[Archived] Credit Crunch To Hit Football?

[Hughesy]

They have also denied they are set to make a move for another club. Maybe they have decided to keep their powder dry with the financial climate in meltdown

[iamarover]

Liverpool could be lucky with the Sheff U situation and unclear ownership making West Ham probably an impossible deal to do quickly and find DIC running out of options to pursue.

But even paying £1 for LFC in its current state is over-paying on any objective basis in this credit crunch climate.

A rational buyer would want to push at least £100m of the debts onto somebody else but nobody is going to do that.

Hicks and Gillett have successfully shifted 100% of their cost of ownership onto LFC wrapped around the new Anfield so having put nothing in to buy it, they are hardly going to put anything in to sell it.

The banks know their money is due to be repaid during an open transfer window. Selling Torres and Gerard in January would yield at least £100m net in total. Spurs would be ecstatic to swap Robbie Keane for the £19m and there are probably another five LFC players in the £15m bracket even in a firesale. Bingo £200m could be raised from asset sales is the way the banks will look at it and they couldn't give a damn about unhappy LFC supporters withdrawing their business- Wachovia and RBS need to shrink their operations anyway as part of their rescue plans. So the banks won't take a hair cut and at best might be willing to roll over £50m of the debt if there were an asset sale.

The Bank of England wouldnt let HBOS go down, irrespective of their debt mountain, and Liverpool's Bank won't let LFC go down either. The interest rate will be more punitive, the payments ultimately higher but there is not a cat's chance in Dingle Hell that the Bank will interfere with a club pushing for the Prem and the Champions League. Rational buyer? When was there ever a rational buyer of a football club? Dont give me Randy Lerner - he got a steal. The rest are either fans, ego maniacs, money launderers, sentimentalists or unfeasibly cash rich playboys. The Yankee Two know this. And they also know ultimately that one dingbat from any of these categoies, - or all of them (allegedly) if it ends up being DIC - will end up pushing them into clover. And so do the banks. There is no chance that any bank in England would make a PR howler of global proportions for a relatively trifling sum, credit crunch or canteen lunch.

[philipl]

The Bank of England wouldnt let HBOS go down, irrespective of their debt mountain, and Liverpool's Bank won't let LFC go down either. The interest rate will be more punitive, the payments ultimately higher but there is not a cat's chance in Dingle Hell that the Bank will interfere with a club pushing for the Prem and the Champions League. Rational buyer? When was there ever a rational buyer of a football club? Dont give me Randy Lerner - he got a steal. The rest are either fans, ego maniacs, money launderers, sentimentalists or unfeasibly cash rich playboys. The Yankee Two know this. And they also know ultimately that one dingbat from any of these categoies, - or all of them (allegedly) if it ends up being DIC - will end up pushing them into clover. And so do the banks. There is no chance that any bank in England would make a PR howler of global proportions for a relatively trifling sum, credit crunch or canteen lunch.

No you have completely missed the point of what is the issue for Liverpool. LFC have a term loan and that loan expires on 25 January when they will repay £250m. There is no question of Liverpool going bust- they have the assets to meet that call.

Only last week the two banks re-confirmed that they have to recover that loan and there will be no extension. Hicks/Gillett have tried to borrow the £250m from elsewhere and have failed so they are selling up.

The lead lender is Wachovia who are being bought by Wells Fargo with US Federal Government money- do you think there are any votes in America for saving Liverpool FC?

The other bank is RBS which will shortly be 60% owned by the UK tax payers and will have to be very aggressive about pruning its debtor book. Just as Northern Rock (state-owned) is now statistically the most aggressive home reposessor so RBS/NatWest will be the most aggressive in calling in its loans and there is no way that the British taxpayer will be able to be the saviour of LFC for their part of the £250m loan. Do you think Man U, Chelsea or Arsenal supporters will vote to save Liverpool never mind the denizens of this messageboard?

Besides, Liverpool are hardly going to go under. All that will happen to LFC is they will have to sell a bunch of players when they would rather not. Welcome Liverpool to the real world which every club except perhaps half a dozen across the world exist in.

[OscarRaven]

Sounds to me like after 15 seasons of growth the premier league may now have to start using the 'R' word.

Time to trim the fat, play it prudent, stand back and watch the fireworks.

[broadsword]

Besides, Liverpool are hardly going to go under. All that will happen to LFC is they will have to sell a bunch of players when they would rather not. Welcome Liverpool to the real world which every club except perhaps half a dozen across the world exist in.

I doubt they'll go under either, but presumably once Liverpool gets sold, the debts stay with the club. Unless the new owners pay off the debts then Liverpool will be selling players to make the debt repayments? So the principal will never disappear?

[philipl]

I doubt they'll go under either, but presumably once Liverpool gets sold, the debts stay with the club. Unless the new owners pay off the debts then Liverpool will be selling players to make the debt repayments? So the principal will never disappear?

If you buy Liverpool for £1, there is £350m of completely useless wasted money in debt to be paid off.

LFC at Anfield is not going to generate sufficient profits unless Benitez turns into as great a genius as Ferguson has been at Man U over the last three years in the transfer market and that seems unlikely.

So to be profitable, LFC need the new Anfield but that is at least £300m and three to four years away.

And if you assume that Liverpool will need backing in the market in the meantime and some contingency for such a major construction project, stick another £150m into the pot.

So £800m out to generate a return of perhaps £50m a year beginning four years from now with all the uncertainties of a football competition?

The numbers make no business sense in the current economic climate.

And Man U's much bigger numbers are getting close to not doing either even if the Glazers sell the club and debts for £1. But at least at Man U there is an automatic take-over clause and the lead investor is a hedge fund which would take managerial responsibility if everything goes completely bad. Unlike at Liverpool where there is no provision for seemless transition of ownership and the lenders are common or garden high street banks (one US, one UK) who would appoint an administrator rather than run the club themselves.

[leftfooter]

Got to feel sorry for Charlton in all this.

DIC/ Zabeel Investments, or whichever branch of the desert Makhtoum despots contrived the charade of their potential takeover, knew they would be putting a huge amount of extra pressure on the two desperados at Liverpool.

They whistled in their direction and understandably enough the sleeping Addicks dog came bounding gratefully toward them.

Meanwhile rumours emanate from their minions in the media that they might be interested in Everton, or West Ham after all.

Sure enough, within days of these revelations, the Americans panic and hurriedly announce that the Liverpool franchise is up for sale.

Barely 24 hours later, a proclamation is issued that Zabeel have dropped its interest in Charlton and that they intend to invest the money in non-football ventures, thus strengthening their future bargaining position.

‘Something seems truly rotten in the state of Dubai’

[iamarover]

No you have completely missed the point of what is the issue for Liverpool. LFC have a term loan and that loan expires on 25 January when they will repay £250m. There is no question of Liverpool going bust- they have the assets to meet that call.

Only last week the two banks re-confirmed that they have to recover that loan and there will be no extension. Hicks/Gillett have tried to borrow the £250m from elsewhere and have failed so they are selling up.

The lead lender is Wachovia who are being bought by Wells Fargo with US Federal Government money- do you think there are any votes in America for saving Liverpool FC?

The other bank is RBS which will shortly be 60% owned by the UK tax payers and will have to be very aggressive about pruning its debtor book. Just as Northern Rock (state-owned) is now statistically the most aggressive home reposessor so RBS/NatWest will be the most aggressive in calling in its loans and there is no way that the British taxpayer will be able to be the saviour of LFC for their part of the £250m loan. Do you think Man U, Chelsea or Arsenal supporters will vote to save Liverpool never mind the denizens of this messageboard?

Besides, Liverpool are hardly going to go under. All that will happen to LFC is they will have to sell a bunch of players when they would rather not. Welcome Liverpool to the real world which every club except perhaps half a dozen across the world exist in.

No one is saying they will go under. One of two things will happen in Jan. Either DIC will buy or the banks will re structure. No fans will vote and no fans will complain about it. You keep predicting the end of the Prem for both Liverpool and ManU and both continue to prosper in footballing terms. Either you are Galileo or a stopped clock in terms of being right. See you in Jan.

[philipl]

No one is saying they will go under. One of two things will happen in Jan. Either DIC will buy or the banks will re structure. No fans will vote and no fans will complain about it. You keep predicting the end of the Prem for both Liverpool and ManU and both continue to prosper in footballing terms. Either you are Galileo or a stopped clock in terms of being right. See you in Jan.

It has just been announced that Liverpool have been given a six month extension to July 2009 to repay £315m in total (obviously some of the other debts are maturing as well).

In order to finance the interest on the extension, Hick and Gillett are going to use money which was earmarked for Liverpool's operations (ie running the club).

The latest estimate for building new Anfoeld is £450m.

[yoda]

It has just been announced that Liverpool have been given a six month extension to July 2009 to repay £315m in total (obviously some of the other debts are maturing as well).

In order to finance the interest on the extension, Hick and Gillett are going to use money which was earmarked for Liverpool's operations (ie running the club).

The latest estimate for building new Anfoeld is £450m.

No fire sale yet then!

[philipl]

No fire sale yet then!

True, but its like a dung beetle rolling an ever larger ball of ###### in front of itself.

Originally, the borrowings were split with most going to the Hicks/Gillett company which borrowed enough to buy Liverpool AND pay for servicing all the debts. The other monies went into LFC and have largely been expended on lawyers, architects etc etc. on the new Anfield- it was also supposed to complete Phase 1 of construction but that has not happened but the money has gone anyway.

Now the debt has matured and there is no partly built stadium to secure the rollover on, it is obvious that Hick and Gillett kept upping the offer to the banks for the extension until they put arrangement fee and interest proposition on the table that were too good for the banks to resist.

The result is that the holding company is completely stripped of cash, the New Anfield fund is also completely stripped of cash and the one remaining unbroken promise to the LFC fans is now going to be broken, Gillett and Hick are putting the next six months interest fees on the £315m onto the main books of LFC. I'd guess something like £15m will be siphoned out of LFC in the last six months of this season which until yesterday was ear-marked for the club's use.

Will Hicks/Gillett sell this new LFC arrangement to any purchaser of the club between now and July 2009 given there was nobody rushing forwards to buy Liverpool even before the two banks took their additional pounds of flesh?

Will the credit crisis ease enabling the £315m to be rolled next summer even though LFC will be hit by £30m a year in interest and bank charges and have no realistic chance of paying back the £315m sum borrowed?

If Lehman Bros had done some very unpalatable things 6 months ago, they would not have gone bust loast month.

Liverpool supporters might end up wishing there had been a firesale this January.

[Hughesy]

Kuwaiti billionaire Nasser Al-Kharafi, who has a fortune reputed to be worth around £9bn, is in serious discussions with Newcastle about buying the club for £300m. (The Sun)

[iamarover]

It has just been announced that Liverpool have been given a six month extension to July 2009 to repay £315m in total (obviously some of the other debts are maturing as well).

In order to finance the interest on the extension, Hick and Gillett are going to use money which was earmarked for Liverpool's operations (ie running the club).

The latest estimate for building new Anfoeld is £450m.

And still paying themselves £1m apiece for the privilege presumably? Brass neck makes cash. Appalling. I hope you are right and they run into meltdown but I have a feeling DIC could yet save them.

[dingles staying down 4ever]

Chelsea not going to be active in January Transfer Window.

Roman must be skint!

[Ricky]

No you have completely missed the point of what is the issue for Liverpool. LFC have a term loan and that loan expires on 25 January when they will repay £250m. There is no question of Liverpool going bust- they have the assets to meet that call.

Only last week the two banks re-confirmed that they have to recover that loan and there will be no extension. Hicks/Gillett have tried to borrow the £250m from elsewhere and have failed so they are selling up.

So this loan that definitely wasn't going to be extended has been extended then.

[philipl]

So this loan that definitely wasn't going to be extended has been extended then.

Yep. That's what the banks said- which means the 6 month extension must have been bought on eye-watering terms.

[PAFELL]

Yep. That's what the banks said- which means the 6 month extension must have been bought on eye-watering terms.

All this talk about football and the credit crunch, how do you think Rovers will fair. All the big clubs have large assets that could be sold to pay off debts, which could involve the force selling of these assets, such as players, Rovers are not in that position, for Rovers to be forced to sell players to pay off debts would cripple the club. After all would a bank be more willing to lend to Rovers or a club like liverpool or man utd, after all the banks know the potential of these clubs, but not Rovers potential. So in your view are Rovers well placed to with stand the current world financial situation or not.

[philipl]

Right now, Rovers probably have zero debt.

[1864roverite]

Rovers have BIG TIME PRIME REAL ESTATE that valued a t MILLIONS whereas other clubs somply dont have that behind them.

[philipl]

For those who think the next TV deal will be plain sailing:

BskyB is facing a "perfect storm" according to a melodramatic note from broker Collin’s Stewart on the day Sky shares plumbed a three-year low. The on-coming recession, threats from changing technology and tighter regulation threaten to demolish its core business model, says the broker. It warns Sky risks missing its target of 10 million pay TV subscribers by 2010.

The report said subscriber growth would stall, leaving BSkyB 600,000 customers short of its 10 million target by the end of 2010. "We believe BSkyB faces greater threats to its business model than ever before," said the report.

The Advanced Television commentary forecasts that 20 million Britons will have access to broadband Video on Demand by 2011 and that alone will trigger a 13% reduction in satelite subscriptions.

[stuwilky]

For those who think the next TV deal will be plain sailing:

BskyB is facing a "perfect storm" according to a melodramatic note from broker Collin’s Stewart on the day Sky shares plumbed a three-year low. The on-coming recession, threats from changing technology and tighter regulation threaten to demolish its core business model, says the broker. It warns Sky risks missing its target of 10 million pay TV subscribers by 2010.

The report said subscriber growth would stall, leaving BSkyB 600,000 customers short of its 10 million target by the end of 2010. "We believe BSkyB faces greater threats to its business model than ever before," said the report.

The Advanced Television commentary forecasts that 20 million Britons will have access to broadband Video on Demand by 2011 and that alone will trigger a 13% reduction in satelite subscriptions.

And all of that will make Sky less likely to want to lose the football. As lets face it, there are many of us who only subscribe to Sky because of the football. If it didnt have Sky Sports I wouldnt have it at all.

[philipl]

$150,000 per seat? Welcome to NFL super-stadia.

[ABBEY]

you could only dream of affording it..

[philipl]

Tucked away in this Times article on the losers from Porsche hitting hedge funds hard on VW shares, the hedge fund that backed the Glazer takeover of Man U is among the losers in the $20bn sting.

Chances are that is giving the Hedge Fund far less room for manoevre in any re-financing of the Man U loans and increases their need to recover the money loaned out and interest from Man U when they fall due to be paid.

If the hedge fund that leant to Man U actualy goes bust it will give Man U a nightmare as their entire financial structure would become open to all kinds of scrutiny the Glazers are seemingly currently avoiding.

[PAFELL]

Right now, Rovers probably have zero debt.

Or money to spend.