Liverpool in meltdown
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It was supposed to be the American dream - a takeover of Liverpool that promised massive investment from two generous billionaires which would finally enable the great club to compete at the top again.
Fast forward 12 months, and that dream is turning into something of a nightmare, with no end in sight to the lurid crisis that has gripped Anfield in recent months, culminating in confirmation yesterday that Rafael Benitez's job was casually offered to Jurgen Klinsmann.
Such a revelation from owner Tom Hicks, which fatally undermines Benitez's position at the club, should be just about as bad as it gets at an institution better known for its dignity in the face of adversity down the years.
But the Americans' relationship with their manager - and the implications of employing a lame duck boss over the next four months - are just about the least of the worries facing Hicks and his co-owner George Gillett.
Liverpool are in a mess. In fact, prefix that with an expletive, and you begin to understand the sort of mess they are in. They are a club beset by financial concerns and political infighting, and one whose prospects look bleak for at least the next four to five years.
When they bought Liverpool, Hicks and Gillett explained that they were very different from the Glazers at Manchester United, promising they would use their own money to finance the deal, and not borrow against the club. Depressingly, that promise has been broken, with the pair spending the last six months attempting to arrange finance that will ultimately put Liverpool in debt to the breathtaking tune of around £600million.
Because of the global 'credit crunch' however, banks are nervous of lending money without security, and they have demanded that both Hicks and Gillett provide personal guarantees and letters of credit to cover the loans.
Gillett has been either unwilling or unable to provide such guarantees, which has caused a major delay in finding the money, and led to speculation that the Americans would be forced to sell their stake. Hicks insisted yesterday that neither he nor his partner have any intention of selling - but he did reveal recently that the plan now is to borrow the money in two stages over the next 12 months.
If they can appease the banks then they will borrow £300m to pay for the purchase of the club and other related costs, and get the 'new Anfield' stadium build underway. In a year's time, they will borrow another £300m to pay for the stadium.
Such massive levels of borrowing means that the interest on the loan will be around £35-40m every year.
Last year, Liverpool's operating profits were in the region of £30m, meaning the loan would be almost 20 times operating profits. In comparison, Manchester United's are eight times, and Arsenal's just four.
Such financial talk is above the heads of many fans, but the bottom line for Liverpool is that at current levels, any profit will be wiped out completely by the interest on loans - which means there will be little or no money for transfers.
The Americans plan to increase profits, but until the new stadium is built - which won't be until at least 2012 - their only real way of doing so will be to increase ticket prices dramatically, another Glazer route they promised not to follow.
To this heady mix of financial worries must be added real problems in the relationship between the two Americans. There are clear indications that the pair simply no longer trust each other, and certainly, both appear to be briefing frantically against each other.
Hicks was supposed to be the silent partner providing the financial muscle in the deal, with Gillett the dealmaker who handled the public relations. Now Hicks seems to have taken over, and Gillett to have disappeared.
There is also disharmony within the Anfield boardroom, with former chairman David Moores and chief executive Rick Parry uneasy about the level of borrowing against the club, and the lack of financial progress that has been made. Which all leaves the situation with Benitez as a puzzling sideshow. In their current financial situation, Liverpool desperately require stability and guaranteed income.
Benitez has not only qualified his team for the Champions League every season, but reached the final twice in three years, providing desperately required revenue. But there is a real danger now that by undermining him so badly, the effect on the team's morale will cost them a Champions League place this season, which would be an unmitigated disaster.
By replacing him, the Americans are merely opening up the possibility of spending even more money they haven't got, because his successor would demand funds to get rid of Benitez's players and bring in his own.
Logically, the Americans would be best served by backing a manager with a good track record, in the hope that he can get the best out of a squad that will not be added to in any significant way over the short to medium term.
But logic has long flown out of the Anfield window. Benitez knows that his only chance of survival now is if the Americans sell before they can sack him.
While that seems a remote prospect, it is not impossible. DIC, the investment arm of the Dubai government, lurks in the background, still interested in buying the club they believe they were cheated out of a year ago.
Hicks revealed yesterday that in October, Liverpool were in talks to sell DIC a stake - but they stalled over the Americans' valuation of £1billion for a business they paid only £180m for just eight months previously.
If borrowing costs get any higher, then the Americans could yet be forced to lower their valuation, and sell not just a stake, but the whole club to the Arabs. A mess it certainly is. -
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Gillett and Hicks (gettyimages.com)
Liverpool anger as Hicks reveals secret approach to Klinsmann
Tom Hicks's admission that Jürgen Klinsmann was approached to succeed Rafael BenÃtez has spread internal division at Liverpool into the boardroom, with the other co-chairman, George Gillett, and the chief executive, Rick Parry, enraged by the public revelations which have undermined the Spanish manager and exposed the Americans' ownership to ridicule.
Hicks had intended to draw a line under the uncertainty about BenÃtez's future - at least until the end of the season - by saying that although he had spoken to Klinsmann last November he now backed Liverpool's current manager after the club qualified for the Champions League knockout stages. Instead the Texan has fuelled the infighting at Anfield as well as damaging BenÃtez's long-term prospects at the club.
Gillett is understood to be livid with his business partner at the embarrassment the Klinsmann revelations have caused and the fury it has provoked against their reign among the Liverpool support. It is not the meeting with the former Germany national team coach which has irked Gillett, however, because he himself was present at Hicks's Californian retreat when the Liverpool owners tried to secure their "insurance policy" against BenÃtez's rumoured departure. Klinsmann has since accepted an offer to coach Bayern Munich from July 1 and Gillett had intended the clandestine meeting to remain private.
The falling-out comes at a sensitive time for the Liverpool co-chairmen, given that they have six weeks to secure a £350m loan that would refinance their purchase of the club and enable work on a revised stadium project to commence. Failure to finalise a deal with the Royal Bank of Scotland and the US investment bank Wachovia, which rests on personal guarantees from the American pair, would heighten problems for Gillett and Hicks and increase the prospect of Dubai International Capital launching a fresh takeover bid. Sources close to the owners, however, are adamant the loan will be in place within the next few weeks.
BenÃtez could sue Hicks for constructive dismissal after this week's comments but he would have to resign from a job he cherishes before taking legal action and he is not considering that option at present. He would also risk losing a £6m pay-off should he walk away from Anfield.
Liverpool's former manager Kenny Dalglish yesterday insisted BenÃtez did not deserve to be treated so poorly for his public outburst against the Americans' transfer policy last November and said instability at the club had begun to affect the playing staff. "I think it's a disappointing phase when Liverpool, who have never washed the dirty linen in public, have contributed over the past two or three months to a lot of headlines which really you had never seen before," he said. -
well, one end wanted results, one end wanted more money..
and both can't meet in the middle, things fall apart lor. -
Originally posted by zocoss:
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pay 180million quids and ask for 1 billion quids in return..? tis two owners are a real nutcase...
