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Lim's new offer for Liverpool

Robert Peston | 11:26 UK time, Tuesday, 12 October 2010

Here are the details of the new offer to acquire Liverpool FC, which will be announced in a few moments by the billionaire Singapore businessman, Peter Lim.

He is offering £320m in cash for the club and its liabilities, compared with the £300m offered by New England Sports Ventures - which was accepted last week by Liverpool's chairman, Martin Broughton.

But what may excite Liverpool's fans is that Mr Lim is also saying he'll provide £40m in cash to Liverpool's manager, Roy Hodgson, to purchase players during the January transfer window.

Liverpool's board will find it difficult to ignore Mr Lim's new offer, raising yet more uncertainty about the ultimate fate of Liverpool FC.

Update 1221: The bid battle for Liverpool FC has become slightly more complicated than three-dimensional chess, but I'll have a go at explaining the interplay of the offers on the table and the outcome of today's high court case.

If Royal Bank of Scotland wins the case - to the effect that the current US owners of Liverpool, Tom Hicks and George Gillett, had the right to change the members of the board under Liverpool's articles of association but were simultaneously in breach of their agreement with RBS - then in those circumstances a new board will be formed that will consist of the original members.

And as I understand it, in those circumstances the newly-constituted board - which would again include Christian Purslow and Ian Ayre - would be obliged under its fiduciary duties to consider Mr Lim's bid.

In which case, it would probably be obliged to accept his bid, pending the receipt of an improved offer from New England Sports Ventures.

However, if Liverpool's chairman, Martin Broughton, were to win on his argument - that Mr Hicks and Mr Gillett were acting beyond their powers in removing Mr Purslow and Mr Ayre - the old board would still be in place.

And if the old board were still in place, the agreement with New England Sports Ventures would hold. And Mr Lim would be out of the game.

Finally, if Mr Hicks and Mr Gillett were to successfully argue that they had the right to replace Mr Ayre and Mr Purslow with their appointees, Mack Hicks and Lori Kay McCutcheon, then all bets are off.

In those circumstances, Liverpool would probably be careering towards administration under UK insolvency procedures. And it would be up to Royal Bank of Scotland - rather than Mr Broughton - to decide whether to sell to Mr Lim or New England Sports Ventures.

Right now, Mr Lim's bid probably looks more attractive to RBS than the offer from New England Sports Ventures, because he is proposing to pay RBS and its US banking partner, Wachovia, up to £20m in penalty charges, compared with the £10m or so offered by his rival.

Mr Lim's revised improved £320m offer breaks down as follows: £200m to pay off the long-term debt provided by RBS and Wachovia (identical to what New England has offered); £20m to cover bank penalty fees; £60m in cash to pay off other bank debt and to provide working capital; and the assumption of £40m of other liabilities.

In addition, he would provide £40m for the purchase of new players.

For the avoidance of doubt, Mr Lim's new offer is identical to New England's in one respect: not a penny of his money would go to Mr Hicks or Mr Gillett, who continue to face the painful prospect of losing £140m.

Comments

  • Comment number 1.

    You'll never walk without a loan!

  • Comment number 2.

    while Lim may be worth about £1billion, buying and rebuilding the club is going to take up a lot of that money: £340m to buy the club, £40m in transfer fees this season alone, another £300m to build the stadium and that’s the vast majority of his personal fortune gone with little or nothing to show for it.

    Is he really going to want to do that? I appreciate he’s saying he won’t use debt in the first instance, to buy the club, but you have to expect him to borrow at some stage against all those costs. This doesn’t look as much a case of black and white, compared with NESV as it’s being presented.

    Equally, Mr Lim is a Manchester United fan who is reportedly only interested in Liverpool to get revenge over Man Utd for rejecting him when they sold to the Glazers. Not sure Liverpool fans would be too happy about this as a long-term prospect.

  • Comment number 3.

    I'm happy, as long as Hicks and Gillett get less than nowt.

  • Comment number 4.

    £320m would fund roughly 60 decently capitalised start-ups or spin-outs.

  • Comment number 5.

    £40 million won't buy you much, especially now that all selling clubs know that you have £40 million to spend. Just ask Man City. Ja-ja Toure, £26 million transfer fee and £220,000 a week for what is no more than a "stopper", more like Ha ha Toure laughing all the way to the bank. Sheer madness.

  • Comment number 6.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 7.

    "But what may excite Liverpool's fans is that Mr Lim is..."

    not a yank, basically.

  • Comment number 8.

    Madness.

    All for the sake of an extra £20m, and the promise of money to spend in the transfer window.

    Having announced the £40m it now means that Liverpool will be paying well over the odds on any player they bid for...

    They are happy to throw their lot in with a total unknown with no experience whatsoever in sports ownership, rather than a group that brought the Red Sox their first World Series in 86 years, then another one a few years alter.

    Football financing is a total mess.

  • Comment number 9.

    Robert:
    Is not the agreement reached with Americans legally binding ?

  • Comment number 10.

    Wot, no soylent greens today? I'm toast.

  • Comment number 11.

    1. At 11:49am on 12 Oct 2010, watriler wrote:

    "You'll never walk without a loan!"

    Superb.

    How can Andrew Marr criticise bloggers as being spotty angry teenagers with humour like that?
    Maybe Andrew, for all his educational attributes, still doesn't ask the most basic and fundamental questions of our politicians and his other guests - and that leads to ever increasing frustration by bloggers.

    I have read some incredible insights on here, witty statements which compact montains of theory into a simple phrase - accurately and completely - and I've often seen stories which were revealed on here which later 'coincidently' get picked up by the media a short time afterwards.

    I would suggest Andrew has 'journo-snobbery' and fears for his job because I would rather listen to the opinions - and rantings - of some on here than any 'qualified' journalist who needs to consider his job before he writes any story - a restriction bloggers do not suffer.

    So keep on blogging folks - even those who are deluded - we're clever enough to spot the phoney's and the liars - we don't need a journalist to filter them out in a definition set by them.

    Now back to business - the headline in the City AM appears to indicate that QE2 is a done deal and will be put in place over this winter to counteract the falling aggregate demand - brought on by public sector cuts.
    I am so glad our erstwhile journalists are so meticulous in their interviews that not one of them has pointed out to David 'Monetarist' Cameron that this is exactly what Japan attempted and it took them a decade to get out of it....and in addition to this it made them very vulnerable to the new shock we're experiencing today.

    You cannot 'solve' asset devaluation by creating a bubble in 'money' - which is what Cameron's ill-fated plan is.
    Now where are all those experienced and qualified journalists asking that question? - too busy criticising the rest of us I presume...

  • Comment number 12.

    For that £40m he can buy Sheff Wednesday - twice!

  • Comment number 13.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 14.

    Who cares!

  • Comment number 15.

    ha ha ha - out of the frying pan and into the fire...

  • Comment number 16.

    Everton will be hoping & praying to add to the misery this weekend - ha ha ha - it's a funny old game...

  • Comment number 17.

    "In addition, he would provide £40m for the purchase of new players."

    So, they can buy one half of one decent player then?

  • Comment number 18.

    I would suggest that this latest offer is "Positioning" on the possibility that Liverpool are called into administration and that RBS will be keen for a quick deal. In current form I would suggest the club is valued less than £100 million .Its certainly needs someone with big pockets to re invest in the team. I can't see the new ground ever being built at £300 million you would never get your money back ,Arsenal could only redevelop because Highbury was worth a fortune due to London house prices.

  • Comment number 19.

    2. At 11:51am on 12 Oct 2010, theocupier wrote:

    Any buyer is highly unlikely to fund the purchase entirely out of their own cash. Its going to be a leveraged buyout from which the club will have to service the buyers debt and fund any expansion through further debt. Liverpool's balance sheet won't be that much better off under any new owner as the whole purpose is to fund growth through debt and then sell in a few years time.

  • Comment number 20.

    So when is it nailed down ? When a bid is accepted by the LFC board is that it or can anybody else issue a bid through the media? Will it be that 3 months from now some other bidder will say that they would have offered £350,000,000. Lim has no experience in this type of venture so effectively it is only money that is on offer and that does not fall within the self imposed remit of Broughton. It was always reported that there were 2 bids and that they were more or less the same money so the assumption must be that Lim was discounted earlier for other reasons. No mention of the ground in the Peston article. But it is a headline and it pumps up the hype.

  • Comment number 21.

    Arsenal could only redevelop because Highbury was worth a fortune due to London house prices.
    ------

    Not true. There match day takings amount to 3mill a game, compared to Tottenhams 1mmill. That's a big difference in anyones book, and shows you the difference a shiny new stadium can make. There overall turnover is significantly higher, (somewhere in the region of 100m a year if im not mistaken) therefor the stadium will pay for itself sooner rather than later.

    You also have to remember, that whilst Highbury was worth a fortune, so was the land at Ashburton grove. Even the land around WHL is expensive, and it's a dive! If Liverpool can build the new stadium for 300m it will be a massive, massive boost to them econimcally. Tottenhams ground move is rumoured to be in the region of 400+mill! which is why the olympic park suddenly looks an interesting propersition.

    Good article, leveraged buyouts should be banned full stop. However, there is light at the end of the tunnel for l'pool, however avoiding the 9pt penalty will be huge.

  • Comment number 22.

    I hope the investors are reading this column. £30 million would buy Sheffield Wednesday and it would be a propel the club into the Premiership. Not a bad return for your money and then skys the limit.

    £320 million would only be the tip of the iceberg with the expectations of the supporters at Liverpool.

    A good run Wednesday has at least as much potential as Liverpool.

  • Comment number 23.

    theocupier wrote:
    Equally, Mr Lim is a Manchester United fan who is reportedly only interested in Liverpool to get revenge over Man Utd for rejecting him when they sold to the Glazers. Not sure Liverpool fans would be too happy about this as a long-term prospect.


    This Liverpool fan would be *very* happy with an owner who wants revenge over Manchester United ... especially on the pitch!

  • Comment number 24.

    19. At 1:05pm on 12 Oct 2010, RiskAnalyst wrote:

    "Any buyer is highly unlikely to fund the purchase entirely out of their own cash. Its going to be a leveraged buyout from which the club will have to service the buyers debt and fund any expansion through further debt. Liverpool's balance sheet won't be that much better off under any new owner as the whole purpose is to fund growth through debt and then sell in a few years time."


    ..and around we go again - al these investments are flawed - they're all on the basis of there being a rise in asset value. It's like BTL for morons where each property is remortgaged to the hilt in order to 'purchase' the next one - it all works great when the asset prices keep rising.

    Alas - a lot of the people in the market (football or BTL) have not actualy expereinced a negative asset appreciation environment (prices falling) - which is why they're still buying today on the premise that asset values wil 'turn around'. This is contrary to how businesses and banks feel about the situation - who are running scared of deflation.

    The only hope of Liverpool is a mega-rich mega-fan who doesn't mind losng a lot of dough on a trinket - or who is prepared to hold the club for about 20 years or so - when it should start appreciating in value again.
    So a mega-rich, mega-liverpool fan who is not planning to retire (or die) in the next 20 years at least.


    ...that narrows the choice right down - no wonder Sheffield Wednesday can't find a buyer!!

    I said football is doomed - and it will be. How many times in the last year have we had a 'liverpool rescue' only to find it was all a load of codswallop?

  • Comment number 25.

    Lim's bid is just money offer, NESV's bid is a money and experience offer.

    also the potential growth with each bid are different.

    Lim's bid: Asia market but Liverpool already have a big fan base over there so it not as beneficial as it might look like.

    NESV's bid: Partnership with Red Sox and the market in the USA which the popularity of the sport has been growing fast.

  • Comment number 26.

    Surely the £40m fo rnew players is not 'free money'? If it is not part of the purchase price then he will expect to get that money back through future player sales. Which means all he is doing is stating that he will invest in the team in the short term. I don't see how this would influence the sale at all.

  • Comment number 27.

    Its all a bit of a cautionary tale.

  • Comment number 28.

    Thanks for the explanation, Robert. Just one thing: it's my understanding that today's hearing was brought by RBS against Hicks and Gillette for breaching undertakings given to RBS when the loans were re-financed in April.

    If that's the case, in what circumstances could Martin Broughton win and the old board remain in place, given that he is neither the plaintiff nor the defendant?

  • Comment number 29.

    ooooh it's like dragon's den, each party strutting out why they should be the one. From your report Robert you state that the American offer is still in a sense debt on their parent company, Mr Linns is cash and the hedge fund I didnt catch what there offer consisted of.

    anyhow the winner will be the ones borrowing the money because somewhere someone will get a nice little earner, luvvlly jubbly

  • Comment number 30.

    #24, WotW. I'd have to take issue with your assertation that the investment itself is flawed. As with pretty much any investment, we'd have to wait and see to come to that conclusion, though if the investment is solely to turn the club into a profit making enterprise and recoup the original outlay then I do wonder how Mr Lim made his billions.

    Having said that, LFC do have potential as a business proposition. Their rivals got a massive head-start with the first influx of Sky money and the EPL boom when it came to negotiating advertising deals (an area in which Liverpool still lag behind the teams they would like to call their contemporaries) and other sources of income, e.g. corporate hospitality. This set LFC back significantly, but also means that there are some relatively straightforward ways of increasing income. Ticket prices are also relatively low for a club that can comfortably sell out Anfield for the majority of games. Obviously if Hicks et al attempted a price hike there would be uproar, but I think new owners could get away with it simply on the basis of who they are not.

    The new stadium would significantly increase revenue, and LFC have a friendly council regarding this matter. Many people are assumming that LFC would be required to foot the £300m (estimates vary wildly) cost on their own, but this is far from the case.

    Liverpool are also considered to not be exploiting their extensive global fanbase either (hard to believe from my perspective, but there you go).

    So, there is a chance that LFC could work as an investment. Throw in success on the pitch and success for the national side in 2012 (this is where things become a little unrealistic) and who knows, it could be a winner.

    These are some pretty big 'ifs, buts and maybes' though, and I do struggle to see why any businessman would buy LFC for a profit. Debt vehicle or plaything in my book.

  • Comment number 31.

    Afternoon Bobby P. Why would anyone spend £320m to buy Liverpool FC? The city is worth less than that!

    Unless they intend on moving the club to Milton Keynes and being nearer a more affluent market. That must be the reason.

  • Comment number 32.

    If everyone in Liverpool put in £500 then we could probably buy the club! If only...
    Saying that it would be half-owned by Everton fans so not sure thats a good idea!

  • Comment number 33.

    30. At 2:20pm on 12 Oct 2010, Deep-heat wrote:

    "#24, WotW. I'd have to take issue with your assertation that the investment itself is flawed. As with pretty much any investment, we'd have to wait and see to come to that conclusion, though if the investment is solely to turn the club into a profit making enterprise and recoup the original outlay then I do wonder how Mr Lim made his billions."

    Football investment is flawed - there is no money in it. All the profits derided since the premiership's inception are based on a 20 year boom where asset values were rising and there were pots of Billionaires ready to play 'club owner' to get themselves into an elite (where owning a super yacht and a manhattan penthouse just isn't enough)

    You don't really have to wait and see - if you strip out the asset value appreciation then no football club is worth buying - with the exception of a few - clubs generally run at a loss (or a near loss) and rely on refinancing to bring down the interest payments and make the club look like it's profitable. All these conditions have gone - cheap credit, billionaires and asset appreciation.

    It's not a Liverpool thing, it's a football thing. What most clubs were banking on is that international merchandise revenue would always be there - which is why they ignored the attending fans. Sadly this is now in decline as the world is in recession. In addition the much trumpeted TV money is a large variable as people will quickly cancel their Sky subscriptions when the food bill begins to rise.

    Even if the picture was different - many clubs still run at a loss, in the forlorn hope that success is round the corner which will pay off all their debts.

    The only value LFC has is it's brand - it's history - which won't change under new management - but the problem is whilst some fans are 'red till they die' - the majority as fickle and will happily move to the next successful club.

    The bidding is about what the giant money men think this brand is worth - a very difficult thing to value is a brand - which is where so many people have tripped up before.

    it's wrong to assume that simply because someone is wealthy that they know what they are doing - I mean the wealthiest people are most likely to make mistakes as they will be over-confident and less cautious than someone who has a lot to lose. This is 'anti-capitalism' which expects those who make a lot of money to become more talented and better judges - well there is no evidence for this - all that becomes easier is the paying for your own mistakes.

  • Comment number 34.

    Too much Liverpool FC on this blog recently. Business? I don't think so!

  • Comment number 35.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 36.

    It's obvious the greedy banks want to accept the American offer, so they then will be reaping more interest from money that didn't belong to them.....

    They do not want the debt written off by the Asian offer...
    They, the bank do not give a monkey about the club, just their greedy bonuses

  • Comment number 37.

    What happened to free speech BBC. Let people say what they want, not just what you want to see!! Separate yourselves from your masters.
    I guess that will stop my posts

  • Comment number 38.

    Robert,

    Too much leverage in the system....?

    Now where have we heard that before?

  • Comment number 39.

    The Premier League should never have sanctioned a leverage buyout in the first place. How could they possibley allow Hicks and Gillett buy the most important club in british football buy a club with someone elses money and then use it as collateral? There are far more people to blame for this mess, those two yanks couldn't do all this on their own.

  • Comment number 40.

    The club could be renamed Limerpool and the suporters limerpudlians

  • Comment number 41.

    39. At 3:33pm on 12 Oct 2010, Soruche wrote:

    "The Premier League should never have sanctioned a leverage buyout in the first place. How could they possibley allow Hicks and Gillett buy the most important club in british football buy a club with someone elses money and then use it as collateral? There are far more people to blame for this mess, those two yanks couldn't do all this on their own."

    I'll tell you how...

    1) The premier league 'chumps' don't know the first thing about finance. I mean their whole business model is based on currying favour with Rupert Murdoch.
    2) If they didn't allow this leveraged buyout then they would have to get rid of half the premier league as they're all playing the same doomed game.

    It's going to be like Nash's game theory eventually where the desire of self interest ultimately costs all the players their shirts.

  • Comment number 42.

    I'm sorry but in this day and age, 40 million is chump change. I shudder to think what dross Hodgson would bring into the club. It'll be either a has-been top player who's at least 30, or a couple of his former players at Fulham, or some non international Swedish or Swiss players, from his "extensive scouting network" in those respective countries.

    Notwithstanding Roy's inevitable ill-informed signings, if you are going with a billionaire investor, who doesn't have any experience with owning a football club whatsoever, you would at least expect to get a transfer kitty more towards the 100 mark than 40, to make up for it!

    At least NESV have experience running successfully a sports franchise, albeit another sport.

    I think this latest "offer" has thrown a spanner in the already, broken works.

  • Comment number 43.

    Is it true Anfield will shortly be razed to the ground to make way for the posh development of the City of Liverpool's new "Inns of Court"?

  • Comment number 44.

    A quick question for someone on the business side of this, how much would Hicks and Gillett have to sell Liverpool for to start getting their any of their cash back?

    The article doesn't make it completely clear as to where the extra £20 million is going, but i assume it's not going back to America with them. Is it going to be used to pay off other debts owed ?

    Also looking at some of the other comments and some people seem to think that by paying £320 mill for the club without borrowing is just throwing money away. My business studies GCSE didn't teach me much but even i can see that the club will now have positive equity and if he went to sell he would get to keep the money. It also surely means that the club won't be paying millions of pounds in interest.

  • Comment number 45.

    What I don't understand is the assertion that G&H will lose £140 from current deal on the table. Any explanation?

  • Comment number 46.

    1. At 11:49am on 12 Oct 2010, watriler wrote:
    "You'll never walk without a loan!"

    Love it. Can't beleive I haven't heard that before.

  • Comment number 47.

    45. At 4:30pm on 12 Oct 2010, edmund wrote:

    "What I don't understand is the assertion that G&H will lose £140 from current deal on the table. Any explanation?"

    Only £140? - surely that's something the fans could come up with!

    Alas - I think it should be £140 Million - well at least it's not £140 Billion - which is what the Government's going to need to bail the banks out again!

  • Comment number 48.

    I have to admit this Liverpool saga is far more exciting than Brookside ever was. I mean we could be getting our own 'lost weekend' on Friday as the banks start to get nervous about holding debts which aren't going to get paid.

    Still - there's a lot more for banks to be nervous about at the moment...

  • Comment number 49.

    Isn't 3D chess just normal chess? The interplay of individuals here looks much more complicated.

  • Comment number 50.

    48. At 5:17pm on 12 Oct 2010, writingsonthewall wrote:
    I have to admit this Liverpool saga is far more exciting than Brookside ever was

    Not when Anna Friel was in it

  • Comment number 51.

    why aren't we talking about this ??

    inflation higher than expected, exports down (despite falling pound), imports down (oil price? falling demand?)

    from Bloomberg news today (UK)-

    "Retail price inflation, a measure of living costs used in wage negotiations, was 4.6 percent in September, and the rate excluding mortgage-interest payments was the same. Economists forecast 4.4 percent for both measures, according to the median predictions in Bloomberg News surveys.

    The trade deficit narrowed to 8.2 billion pounds in August from 8.7 billion pounds, the statistics office said in a separate report. Exports fell 1.8 percent, while there was a 2.7 percent drop in imports."

  • Comment number 52.

    While I'm sure that supporters of any club likely to be taken over by an American will cringe, Liverpool is a special case....One of the oldest most successfull clubs in history, taken to the wall by a pair of jokers who couln't stand the supporters, couldn't stand the manager and couldn't stand each other. Who is to say that NESV's reign will not be similar or worse...saying that however the new Lim bid is highly dubious...One- as far as I am awaer he makes his dosh in the stock market and by running mancunian theme bars...so how he will be able to continually finance the club is a bit of a mystery; 2) He's outright advertising how much cash he allegedly has on hand for player transfers...so IF he does have that money Liverpool can count on other clubs to up the prices on potential recruits accordingly. 3- Where was he before all this? Liverpool's problems have been fronta nd back page news for a good while now so why is this bid coming in after another has been accepted? Is this just some mad PR stunt on his own part???

  • Comment number 53.

    I really don't want the Chinese people to buy Liverpool. Because they will change the coat of arms to a red star. Lol

  • Comment number 54.

    It's patronising in the extreme to think that £40m for the transfer kitty is going to buy off LFC fans.
    Mr Lim and Robert Peston (marvellous on economics but way out of his comfort zone on football) seem to be the only two people on earth who still seem to have the same mindset about football fans that we used to have to put up with in the 80's ie they're thick and potentially disruptive so treat them like cattle.

  • Comment number 55.

    #31 Where's Hendon ?

  • Comment number 56.

    Robert, whilst this case is important, the argument about the need for cuts in the first place, is blowing up and so you;re needed. It's pointed out our debt to gdp ration is low, that the cuts will cause a second recession, that the poor are being made to suffer, that anyway, the 'crisis' was just a disciplining device on the poor in the first place, that...

    ...well, we need you back on line on line and air on all this, my son.

  • Comment number 57.

    Post 28. Broughton was bought in by the banks to act as a steadying influence and ensure that the club remained in good order for a sale if Hicks and Gillette were not able to repay the banks.

    The deadline for the repayment has been extended a number of times and each deadline that has passed has incurred a further penalty payment that is owed to the banks.

    If Broughton wins then he and the other two directors, one of whom is Purslow, not appointed by Hicks and Gillette remain in the majority and can then accept an offer to sell the club. If Hicks and Gillette win then they can replace Purslow and the other "independent director" which would give them a 4-1 majority on the board and block the sale.

    As a going concern before going into administration, and thus avoiding a 9 point penalty, Liverpool are worth more than if they are in adminstration.

    In administration and with a 9 point penalty Liverpool will almost certainly not qualify for Europe next season,; will face a transfer ban that will remain in place until all their debts to other clubs have been paid and may even struggle to stay up. In administration the administrator will have a responsibility to try to realise as much as possible for the creditors so expect to see Reina and Torres and possibly Gerrard go in January unless the clubs can be bought out of administration before then.

    If Broughton wins expect the club to be sold within days. If there are other viable bids to the current accepted one, such as the Lim bid Rbert mentions, the bank may well not call in the loan and allow extra time to try to maximise their return.

    If Hicks and Gillette win the banks will call in the debt on the fifteenth unless Hicks and Gillette magically find the money from somewhere to repay the banks or they can do a deal with the new purchasers that allows them to walk away with some money.

  • Comment number 58.

    As they say a fool and his money ..... £300-400 million on a football club, crazy! what kind of investment is that?

  • Comment number 59.

    #33, WotW, "Football investment is flawed - there is no money in it."

    It depends. Take the Glazer's purachase of Man U for example. If this had been a 'straightforward' investment for profit, i.e. not to buy a vehicle for debts, then they would have seen some relatively healthy returns. Man U are making significant operating profits but these are obviously cancelled out by interest repayments and fees because of the financial structure of the club.

    Would also disagree about your comments re Sky money being an unreliable source of income. Subscription to Sky Sports has been consistently going up as it becomes available on new platforms. I'd like to agree that people would put food on the plate before the Sky subscription but I have a suspicion (nothing more, I grant you) that this wouldn't be the case. Anecdotally, I'm also aware of quite a few people among my friends who have recently subscribed to Sky because of a downturn in their financial fortunes - they have taken the decision to save money by giving themselves entertainment at home.

    Re your post #41, I don't think that the EPL approval of investors is because they haven't got a clue about finance. I think its largely because the vast majority of clubs decided some time ago to operate with business as their primary driver (ironic!) and the EPL can't simply change business law because of the nature of the business in question (they have raised this matter with the government and UEFA). It is depressing, and you final para is not far off the mark.

    What could have been done if the EPL weren't so greedy/shortsighted was to introduce rules about the business structure and operating profit of a club as they did in Germany. Sadly, the financial state of clubs makes that impossible now - that ship has sailed.

    UEFA are making progress in this area, but if their current FFP regs had been introduced a few years back then we might not have found ourselves in this situation now. As it is, change will be a long time coming and there will be quite a few more casualties.

    Incidentally, it is not only in Britain where this is becoming an issue. Many Italian clubs are struggling as the government tries to claw back money from the grounds (most of which are state owned), and the economic situation in Spain has left the vast majority of clubs (with two obvious exceptions) in real difficulty. Because TV deals are negotiated on an individual basis there, a ridiculous % of TV money finds its way to Barca and Madrid and very little anywhere else. One thing the EPL got right from the beginning!!!! (Though as an aside, this has made the majority of Spanish sides 'selling' clubs, meaning they have to develop their own talent for a profit - a possible reason for the Spanish national team's current success?)

  • Comment number 60.

    Is football worth it any more? When I first started paying to watch it, it cost me the same as going to the cinema, in the early 1980's. The cinema is now £6 and a seat in the main stand at Hilsborough £24, to watch third division football.

    Having had to focus on building my own business the last few years, I haven't had this type of spare money to spend on football. I can imagine a few other people, thinking along the same lines as me, following the recession.

    To tell you the truth if Liverpool, Man Utd and a few other clubs, including my own "Wednesday", have to go bankrupt, to bring the game back to its senses, so be it. Football seems to be living in a world of its own!

  • Comment number 61.

    Can we not stick to the important issues?

    Everyone should read:

    From Marx to Goldman Sachs: The Fictions of Fictitious Capital by Michael Hudson

    (http://michael-hudson.com/2010/07/from-marx-to-goldman-sachs-the-fictions-of-fictitious-capital1/%29

    Quote:
    "But the pretense that fictitious finance-capital claims can be paid must be dropped at the point where financial managers desert the sinking financial ship. Their last act before the bubble bursts is the time-honored practice of taking the money and running – paying themselves as large bonuses and salaries as corporate treasuries (and public bailouts) allow."

    Now look at these:

    $144bn bonuses to Wall Street

    (http://www.dailymail.co.uk/news/article-1319836/Greed-returns-Wall-Street-Bankers-pay-hit-record-144bn-despite-financial-crisis.html%29 Sorry it's from the DM - plenty of other sources.

    1oz Krugerrands at £909.

    The end game is here.

  • Comment number 62.

    #59 Deep-heat wrote:

    '(Though as an aside, this has made the majority of Spanish sides 'selling' clubs, meaning they have to develop their own talent for a profit - a possible reason for the Spanish national team's current success?)'

    Footballer Farming.

    Could do wonders for the balance of payments :) although a team needs to keep some of its top performers in order to attract the new raw talent (the seeds).



  • Comment number 63.

    Surely when Hicks and Gillett bought the club they immediately got their initial investment out by loading the holding company with debt, as that is what any good fund does to protect their investment, thus if they don't get a penny from the sale they actually don't lose any money, they just lose their perceived profit that they were going to get when they initially bought the club? Am I right or wrong?

  • Comment number 64.

    Whilst admitting that I am no financial genius, why can't the RBS simply refuse to extend further credit to the yanks, call in the loan, take possession of the club, and then sell to the best (not necessarily the highest) bidder?
    That way the RBS get their money, the supporters get their club stabilised, and the yanks get what they deserve - nothing.

 

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