Sorry if this has been posted. Good article.
From The Sunday Times January 17, 2010
Buyer needs £1bn for Anfield takeover to succeed
Jonathan Northcroft
THE ENTRANCE to Liverpool’s Melwood training ground is almost always open during working hours, with just a couple of gateman to keep out the public. On Friday a 10ft steel barrier was drawn across but the only punters it offered protection from were a bloke and his girlfriend who stood politely telling journalists they had to knock against the metal if they wanted to get inside. Liverpool’s fans are still at the jeering rather than rioting stage. Walking on is what they signed up for. They cannot just say to bad times, in the manner of Tom Hicks Jr: “Blow me, f***face. Go to hell. I’m sick of you.â€
Yesterday’s draw against Stoke plunged their football club further into the morass, but though dissent against Rafael Benitez is growing, the affectionate response on the message boards towards his humorous performance at his Friday press conference shows he still knows how to play to his audience. Liverpool’s owners, Tom Hicks Sr and George Gillett, remain the focus of their ire. If the Americans sold up, as fans implore them to, it would be the most popular exit from Merseyside since the M62. The chances of it happening, however, remain remote.
The price of buying out the Americans and bringing Liverpool back, on and off the pitch, to the standard of a world-class club, was revealed this week to be in the region of £1billion. Hicks and Gillett continue to cast around for a new investor to buy a 25% stake in their club, on offer for £100m. That values Liverpool at £400m and in a local newspaper interview on Wednesday the chief executive, Christian Purslow, branded building a new stadium as “the key†to Liverpool being able to contend with other leading clubs.
The admission underlines that leaving Anfield must now be considered a necessity rather than optional for any would-be buyer and the cost of a new stadium is estimated as being another £400m. Chelsea, in the first 12 months of Roman Abramovich, spent a net £210m on transfers and in the same span under Sheikh Mansour, Manchester City’s transfer investment was £180m. It is fair to say, therefore, the tariff for revamping a squad such as Liverpool’s back to standard would exceed £100m. Then there is the question of whether replacing Benitez is desirable. If a new owner deemed so, the manager would require the remainder of his contract, worth £4m per year and running until summer 2014, to be honoured and a sizeable part of his entourage would inevitably need paying off, too. And how much would that cost? Benitez has at least 20 backroom staff, of whom nine followed him to England from Spanish football, 17 were Benitez’s appointees and 13 arrived in the past year.
Who is going give fans their wish and run Hicks and Gillett out of town at that price? “In the current market, finance for football club buyouts is brutally hard to come by and there are no investors out there saying, ‘I’m desperate to lend to the football sector’,†said leading football financial consultant Harry Philp. “The cost of buying Liverpool and building a new stadium is £800m before you start on players. Given Arsenal, who already have the Emirates, are worth £800m, that doesn’t seem great value.
“Twenty-five per cent of Liverpool is on offer but I don’t see why anyone would buy that minority stake. You’d pay £100m into getting one quarter of a dysfunctional football club and your money would go straight to the bank, to service Hicks and Gillett’s debt.
“The prospect of investment is made even slimmer by the presence of the sheikhs at Manchester City. It’s that much harder to buy a club and compete when faced with such a rich competitor. Three or four years ago, I was working with American investors and they all asked, ‘What happens if another Abramovich appears, and there’s another Chelsea in the Premier League to dislocate the transfer market?’ These people were savvy, the owners of NBA and NFL franchises, and they just couldn’t live with that risk. You’d have to say, with City, their worst fears have come true.â€
A source in the football finance sector, who has dealt with Hicks and Gillett and has knowledge of their search for Middle Eastern money, said: “Christian Purslow has been talking for weeks about being close to finding £100m but it’s yet to materialise and I’d be shocked if it comes from the Middle East. Hicks and Gillett have kept on and on going to the region and sending people there, and getting no interest. They just don’t seem to understand the word ‘No’.
“They can talk about interest from investors but who in their right mind would want to part with £100m for a minority stake in that set-up? Any serious businessperson would be after a controllingstake.â€
WHY THE REMEDY COSTS SO MUCH
COST OF CLUB £400m
NEW STADIUM £400m
SQUAD OVERHAUL £100m+
MANAGERIAL SWITCH £40m
TOTAL SPEND £940m+
