David Maddock and Kop Faithful

[keniget]

Well, Moratti has been on a bit of a mission with Inter. And he has done a fair amount of hiring and sacking.

Some clubs, it would be seem, make enough money to prop themselves up. Barca make over 350M euros a year and if the long blog post I read about their finances is all on the up and up, they're not too badly off. Maybe it's all a clever ruse for marketing man Rossell to fuck the likes of Unicef off and start making some proper money.

Edit: in case anyone is interested: http://bleacherreport.com/articles/394993-how-can-barcelona-afford-cesc-fabregas

 

[Woland]

Well Barca do have the 'advantage' of selling their own TV rights as opposed to the group model the Premier League has. The advanatge involves 2 clubs shitting on the rest and there being zero competition. Some reckon that's what the yanks on both sides of the M62 are holding out for... and who can blame them.... but there is no happy ending here. All that 80s crap, that's gone, forever, forget about it.

As for supporters groups owning it... Hmmm. So say 50000 people spend 10000 each and raise half a billion. What happens when we lose 30 million in the first year? Oh yeah, sorry... but we need to take a direct debit of an extra 600 quid off everyone to cover the loss. And we also want to buy some player for 20 million so let's just call it a grand. And you still have your season ticket renewal to deal with.

It would be better for everyone if the whole thing went to the wall and we started paying the twats that played for us something resembling sense again. That's the drain. The yanks have done us for a lot of money over the past few years - but if you add up what Stevie and Torres and Rafa have taken, it won't be far off it either.

 

[keniget]

Well, I imagine salary caps would take care of that.

Has that come up yet at FIFA?

 

[Y1]

LFC is unsustainable as a business model. The fact that other clubs are in the same boat is no comfort at all. Rosco is a better accountant than a lawyer!

 

[spider-Neil]

what's scaring off potential buyers is the massive amount of money they would have to invest before they saw a profit (if they saw a profit at all). if the yanks gets refinanced that amount will only increase, making it even less likely we get sold. vicious circle with the debt ever increasing and the team year or year getting worse because more money will be required for debt.

 

[StevieM]

The new stadium was supposed to increase the revenue streams to cover increased wages.

Also makes sense why Acquilani was sent off on loan - as I'd imagine this would be an attempt to reduce the wages.

Selling Mascherano will also have helped reduce wages.

 

[kingjulian]

[quote author=Y1 link=topic=41733.msg1168924#msg1168924 date=1283389994]
LFC is unsustainable as a business model. The fact that other clubs are in the same boat is no comfort at all. Rosco is a better accountant than a lawyer!
[/quote]

That is a sweeping statement. We are not far off. Clubs like City and Chelsea will struggle to cope. But we are not that far off from turning a year-on-year profit. We have had sizable reduction in the wages in the last two years. Something that will be reflected in the next financial statement due. We have also got some positive new or expanded revenue streams to look forward to.

With sensible management our club can be run profitably even without a new stadium. But it would be nice to have a new stadium.

 

[Y1]

[quote author=kingjulian link=topic=41733.msg1168932#msg1168932 date=1283401768]
[quote author=Y1 link=topic=41733.msg1168924#msg1168924 date=1283389994]
LFC is unsustainable as a business model. The fact that other clubs are in the same boat is no comfort at all. Rosco is a better accountant than a lawyer!
[/quote]

That is a sweeping statement. We are not far off. Clubs like City and Chelsea will struggle to cope. But we are not that far off from turning a year-on-year profit. We have had sizable reduction in the wages in the last two years. Something that will be reflected in the next financial statement due. We have also got some positive new or expanded revenue streams to look forward to.

With sensible management our club can be run profitably even without a new stadium. But it would be nice to have a new stadium.
[/quote]

55 million financial lost (obviously including interest or else where do we chuck it?) is not far off from profit? Show me the moolah.

 

[kingjulian]

[quote author=Y1 link=topic=41733.msg1168934#msg1168934 date=1283403156]
[quote author=kingjulian link=topic=41733.msg1168932#msg1168932 date=1283401768]
[quote author=Y1 link=topic=41733.msg1168924#msg1168924 date=1283389994]
LFC is unsustainable as a business model. The fact that other clubs are in the same boat is no comfort at all. Rosco is a better accountant than a lawyer!
[/quote]

That is a sweeping statement. We are not far off. Clubs like City and Chelsea will struggle to cope. But we are not that far off from turning a year-on-year profit. We have had sizable reduction in the wages in the last two years. Something that will be reflected in the next financial statement due. We have also got some positive new or expanded revenue streams to look forward to.

With sensible management our club can be run profitably even without a new stadium. But it would be nice to have a new stadium.
[/quote]

55 million financial lost (obviously including interest or else where do we chuck it?) is not far off from profit? Show me the moolah.
[/quote]

I'm looking at EBITDA. We are not that far from being profitable on an annual basis.

The reason im looking at EBITDA and not the net earning, is that interest payments can be managed with better long term finance package (Equity + long term debt). I don't think there is a football club (not even Arsenal) out there that makes 50 million operational profit every year to cover for the size of interest deficit we have. The issue needs to be addressed. But it doesn't have to be a new investor who addresses this, H&G could negotiate better terms on longer tenure loans and some of their money as equity. The initial debt was short maturity, because that is the usual norm in LBOs. Ideally the owners should have got their refinance package before the short term lease acquired for takeover expired but the macro-economic conditions put paid to that, and we are in the situation that we are....

The key is; can the owners negotiate better terms on longer tenure loans, and are they willing to put in some of their money as equity?

I doubt they can do it easily. It depends on how interested Barclays is in getting this business. Our owners would still probably be required to purchase at least x% (could be 20 to 40% who knows) of the RBS loan through equity and cover the rest through long term loan deals with Barclays etc or get PE money for short term.

Ideally we would get a new owner, but its not beyond the owners means to turn this situation around. We have to also note that there is no reason to believe that new owner will have a more conventional and conservative finance model in place.

 

[Y1]

EBITDA as a measure is dangerous. Even if refinancing cost is lower, how much lower can it be? From 40m pa to at best 20m pa. Depreciation & amortisation is a natural process to replace wasting assets such as players (the major items) & others. Unless the value of our assets like young players and established ones can grow and we sell them, we are in terminal decline financially. We cannot sell if we want to maintain our PL position. Say for the sake of argument that we break even using EBITDA, the cost of finance will also kill us on the long run. However we look at it we are in a bleak position unless huge amount of cash is pumped in as equity.

 

[Woland]

[quote author=StevieM link=topic=41733.msg1168927#msg1168927 date=1283396270]
The new stadium was supposed to increase the revenue streams to cover increased wages.

Also makes sense why Acquilani was sent off on loan - as I'd imagine this would be an attempt to reduce the wages.

Selling Mascherano will also have helped reduce wages.
[/quote]

This new stadium thing never made sense to me. Say it cost 300m and that cost us an additional 30m quid a year, you've just gobbled up every bit of the additional dough that we could possibly make and more paying for the place. There's no way we'll increase our match day revenues to that of Manure - not when getting tickets has been so easy lately. The corporate department were offering 300 quid deals for 80 quid the week before the Arsenal game - that's the first game of the season against a massive rival. Dreams of filling 60,000 every week and selling umpteen boxes just aren't true. They've reduced the boxes at Carra's testimonial this weekend from a grand to 700 quid. At best we could hope to regularly fill a 55,000 seater so they should knock the main stand down and build a huge new one in its place.

 

[Judge Jules]

[quote author=spider-neil link=topic=41733.msg1168925#msg1168925 date=1283391258]
what's scaring off potential buyers is the massive amount of money they would have to invest before they saw a profit (if they saw a profit at all). if the yanks gets refinanced that amount will only increase, making it even less likely we get sold. vicious circle with the debt ever increasing and the team year or year getting worse because more money will be required for debt.
[/quote]

If - IF - we can get new owners who are willing and able to put enough money in, I'd be pretty confident they'll see a profit in the end. It's also significant that H and G have been getting rid of other assets rather than LFC, which shows you where they think their best hopes lie.

Definitely agree with the rest of what you say though. Of course H and G won't give a f'ck as long as they're able to hang in there till the TV deal comes in, because their backs are against the wall financially so that's all they can pin their hopes on now.

You know, you can put up some excellent posts when you lay off the shrooms.

 

[Molbystwin]

So the owners of the club have had to shoulder the burden of the 111M in interest payments that they themselves have accrued by failing to actually invest any real money when obtaining the shares, and just how did they achieve this aim? by "loaning" the interest payents to the club via an investment vehicle and then charging us interest on the interest.

Its magically perverse.

So in effect none of the actual original debt has been paid of nor indeed the accrued interest on that debt for the last three years all of which is ultimately liable to the club/prospective new owners.

Its strikes me as the dictionary definition of a fuck up.

As for our major problem being wages well..... what to do? clear all high wage earners from the books so we can continue not servicing the debts we should never have accrued in the first place and wouldnt have done if we were not owned by two of the poxiest *billionaires* ever.

I can see a problem with that model actually.... Maddock is right here whopper or not we really do need rid of them two and sharpish.

 

[jexykrodic]

[quote author=Molbystwin link=topic=41733.msg1168980#msg1168980 date=1283417786]
So the owners of the club have had to shoulder the burden of the 111M in interest payments that they themselves have accrued by failing to actually invest any real money when obtaining the shares, and just how did they achieve this aim? by "loaning" the interest payents to the club via an investment vehicle and then charging us interest on the interest.

Its magically perverse.

So in effect none of the actual original debt has been paid of nor indeed the accrued interest on that debt for the last three years all of which is ultimately liable to the club/prospective new owners.

Its strikes me as the dictionary definition of a fuck up.

As for our major problem being wages well..... what to do? clear all high wage earners from the books so we can continue not servicing the debts we should never have accrued in the first place and wouldnt have done if we were not owned by two of the poxiest *billionaires* ever.

I can see a problem with that model actually.... Maddock is right here whopper or not we really do need rid of them two and sharpish.
[/quote]

Put that way it sounds like a financial scam dreamed up by those clever enough to manipulate the rules. I've no doubt that what they've done is perfectly legal.

 

[Molbystwin]

[quote author=jexykrodic link=topic=41733.msg1168983#msg1168983 date=1283418093]
[quote author=Molbystwin link=topic=41733.msg1168980#msg1168980 date=1283417786]
So the owners of the club have had to shoulder the burden of the 111M in interest payments that they themselves have accrued by failing to actually invest any real money when obtaining the shares, and just how did they achieve this aim? by "loaning" the interest payents to the club via an investment vehicle and then charging us interest on the interest.

Its magically perverse.

So in effect none of the actual original debt has been paid of nor indeed the accrued interest on that debt for the last three years all of which is ultimately liable to the club/prospective new owners.

Its strikes me as the dictionary definition of a fuck up.

As for our major problem being wages well..... what to do? clear all high wage earners from the books so we can continue not servicing the debts we should never have accrued in the first place and wouldnt have done if we were not owned by two of the poxiest *billionaires* ever.

I can see a problem with that model actually.... Maddock is right here whopper or not we really do need rid of them two and sharpish.
[/quote]

Put that way it sounds like a financial scam dreamed up by those clever enough to manipulate the rules. I've no doubt that what they've done is perfectly legal.
[/quote]

Of course Jexy you are right and it is legal but it is veering very very close to a scam dont you think?

Buying something with absolutely no investment apart from a loan to pay for the interest on the acquirement loans upon which you actually charge your own interest which you collect when you sell it on to another mug..... no wonder we havent moved forward since they arrived.

Yes wages and profit are an issue clearly but they only become such when the club is in a strangle hold such as now. How can we extricate ourselves is the question if it means being all "real fan" and kicking up a stink then i can handle the embarrassment tbh. Hyperbole or not i just get the impression the club is being destroyed. Konchesky saying that he was happy to sign for us due to the allure of the club.... that hurts me.

 

[jexykrodic]

[quote author=Molbystwin link=topic=41733.msg1168990#msg1168990 date=1283418933]
[quote author=jexykrodic link=topic=41733.msg1168983#msg1168983 date=1283418093]
[quote author=Molbystwin link=topic=41733.msg1168980#msg1168980 date=1283417786]
So the owners of the club have had to shoulder the burden of the 111M in interest payments that they themselves have accrued by failing to actually invest any real money when obtaining the shares, and just how did they achieve this aim? by "loaning" the interest payents to the club via an investment vehicle and then charging us interest on the interest.

Its magically perverse.

So in effect none of the actual original debt has been paid of nor indeed the accrued interest on that debt for the last three years all of which is ultimately liable to the club/prospective new owners.

Its strikes me as the dictionary definition of a fuck up.

As for our major problem being wages well..... what to do? clear all high wage earners from the books so we can continue not servicing the debts we should never have accrued in the first place and wouldnt have done if we were not owned by two of the poxiest *billionaires* ever.

I can see a problem with that model actually.... Maddock is right here whopper or not we really do need rid of them two and sharpish.
[/quote]

Put that way it sounds like a financial scam dreamed up by those clever enough to manipulate the rules. I've no doubt that what they've done is perfectly legal.
[/quote]

Of course Jexy you are right and it is legal but it is veering very very close to a scam dont you think?

[/quote]

I'd say it had veered close to the edge and then crashed over it but then natural justice doesn't apply in financial affairs as we witness all to often.

I don't see how we escape this other than H&G defaulting and the Club going into administration.

Who is going to bale out a club rolling up debt without major income opportunities (e.g CL money), build a stadium and compete for star players?

It's a wishlist too far.

 

[Judge Jules]

Default yes, administration no. I've yet to see a convincing explanation why the bank would go that far and, in doing so, significantly depress the price it could demand for the club.

 

[jexykrodic]

[quote author=Judge Jules link=topic=41733.msg1168993#msg1168993 date=1283419681]
Default yes, administration no. I've yet to see a convincing explanation why the bank would go that far and, in doing so, significantly depress the price it could demand for the club.
[/quote]

I see your logic JJ but how do you depress a price that no-one's willing to pay?

 

[Judge Jules]

Thing is, jexy, I don't think the picture is that bleak in terms of potential buyers. We DO represent a significant opportunity - witness H and G's own desperation to cling on for grim death - and competent businessmen will fancy their chances of maximising that, once those two have been f'cked off.

 

[Molbystwin]

[quote author=jexykrodic link=topic=41733.msg1168991#msg1168991 date=1283419417]
[quote author=Molbystwin link=topic=41733.msg1168990#msg1168990 date=1283418933]
[quote author=jexykrodic link=topic=41733.msg1168983#msg1168983 date=1283418093]
[quote author=Molbystwin link=topic=41733.msg1168980#msg1168980 date=1283417786]
So the owners of the club have had to shoulder the burden of the 111M in interest payments that they themselves have accrued by failing to actually invest any real money when obtaining the shares, and just how did they achieve this aim? by "loaning" the interest payents to the club via an investment vehicle and then charging us interest on the interest.

Its magically perverse.

So in effect none of the actual original debt has been paid of nor indeed the accrued interest on that debt for the last three years all of which is ultimately liable to the club/prospective new owners.

Its strikes me as the dictionary definition of a fuck up.

As for our major problem being wages well..... what to do? clear all high wage earners from the books so we can continue not servicing the debts we should never have accrued in the first place and wouldnt have done if we were not owned by two of the poxiest *billionaires* ever.

I can see a problem with that model actually.... Maddock is right here whopper or not we really do need rid of them two and sharpish.
[/quote]

Put that way it sounds like a financial scam dreamed up by those clever enough to manipulate the rules. I've no doubt that what they've done is perfectly legal.
[/quote]

Of course Jexy you are right and it is legal but it is veering very very close to a scam dont you think?

[/quote]

I'd say it had veered close to the edge and then crashed over it but then natural justice doesn't apply in financial affairs as we witness all to often.

I don't see how we escape this other than H&G defaulting and the Club going into administration.

Who is going to bale out a club rolling up debt without major income opportunities (e.g CL money), build a stadium and compete for star players?

It's a wishlist too far.
[/quote]

I agree with JJ it wouldnt make sense for RBS to put is into administration as its basically their money they will lose. I agree with you it is a wishlist to far.

It is petrifying, the fact that others club are storing up a whole world of pain just as we are doesnt make me feel better either...

 

[spider-Neil]

the annoying thing is the likes of real and barca have massive debt as a result of buying fabulous players and paying ridiculous wages, we have massive debt because we are paying for the privilege of being owned.

 

[FoxForceFive]

It's not match day revenues where you see the big money from the stadium, its the corporate facilities. Liverpool need them too. Llook at utds books, that's where the big money is from a stadium.

 

[Woland]

Unfortunately, Goldman Sachs et al have already done their corporate thang up the road in Manchester. Liverpool is not a financial centre and never will be. There was a box available to any takes a couple of weeks before kick off this season.

 

[peekay]

[quote author=Judge Jules link=topic=41733.msg1168997#msg1168997 date=1283419944]
Thing is, jexy, I don't think the picture is that bleak in terms of potential buyers. We DO represent a significant opportunity - witness H and G's own desperation to cling on for grim death - and competent businessmen will fancy their chances of maximising that, once those two have been f'cked off.
[/quote]

Are we really that attractive JJ, for the price being quoted. Look at the number of bids for us in the last 7 years. Moores and Parry went around the world with a begging bowl and even for a significantly lower price, we were able to find only two genuinely interested parties. Any businessman will need to commit 600 million immediately( I am thinking 450 to buy the club + 50 million player investment and 100 million to kick start the stadium). I am sure the rest of the stadium cost will pay itself. And we are looking at significantly long term before we start making money on the 600 million.

Unless you are a billionaire with an avid interest in sports, why would you be looking to make such an investment. Wont you invest in Google/Apple? I am sure any decent venture capitalists can come up with a list of 20 promising start up companies to distribute your 600 million to.

 

[Avmenon]

I actually agree that we're looking decidedly unattractive now, but I think JJ is of the view (which I share) that administration or re-financing will make us even harder to sell and that is where the big profits are.

I think the contrary view to this is that re-financing will allow the bank to rake in huge sums in interest and in the event we can't repay the bank will just foreclose and asset-strip the club.

The total amount earned would probably allow the banks to make some money, but I think it would still be a pittance compared to what a successful sale would generate..and I also think there would be a lot of fallout if the banks insisted on cutting up LFC..

I think this is something which also shouldnt be discounted.

 

[peterhague]

[quote author=peekay link=topic=41733.msg1169028#msg1169028 date=1283425681]
[quote author=Judge Jules link=topic=41733.msg1168997#msg1168997 date=1283419944]
Thing is, jexy, I don't think the picture is that bleak in terms of potential buyers. We DO represent a significant opportunity - witness H and G's own desperation to cling on for grim death - and competent businessmen will fancy their chances of maximising that, once those two have been f'cked off.
[/quote]

Are we really that attractive JJ, for the price being quoted. Look at the number of bids for us in the last 7 years. Moores and Parry went around the world with a begging bowl and even for a significantly lower price, we were able to find only two genuinely interested parties. Any businessman will need to commit 600 million immediately( I am thinking 450 to buy the club + 50 million player investment and 100 million to kick start the stadium). I am sure the rest of the stadium cost will pay itself. And we are looking at significantly long term before we start making money on the 600 million.

Unless you are a billionaire with an avid interest in sports, why would you be looking to make such an investment. Wont you invest in Google/Apple? I am sure any decent venture capitalists can come up with a list of 20 promising start up companies to distribute your 600 million to.
[/quote]


exactly. this is what i and many others have been saying for ages now, that the price being quoted is just fantasy stuff. nooone will pay it, at least not as an investment, and that's why we're still in limbo. the only solution is for RBS to force H&G's hands, hopefully that'll come in october.

i can't see it going much beyond that because the club's already leveraged to the eyeballs: no bank's going to support a situation where the debt's worth more than the shares. i think worst case scenario might be another 6 months and £60m in debt, which would leave us owing around £360m to the banks - that would surely then be game over with the bank stepping in and assuming control in order to sell us and recoup their money.

 

[peekay]

[quote author=Avmenon link=topic=41733.msg1169030#msg1169030 date=1283426011]
I actually agree that we're looking decidedly unattractive now, but I think JJ is of the view (which I share) that administration or re-financing will make us even harder to sell and that is where the big profits are.

I think the contrary view to this is that re-financing will allow the bank to rake in huge sums in interest and in the event we can't repay the bank will just foreclose and asset-strip the club.

The total amount earned would probably allow the banks to make some money, but I think it would still be a pittance compared to what a successful sale would generate..and I also think there would be a lot of fallout if the banks insisted on cutting up LFC..

I think this is something which also shouldnt be discounted.
[/quote]

Based on the way the Rangers sale was conducted here, I think administration or "administration style management" without officially declaring administration is the only way the club will be sold. Hicks was backed to the wall and cornered here but he managed to hold on to the Rangers for at least a year and a half even though everybody where commenting on how perilous the state of the club was. He lost the Rangers only when it was yanked out of this hands through the court ruling. Even then he tried to hold on to 1% of the shares, honorary life presidency, and the parking space land. However, the courts denied him any more involvement with the Rangers. He was also forced into this situation by the MLB. Unless something like this happens, I cannot see a sale happening as I will be surprised if any investor will meet his reserve price.

However as Av pointed out, I think the RBS would like to be involved in LFC long term especially in the stadium construction cost aspect. I dont know how "future owners" would view a stadium loan from RBS if they instigated a hostile takeover.

 

[Judge Jules]

[quote author=peekay link=topic=41733.msg1169028#msg1169028 date=1283425681]
[quote author=Judge Jules link=topic=41733.msg1168997#msg1168997 date=1283419944]
Thing is, jexy, I don't think the picture is that bleak in terms of potential buyers. We DO represent a significant opportunity - witness H and G's own desperation to cling on for grim death - and competent businessmen will fancy their chances of maximising that, once those two have been f'cked off.
[/quote]

Are we really that attractive JJ, for the price being quoted. Look at the number of bids for us in the last 7 years. Moores and Parry went around the world with a begging bowl and even for a significantly lower price, we were able to find only two genuinely interested parties. Any businessman will need to commit 600 million immediately( I am thinking 450 to buy the club + 50 million player investment and 100 million to kick start the stadium). I am sure the rest of the stadium cost will pay itself. And we are looking at significantly long term before we start making money on the 600 million.

Unless you are a billionaire with an avid interest in sports, why would you be looking to make such an investment. Wont you invest in Google/Apple? I am sure any decent venture capitalists can come up with a list of 20 promising start up companies to distribute your 600 million to.
[/quote]

The bolded bit is key though, plus the vanity value, which shouldn't be discounted as a potential selling point (otherwise why would Abramovich or the Arabs have bought into Chavski and Citeh either?).

Both Google and Apple have had their recent problems too BTW.

 

[FoxForceFive]

[quote author=crump link=topic=41733.msg1169023#msg1169023 date=1283424890]
Unfortunately, Goldman Sachs et al have already done their corporate thang up the road in Manchester. Liverpool is not a financial centre and never will be. There was a box available to any takes a couple of weeks before kick off this season.
[/quote]

Sorry, I phrased that badly. By corporate I meant conference facilities, used by businesses. A huge part of utd & arsenals revenue is gleaned from that, we lose out massively.

 

[StevieM]

[quote author=crump link=topic=41733.msg1169023#msg1169023 date=1283424890]
Unfortunately, Goldman Sachs et al have already done their corporate thang up the road in Manchester. Liverpool is not a financial centre and never will be. There was a box available to any takes a couple of weeks before kick off this season.
[/quote]

You almost sound like you're suggesting we're an average sized provincial side incapable of competing with the big boys from Manchester & London.