Liverpool FC face credit crunching tackle

‘œWe’ll put real money into LFC. If you want to buy our Club, come to us,’
say ShareLiverpoolFC.

Press Release: Amidst calls by FIFA President Sepp Blatter for controls on the foreign ownership of football clubs, and comments by the FA Chairman, Lord Triesman, and UEFA’s general secretary David Taylor, regarding the excessive amount of debt held by Premier League clubs, the fans’ organisation ShareLiverpoolFC have raised serious questions about their Club’s financial stability as a result of being so heavily geared at a time when the ‘œCredit Crunch’ is really beginning to bite.

Utilising a powerful business modelling tool widely used in the football industry, ShareLiverpoolFC have reviewed LFC’s finances from the last audited accounts and projected these figures forward over the next five years. The results raise some very serious questions about the financial stability of the Club in the near future:

  • Even if the current RBS loan is extended beyond Jan ‘˜09, under the current arrangement it will only be until July, 2009. With both American owners unable to raise money for the stadium, in today’s financial climate, can they raise more ‘˜real’, unleveraged money to restructure the loan and keep the Club afloat?
  • If the football bubble bursts, could the loans secured against LFC become sub prime and put the Club at risk?
  • Kop Football Ltd has to find £20m plus to service the debt of £245m. How will the debt be serviced? Can the owners assure us that Kop Football’s indebtedness is not to be serviced by the Club? If it is, how can the Club pay it?
  • Rogan Taylor, founder of ShareLiverpoolFC, said:

    ‘œThe turmoil we are witnessing in financial markets is largely down to excessive lending to those that have difficulty in servicing the cost of the debt and who, as a result of the borrowing, effectively have negative equity in the assets they have borrowed on. Without a new owner in prospect, Liverpool FC now appears to fit this description based on the results of our review. We call on the owners to capitalize the loan from Kop Football to the Club. In other words, put some ‘˜real’ money into the business.’

    By July next year, ShareLiverpoolFC estimate that losses at LFC will have eroded the club’s Capital and Reserves to a negligible amount compared with it’s liability to its bankers; i.e. it will be very heavily geared and won’t have sufficient income to cover this total interest cost.

    Over the next five years ShareLiverpoolFC anticipate losses to range between £30m to £70m a year. These projected losses are largely due to the Club not having a big enough stadium or commercial income to support its current player and debt costs.

    It is also likely that the Club and its parent company, Kop Football, will be going through a re-financing exercise come the Club’s year end.

    Rogan Taylor commented: ‘œNot a comfortable position to be in at a time when the game’s regulators are calling for a reduction in debt and foreign ownership – not to mention the effects of the global ‘˜Credit Crunch’ ‘“ which will make a Stevie Gerrard tackle look like a vicar’s limp handshake.’

    SLFC Board member, Barrie Baxter, said:

    ‘œShareLiverpoolFC already represents thousands of fans prepared to invest real money into the Club. Raising the required funds won’t be the issue once we have a deal in prospect. We’re confident we’ll be able to succeed.

    ‘œWe are prepared to consider a partnership with any incoming buyer with the right attitude to the development of LFC going forward. After the experience with the current owners, it will be important for any new owner to ensure that they have the confidence of Liverpool fans.

    ‘œWe call on the current owners to inject cash as capital to reduce the Club’s debt. If they are unwilling or unable to do this, then they should move over and let others that can better serve the Club take control.’

    ShareLiverpoolFC’s long term objective is to gain control of the Club. However, in the medium term their strategy is to work with suitable new investors to help achieve a change of ownership, stabilise the Club’s finances and represent the fans interests by acquiring a stake in the Club. ShareLiverpoolFC believes their participation in the future will assist with this.

    Their message to potential new owners of ‘œtheir’ Club is ‘œcome and talk to us; you need the fans behind you and this is no ordinary Club. We understand it and have the experience to help’.


    Commentary to accompany this is available here.