Liverpool FC Still on Rocky Ground Despite Buyout

Fans celebrating the takeover of Liverpool should be concerned that new owner John W Henry never offered a written guarantee promising not to load the football club with debt.

Before the buyout, Henry and his 16 partners in New England Sports Ventures (NESV) made verbal commitments agreeing to pay £200m owed to Royal Bank of Scotland (RBS) and Wachovia bank without burdening Liverpool with any further debts related to the acquisition of the club.

Considering Liverpool’s former owners, Tom Hicks and George Gillett, were unable to pay the loans without burdening the club with more debt, it will be interesting to see how NESV plans to achieve such a mammoth task.

Hicks and Gillett almost led the club into administration because they did not pay their debts and were therefore in breach of their banking covenants.

If NESV had allowed the club to go into administration they would have made the purchase at a reduced price.

Instead, they circumvented Hicks and Gillett and dealt directly with RBS who had all the security in the assets.

Now NESV has paid off RBS and Wachovia, it’s difficult to see how they’ll make a profit without putting the club back into debt.

Foreign businessmen such as Henry and his pals too often underestimate the relationship between players, fans and the club; football is a religion in this country.

Fans never want their team to sell its best players because they want to win silverware.

However, the best players are a businessman’s best assets so when it’s time to balance the budget, if nothing’s been won the club still has debts and must sell its best players.

Football is a game of emotion, and that’s great if you’re winning silverware and getting money. But if you let your emotions run wild and aren’t wining anything, you’ll soon be facing relegation and finished.

In order to compete and win you need deep pockets, and if you don’t have deep pockets you borrow, but then you become beholden to your lender.

Ultimately, it’s the banks and lenders that call the shots and own the players.

Considering this vicious economic cycle, it’s unlikely NESV will be any more successful than Hicks and Gillett, but, as they say, football is a funny old game so we’ll just have to wait and see.

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