The Epic Swindle - revisited

[gkmacca]

Liverpool football club was offered to billionaire Bill Gates in an attempt to solve a financial crisis under its former owners George Gillett and Tom Hicks, according to a report.

Americans Gillett and Hicks bought Liverpool in February 2007 but lost control of the club three and a half years later, on October 15, 2010, when the High Court in London approved a £300 million takeover by New England Sports Ventures, later Fenway Sports Group in a case brought by Royal Bank of Scotland.

Gillett and Hicks’s inability to keep up loan repayments on the money they had used to purchase Liverpool forced them into selling the club, with documents seen by The Times as part of a court case between U.S. hedge fund Mill Financial, Gillett and RBS revealing an offer of the club to Gates in the spring of 2010.

Bob Kraft, the owner of the New England Patriots NFL franchise, was also the subject of overtures.

Mill Financial, which had previously helped Gillett refinance the loan he had taken out to buy Liverpool in 2007, launched a last-ditch attempt to keep the club out of NESV’s hands in October 2010 which failed.

Mill began legal proceedings against Gillett and RBS in November 2010, claiming it was owed “membership interest” in Liverpool as part of its $70 million loan made to Gillett in January 2008 and alleging RBS sold Liverpool under its market value.

The Times reports that then Liverpool chairman Sir Martin Broughton was asked under deposition if “there was at least an attempt to contact Bill Gates and Bob Kraft in the US?” To which he replied “yes.”


[I doubt Gates would have been much help in the transfer windows, apart from shutting the club down and starting it up again, boom boom]

 

[gkmacca]

False dawn still holds painful memories

Ten years ago today Liverpool began what seemed a bright new era, Paul Joyce writes
February 6 2017, 12:01am, The Times

Gillett, left, and Hicks outlined an attractive vision when they took over in 2007PETER BYRNE/PA



George Gillett was reluctant to say anything but he inadvertently succeeded in saying it all.
The tenth anniversary of his takeover of Liverpool with Tom Hicks falls today, although it remains a date on which the American has no desire to spend time looking back.

It is a slice of history that no one associated with Liverpool wants to look back on, least of all the men for whom the American dream turned into a nightmare.

“I don’t know why you are calling me,” Gillett said when contacted by The Times, before being reminded of the looming landmark. “That is a very sad period in my life and I will have no comments.”

Gillett’s reticence was in contrast to that press conference in Anfield’s old Main Stand a decade ago. On that occasion, shoulder to shoulder with Hicks whom Gillett had brought on board to conclude a deal to buy the former Liverpool chairman David Moores’s shares, a shimmering vision for Liverpool’s future was outlined.

Gillett declared that a “spade would be in the ground in 60 days” for work to begin on a new stadium in Stanley Park, although he was unclear how the project would be funded; that there would be money for Rafa Benítez, the manager at the time, to spend on strengthening his squad; and, crucially, that the £185 million borrowed to fund the buyout would not be placed on the club’s debt.

Theirs was the charm offensive that the Glazers’ takeover of Manchester United had not been.
Liverpool reached the Champions League final three months later, in May 2007, although AC Milan gained revenge for that defeat in Istanbul in 2005, and Fernando Torres was signed that summer, from Atletico Madrid, for a club-record fee of about £21 million.

Yet a partnership that was supposed to be a marriage of convenience instead headed for divorce, with cracks soon evident as Hicks, who had compared buying Liverpool to purchasing Weetabix (which actually proved a successful deal for him), clashed with Gillett over the stadium project.

However, the unravelling of the US businessmen’s regime primarily stemmed from their failed attempt, despite the earlier promise, to put the debts on to Liverpool rather than their own holding company, Kop Holdings.

A process called “a whitewash” had to be observed by law, decreeing that all Liverpool’s directors had to agree to a move that was backed by the Royal Bank of Scotland. Moores and the chief executive, Rick Parry, said no.

RBS initially rolled over numerous credit agreements, but when it called in the borrowings because of the worldwide financial crash, Hicks and Gillett’s fortune ran out both literally and figuratively. Were they unlucky with the timing of their buyout? Could it have worked?

“Maybe if it hadn’t been for a banking crisis the Royal Bank of Scotland would have been more patient in asking for its money back,” a US source involved in takeovers said. “TV revenues have shot up, there’s interest in football from China who could have been interested in taking on the club.

“But leveraged buyouts are about high risk and high reward. If it goes wrong, as it did, and you can’t pay the money back, the whole model is dependent on flipping [selling] it. They couldn’t do that. Or not at the price they wanted.”

Today, Gillett continues to reside in Colorado, while Hicks is in Dallas, where the family name continues to make waves. Hicks’ son, Tommy Jr, is friends with Don Trump Jr and was influential in raising money for Donald Trump’s successful presidential campaign. According to reports he is said to have raised, along with others, $2 million (about £1.6 million) in three days for the Trump campaign’s war chest and was present at his inauguration.

Both Hicks Sr and Hicks Jr declined to be interviewed when contacted by email, though the latter did say he wished “the club and supporters the best of luck and still watch the matches from time to time”.

 

[gkmacca]

From the Mirror:


After suffering four losses in their last five games, frustration is setting in among the Liverpool fan base.

Jurgen Klopp's side appear to be out of the title race and facing a battle to qualify for the Champions League after being knocked out of both domestic cups.

As fans begin to play the blame game, some are looking to the club's American owners for answers. This has been exacerbated following the publication of so-called 'leaked' emails between owner John W Henry and his fellow Fenway Sports Group executives prior to their £300million takeover of the Reds in October 2010.

The content of these emails has led to a number of angry Reds fans venting their frustration on social media, as FSG find their tenure under scrutiny.

Liverpool fans have reacted to the documents with anger online (Photo: REUTERS)
But what is in the 'leaked' emails? And what do they mean? And is the ire that Reds fans have shown on social media justified?
Where do the so-called 'leaked' emails come from?

Despite the terminology sweeping around social media these are not in fact 'leaked' emails.

They are instead court submissions from the case between Mill Financial, the US hedge fund which made a last-gasp attempt to purchase Liverpool, and George Gillett Jr, the Reds' former co-owner.

They are freely available online after being filed at the New York County Supreme County in May 2015.


What do the communications say?

Amid the legalese, there are a number of passages that Liverpool fans have highlighted.

In August 2010 FSG (then known as New England Sports Ventures) were looking at a bid for the debt-ridden club. Henry wrote: “There is a basic precept/combination that I have learned from Charlie Munger and Warren Buffett that interests me in Red.

'Corset it'll be all right'. 'Spanx for the reassurement'. (Photo: Liverpool Echo)

“That is the concept of acquiring a top global brand at a discount price and ensuring it is well managed. I am interested now in trying to ascertain if this is indeed a major opportunity that would indeed diversify and strengthen NESV.”

Henry then looked further into the prospect of purchasing the club.

“In some ways they really are in the dark ages — especially competitively. The best and brightest are not presently working on English soccer. But the English Premier League is bigger than the NFL, NASCAR, MLB and the NBA internationally. Only Formula One can begin to compare in viewership.

“This could be a steal. Every buyer believes what potential Red Sox buyers believed — you have to build a new stadium. And they believe the stadium will cost more than £350m! That’s why there are no bidders. We would probably take the same approach we took to Fenway Park. But we’d be looking to limit investment in the facility to 8 figures.

“Then how much is this worth if we recruit the best and the brightest to run the soccer operation?”


What does it mean? James Pearce's analysis

James Pearce of the Liverpool Echo has broken down what these communications mean . Here are his findings:

The language used is undoubtedly clumsy and unfortunate. But despite the fury in some quarters, the fact is that those private emails don’t tell us anything about FSG that we didn’t know already.

They are an American sports investment company. They weren’t drawn to Anfield by the history and the tradition, the attraction was that it was an outstanding business opportunity.

Henry was right. It was ‘a steal’. Liverpool FC was in a mess at the time and was available at a knockdown rate.

With Forbes now valuing the club at £1.16billion, it’s proved to be a shrewd investment.

It’s also true that under their stewardship over the past seven years Liverpool FC has been transformed following the dark days under Tom Hicks and Gillett.

FSG have provided stability, they have put the club on a much sounder financial footing and in getting the new Main Stand built they found the perfect solution to one of the biggest issues they inherited.

Of course there have been blunders along the way, not least last year’s planned ticket price increases which triggered an unprecedented Anfield walkout and a swift apology and U-turn.

Despite the current mood of doom and gloom, it’s also worth remembering that Henry, Tom Werner and Mike Gordon pulled off a major coup when they secured the services of Klopp.

So what’s the problem? The current levels of vitriol stem from the belief that FSG simply haven’t invested enough cash in the pursuit of glory. That they haven’t backed the manager.

Only once during FSG’s reign have the Reds finished higher than sixth in the Premier League - that thrilling challenge of 2013-14 has been sandwiched by far too much mediocrity.

Say anything remotely positive about the owners and you risk getting shouted down as an ‘apologist’, but it’s worth remembering that from the off Henry and co warned they weren’t sugar daddies.

The documents have emerged as Liverpool are on a run of four defeats in five games(Photo: Gareth Copley)

Liverpool FC has had to live within its means. The stark reality is that the Premier League club with the fifth highest turnover and the fifth highest wage bill currently sits fifth in the table.

Unable to compete at the top end of the market with the likes of Manchester United, Manchester City and Chelsea, the Reds have pursued a transfer policy which focuses on investing in young talent and developing it rather than buying the finished article to order to reach the summit.


What does it meaning going forwards?

This season isn’t a write-off and this isn’t the time to be looking for scapegoats.

Sixteen months ago FSG and Klopp embarked on a long-term project together and that bond remains strong.

Klopp's bond with FSG remains strong (Photo: Getty Images)

The owners believe in the manager’s ability to deliver the glory which has proved elusive during their reign to date. And Klopp’s faith that they will give him the tools he needs to make that happen remains unwavering.

 

[dantes]

I have a feeling that Mill Financial will walk away from their court case incredibly wealthy people, more than they are already, almost as if they knew RBS would bend them over and do bad things, almost as if they predicted it, and wanted it to happen.

 

[Oliver Twist]

That photo of Hicks and Gillette at a game makes me die. What a pair of fucking shysters.

 

[Best Believe It]

[I doubt Gates would have been much help in the transfer windows, apart from shutting the club down and starting it up again, boom boom]

I dunno, he's had a fair bit of experience with Windows. Some good, some not.

 

[tombrown]

Knowing our luck, we'd get fucking Vista

 

[manwithnoname]

That Mirror article is annoying. Oh, silly fans who expect the world. It's a wonderful, respectful relationship based on mutual trust and a shared desire to be successful.

Why don't the clueless fans acknowledge this?

Because most of us - disregarding the mongs in social media - know, and have always known, that FSG will never put enough money into the club to consistently win trophies.

You end up where you spend, generally speaking. So fifth it is.

We will never win a title under them.

 

[FoxForceFive]

James Pearce wrote most of that, & he toes the party line continually, he pretty much has to in order to keep his job. The Echo is shadow of its former self & the only 'journalism' they do is either spoon fed to them by companies or organisations or taken from social media. They're basically just a social media aggregator & mouthpiece for the football clubs & council now, sadly.

 

[manwithnoname]

James Pearce wrote most of that, & he toes the party line continually, he pretty much has to in order to keep his job. The Echo is shadow of its former self & the only 'journalism' they do is either spoon fed to them by companies or organisations or taken from social media. They're basically just a social media aggregator & mouthpiece for the football clubs & council now, sadly.

But why? What the fuck do Trinity Mirror care what the local council or football club think? They don't book any advertising or influence their thinking in any way.

And it hasn't stopped other local papers tearing the fuck out of owners and clubs when they deserve it

Edit: maybe it's 'access'

 

[Mersey86]

Because most of us - disregarding the mongs in social media - know, and have always known, that FSG will never put enough money into the club to consistently win trophies.

You end up where you spend, generally speaking. So fifth it is.

We will never win a title under them.

OK - playing devil's advocate here. If we did get a rich new owner, couldn't we, naively perhaps, suggest that it was too late anyway, as FFP limits a club's ability to spend?
Is the way forward to increase the club's revenues - and the new stand is a step towards doing this - allowing the club to spend more as it has generated more revenue? Of course one way to generate revenue is to be successful - shirt sales etc worldwide will generate a lot more revenue.
Also, following NFL models, the teams which are most cash happy - ie those who pull in the big-name free agents are rarely successful. The Patriots get prolonged success behind a good coach, sensible policies in acquiring new players and being willing to let existing players go when other teams value them higher.

While I am no fan of FSG and while I am frustrated that we are short of class players I see three needs:

1. Generate more revenue
2. Scout better. Transfers like Balotelli, Markovic, Benteke (to an extent) are harmful to the club.
3. Do a better job to develop our own players. Here I am frustrated that Klopp has taken a step backwards this season - would like to see them get more opportunity, but maybe they are just not where he needs them to be.

 

[gkmacca]

I dunno, he's had a fair bit of experience with Windows. Some good, some not.

 

[FoxForceFive]

But why? What the fuck do Trinity Mirror care what the local council or football club think? They don't book any advertising or influence their thinking in any way.

And it hasn't stopped other local papers tearing the fuck out of owners and clubs when they deserve it

Edit: maybe it's 'access'

Access is ALL they have. They don't seem to have the budget (or perhaps desire) to have journalists look into anything at all, so they just thrive on 'exclusives' from both clubs & the council, occasionally from some large businesses too.

The articles about crime or similar are even worse than their football reporting, it's rarely more than an abbreviated version of the official police statement with some 'similar' facts about related crimes or stats/photo's pulled from a victim or criminals Facebook page.

 

[localny]

I think some of youse want to rename this title "Thanks for the 2010 rescue, the newly appointed brilliant top of the line manager, and great prospects for the future, now F off."

I think FSG have done a pretty good job to date. There's noth9ing shocking really in the emails coming out today. They got a great business for a song. It's great they saw this. Thank jesus (and John Henry) we didn't go under.

Kenny was an appointment we all would have made. Brendan, maybe not, but it's understandable. Klopp is a brilliant signing.

I don't want to get bought over by an Arab/Chinese/Russian Billionaire. Within the confines of this, they've supported the managers, they've got a terrific new manager, and if this was 5 weeks ago, you'd all be whistling a different tune.

They bought a lot of players in 2015 window, and the previous manager may not have bought well. But we were 7th in the league, no CL prospects coming along, and with a manager with no ability to attract players..

There will be a lot more money available this summer, as it becomes clear that Klopp's brilliant management of existing resources isn't quite enough. But I'm not going to go all knee jerkey because after 15 months of upward movement, we've hit a bad patch which will be over soon enough. We've come a long way on the field.

Leicester city won the league last year. That's enough for me to believe we can.

 

[FoxForceFive]

OK - playing devil's advocate here. If we did get a rich new owner, couldn't we, naively perhaps, suggest that it was too late anyway, as FFP limits a club's ability to spend?
Is the way forward to increase the club's revenues - and the new stand is a step towards doing this - allowing the club to spend more as it has generated more revenue? Of course one way to generate revenue is to be successful - shirt sales etc worldwide will generate a lot more revenue.
Also, following NFL models, the teams which are most cash happy - ie those who pull in the big-name free agents are rarely successful. The Patriots get prolonged success behind a good coach, sensible policies in acquiring new players and being willing to let existing players go when other teams value them higher.

While I am no fan of FSG and while I am frustrated that we are short of class players I see three needs:

1. Generate more revenue
2. Scout better. Transfers like Balotelli, Markovic, Benteke (to an extent) are harmful to the club.
3. Do a better job to develop our own players. Here I am frustrated that Klopp has taken a step backwards this season - would like to see them get more opportunity, but maybe they are just not where he needs them to be.

Comparing the NFL to footy, even in the Premiership era, is futile simply because the transfer system in the NFL is so different (& arguably a lot fairer), & the lack of promotion & relegation (plus no 'top four = CL top seven = EL' scenario), both of which benefit the clubs who would be penalised or marginalised in the Premiership.

 

[Mersey86]

Comparing the NFL to footy, even in the Premiership era, is futile simply because the transfer system in the NFL is so different (& arguably a lot fairer), & the lack of promotion & relegation (plus no 'top four = CL top seven = EL' scenario), both of which benefit the clubs who would be penalised or marginalised in the Premiership.

Correct. Though it may influence their thinking, nevertheless.

 

[RolandG]

Henry and co. have done what they said they would. Expanded the stadium and made funds available for players. Its held us back financially and was long overdue. The club is on a healthy financial footing. More sponsorship than ever before. Things are looking up. Some silverware would add a shine. We need that.

Our football has improved and so has the squad. Klopp shipped out many average players and bought smartly. Money was made available to him whenever he wanted. He chose not to use it in the January window. A mistake he has he has acknowledged. Lets hope he gets in players to strengthen the 1st team because we need a hugely improved squad if we get to play CL footy.

 

[redhorizon2]

I wonder what those two feel about the club now?

 

[keniget]

I don't want to get bought over by an Arab/Chinese/Russian Billionaire

Why is it preferable to be owned by foreign millionaire businessmen as opposed to a foreign billionaire benefactor?

The only meaningful difference is that with the former option we're far less likely to be successful.

Look at Man City, it's not like the owners are just throwing money at players, they're developing every aspect of the club in an attempt to make it a world class organization.

Why wouldn't anyone want that?

 

[localny]

I don't. I love football, but hand on heart i would find it hard to support the club if we were owned by a bunch of Russian thugs or Sheikhs.

I always thought we were better than that.

Somethings are more important than football to me. A good Indian curry is up there too.

 

[cochyn]

Why is it preferable to be owned by foreign millionaire businessmen as opposed to a foreign billionaire benefactor?

The only meaningful difference is that with the former option we're far less likely to be successful.

Look at Man City, it's not like the owners are just throwing money at players, they're developing every aspect of the club in an attempt to make it a world class organization.

Why wouldn't anyone want that?

Do you not think ffp is the cause of city not throwing money around.