his ultimate employer, to take such a proposal further.) This wasn’t a case of him looking at the offer and deciding it wasn’t good enough – he just ignored it completely.

    http://timesonline.typepad.com/thegame/2010/04/profitable-time-for-everyone-but-the-fans.html

  12. Jim that article just confirmed that the 2 yanks are just using the club, but it has now turned my head to think that maybe Purslow may also be just riding the gravy train of a premier league football club. Idid think though that Purslow was a permanent employee of the club, so I find it hard to believe that he would turn down a very good offer to fund a stadium, unless of course it is just Hicks propaganda?

    It is possible though that maybe the deal was not a very good deal in so much that it a better deal could have been had if we sat tight for a while.

  13. What was this “serious Proposal” to fund the stadium and why has it taken 7 months to surface ? Presumably the benefactor was lending the money ( more debt) because there was no chance of H&G giving up any of their stake in the Club. I take the whole thing with a pinch of salt and at the moment I’m prepared to give Purslow the benefit of the doubt. Wasn’t it he who fixed up the Rhone group offer which placed a realistic valuation on the club.
    Surely there can be nobody left in any doubt about Hicks motivation in buying Liverpool. In my opinion he is now just taking the piss out of the club and especially the fans who have caused him so much trouble.

  14. @Jofrad

    This site, January 24th: “A credible offer is believed to have been put to the club’s owners at the end of last season that would solve the problems with funding for the new stadium. This is believed to have been turned down flat by current LFC Managing Director Christian Purslow, with the impression given that he would be able to solve those problems himself.”

    http://www.anfieldroad.com/news/201001243469/hicks-sells-rangers-lfc-still-in-limbo.html/

  15. Jim – re: that article – It’s bad enough that we already have the greed of H&G to contend with without RBS ciphoning off money in their own best interests.

    Everything I’ve heard from the Purslow SOS minutes and Graham and Paul’s take on them suggests that Purslow is an RBS appointment working on their behalf. But I wouldn’t have thought Purslow and RBS would go as far as to reject a proposal “flat” without considering Liverpool’s best interests.

    One does have to wonder why RBS didn’t call in the loans this time around. All that bluster about a demand to reduce debt by £100m yet the consequence has ultimately been an extension. Broughton has said that RBS recognised that it made no sense to not allow time for bids to compete but why? Surely they shouldn’t care so long as they get their money back? A lot of speculation suggests the reason is that RBS didn’t want to get into the daily running of the club – I suppose this article shows that they are happy to keep taking payments.

    I’m finding it impossible to determine the truth in these latest developments. If these reports on RBS are true then you would have to assume their major concern is that without CL revenue, the interest payments cannot be met and the asset is dwindling. It’s now in their best interests that we are sold too.

    When we are sold though is a whole other matter. Jim – Tony Evans and Tony Barrett are pessimistic at worse and cautious at best. Do you think this will run and run?

  16. @Martin,

    I’ve always thought that RBS would be happy to keep refinancing as long as they felt the club could meet the payments (even if it empties the transfer kitty) and as long as there was enough security there as backup. It’s relatively easy money for them then, although they must have flapped a bit when they saw Hicks had refused to pay certain bills the Texas Rangers had last year. Then again, there’s a lot more protection from the banks for Texas Rangers, and they have MLB on their side too.

    I don’t know if Purslow actually is working for RBS, from what I’ve been told he isn’t. The owners appointed him, not the bank. But what might be the case is that RBS insisted that the owners take more of a back seat in the runniing of the club and so Purslow was made MD. He’d been working for LFC for 3-4 months before he was made MD.

    I actually feel there are going to be loads of similarities with 2008. Hicks speaking out now and again, Gillett keeping quiet, but both wanting the same kind of price for the club. So yes, I think it’s going to run and run.

  17. ” A credible offer has believed to have been made…….this believed to have been turned down flat ”
    Not enough facts for me I’m afraid Jim. Why did this information not appear in the national press at the time ? I think we are in danger of looking for targets to attack. Moores, Parry, Rafa, RBS, Purslow. The buck stops with H&G who conned their way into owning the club.
    Of course RBS are looking after their own interests, after what they’ve been through who can blame them. It is also obvious that they do not want to be involved in running the club, this why they have forced H&G to cede control and put the club on the market. In spite of Hicks’ current posturing to the international financial press, the club will have to be sold and at a market price at that. All this is also in the best interests of the club but that is as far as it goes at the moment, and I agree with Martin that there are few real grounds for genuine optimism at the moment.
    Yes this will run and run.

  18. Thanks for the info about Purslow Jim. Info on RAWK from Graham and Paul from SOS seemed to suggest he was working for them but this can be construed in different ways. I didn’t realise he was appointed before being made MD and this seems to intimate what you suggested.

    I don’t understand why he would turn down that offer for finance flat in that case? Maybe he did look at it and thought it wasn’t optimal so turned it down, although this isn’t the reaction that has been suggested.

    I want to believe that this will be sorted relatively quickly as Broughton suggested but I’m conditioned now to believe the opposite. I think that sorting this out by the end of next season is crucial because we will kiss goodbye to Torres, Benitez and others by then, if not before, for sure no? Clearly.

  19. “So yes, I think it’s going to run and run.”

    Hope your wrong about the length of time it will take to sell the club, but cant see why you would be.

    Does anybody have any suggestions about what fans can do to speed up the owners departure?

  20. I am prepared to beleive that the MD and the new Chairman are and will act in good faith in trying to sell LFC BUT, they will not make the decision to accept any offer no matter what it is.
    With H&G given a further 6 months credit extension, one would assume that they will use that time to get the highest price possible, therefore assuming that 800K is not offered soon or even 700K or 600K , then they will take as long as they wish to see if they can get 500K plus, after all LFC is paying the Bank Fees plus interest, so it isn’t their money they are spending and even then, they may not accept any offer, they are playing the USA National Game of Poker and they bluff very expertly, the only rescue LFC can really hope for is that RBS will truly call in the loan and there is not much chance of that.
    And so, I am not expecting any early decisions but, nevertheless I have my fingers crossed.
    Regretfuly, in the meanwhile life at LFC has to go on and just what the Manager will get by way of funds, one wonders just how low a number it will be.

  21. @Roger.

    One suggestion of what the fans can do to help the sale of LFC – Stay away from all homes games, the only currency H&G know is money and the only way is to reduce LFC revenue stream, it will hurst in the short time but may help to get rid of the 2 conmen.

    I was totally amused by Hicks statement that “they” had grown the club in the 3 years they have held it, he has a dredful warped sence of achievement, I think Christian Purslow and the other 2 Directors have increased the revenue somewhat and Hicks is taking credit for that. ON THE WHOLE, THEY HAVE LIED, LOADED THE CLUB WHITH DEBT, HAVE NOT SIGNED TOP CLASS PLAYEYS AND HAVE FRUSTRATED THE ADMINISTRATION OF THE CLUB, OF WHICH THEY KNOW NOTHING ABOUT ABOUT THE RUNNING OF A UK FOOTBALL CLUB, in othe words they have done the opposite of all they said they would do.

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