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Liverpool deal not the end of the story

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Mihir Bose | 13:32 UK time, Friday, 25 January 2008

Liverpool’s £350m refinancing deal still leaves a lot of questions unanswered.

The debt burden this will put on the club, the future of manager Rafa Benitez, and whether this means the club will now not be sold to Dubai International Capital (DIC), who have been sniffing around.

The fine print of this package should be subjected to close scrutiny.

Last year when George Gillett and Tom Hicks took over Liverpool they borrowed against their own assets, and this was seen as marking them out to be very different from the Glazers.

The money the Glazers borrowed in order to buy Manchester United was charged against the club. A club hitherto debt free was burdened with huge debts causing much anger amongst some fans.

Gillett and Hicks were required to refinance their acquisition loans by the end of next month and had been talking to bankers for some time

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They were not helped by the fact the ongoing credit crunch has made raising money in the City much more difficult.

But also one of their initial plans did not find favour with the Liverpool board.

Last autumn, Gillett and Hicks wanted to load their loans on to the club but this was resisted by former owner David Moores and chief executive Rick Parry.

Of course, as owners they could have dismissed the board but to their credit they did not do so.

I understand the new package means that some £185m of the acquisition debt is still personally guaranteed by Gillett and Hicks who have put in more of their own money.

The rest of the debt, which includes working capital and transfer activity money, will be loaded on to the club. This will be justified on the grounds that it is normal Liverpool business and Liverpool should bear the burden.

The part of the package that the owners want to talk up is the £60mn or so that is earmarked for beginning work on the new stadium, a Liverpool plan for years and one the owners have always considered high priority.

Much is being made of the fact that the new stadium, which the club want to be open by August 2011, has a groundbreaking iconic design and a 71,000 capacity, anchored by an expanded 18,500-seat Kop.

Yet the money the have borrowed is only the first step in the stadium project - the overall cost of the stadium could well reach £400m

Here Liverpool are hoping to follow the Arsenal model. They borrowed heavily to build the Emirates Stadium, had problems securing the money but in the end it has has worked out well.

Liverpool will hope to do the same, but they are not there yet.

Whether this deal will see the owners restore their relationship with Rafa Benitez is much more doubtful.

The breakdown between the American owners and the Spanish manager has been described to me as a clash of culture.

The owners feel that at the beginning of the season they approved the manager's shopping list, so why does he not get on with it and coach the side - that's what they pay him for

Their American sporting experience has not schooled them to the ways of the tabloid back pages and the way a manager can use them to get his own message across.

Hicks is particularity guilty of this, and his attempts to get his own media message across, as in the admission he spoke to Jurgen Klinsman about replacing Benitez, have backfired badly.

The announcement of the refinancing will see a truce but it may be no more than that.

Similarly Dubai International Capital's interest in Liverpool may be by no means be over.

They are still sore about losing out to Gillett and Hicks when the initial takeover took place, especially as they thought they had done a deal that would secure Liverpool for them.

Dubai had hoped that the Americans’ attempts to refinance would fail and that they would buy Liverpool for around £350m, although contrary to reports no formal offer was ever made.

However, while the refinancing makes the price higher, the word from Dubai is that they remain keen to get Liverpool and, depending on how the future plans for raising stadium finance work, they may well get their chance.

The refinancing story should be seen as just one episode in a long running Liverpool soap opera. The final act is far from being written.

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