The fortnight could not have been more disappointing for Liverpool fans. After a weak start to the Premier league campaign, Liverpool football club is running against time to find a new owner before October 6th – the deadline set by RBS. The fans are getting nervous, and an air of insecurity hovers over the possible future of the club in case RBS seizes control, instantiating new promoters who could suffice the 350 million pound loan that ‘Kop holdings’ owes to the bank.

Is Liverpool in safe hands?

Martin Broughton, Christen Purslow and Ian Ayre were appointed as no-owner Directors by Hicks and Gillet presumably under the influence of the RBS. These appointments can be attributed to the fact that RBS wanted to have a say in the  running of the club after the Americans rejected the 100 m pound offer from Rhone Group which would have reduced the debt considerably . The irony is that, the present chairman who is understood be a ‘Chelsea fan’ has the responsibility to protect the rights of Liverpool FC !

An copy of the Champions League trophy stands on top of a gate outside Liverpool's Anfield stadium in Liverpool, northern England April 16, 2010. Premier League club Liverpool went up for sale Friday after American owners Tom Hicks and George Gillett appointed Barclays Capital to find a buyer. REUTERS/Phil Noble (BRITAIN - Tags: BUSINESS SPORT SOCCER)

Martin Broughton has not been talking to the media off late, which is one of the reasons why the fans are chewing their gum. The chairman has nothing to say on the ‘situation’, adding to that, the rumors and confusion surrounding the state of affairs at the club is only an insult to injury. In retrospect, though, it should not be difficult to understand that the three directors have been fairly successful in withholding the owners from re-financing the loan. Going by their reputation, Hicks and Gillet would have made substantial efforts in restoring their control over the club, but it could prove to be a case of too little and too late as we approach the penultimate week of September. This, in itself, strengthens the fact that Broughton has successfully managed to keep such attempts at bay, at least till this point in time. If the directors continue to show such resilience, Liverpool F.C might just be successful in recouping itself from a black hole.

Should RBS take over be cause of worry?

No and yes.

Liverpool football club owes 350 million pounds to RBS. Debt incurred by the American owners against the assets of Kop holdings. If Hicks and Gillet default against the loan, RBS is entitled to seize the assets (in this case Kop Holding) and make a recovery of its investments. Looking at the valuation of the club, it is at least on par, if not less, with the 350 million pounds that RBS would wish to recover from the club.

Even if RBS invites a bidding process, chances are that the bank might even make a profit out of its investment, as the number of interested parties would attempt to outdo each other in the bidding. That is blissful news for the fans, as it ensures that the club would have new owners, who will be able to invest fresh capital in the January window and help in bringing up the new stadium.

But, is that a guarantee? Apparently not! The prospective owners, who hold merit in the RBS bidding, may or may not be interested in building a new stadium, because the bank would seek maximum return from the deal, being least bothered about the interest of Liverpool FC. Because the Liverpool board may not be functional at that point, there may be a situation when the clubs interests are overseen in favor of a ripe offer. However its pretty unlikely that someone without proper knowledge and admiration for the club would actually pit oneself against the fans’ line of fire. In all probability, a change in ownership should be able to solve the omnipresent problems at the Merseyside club.

Unhappy Liverpool Fans with their Protest against Liverpool Owners George Gillett and Tom Hicks Liverpool 2009/10 Liverpool V Sunderland (3-0) 28/03/10 The Premier League Photo Robin Parker Fotosports International Photo via Newscom

What if Hicks or Gillet succeed in refinancing?

Doomsday ?! Maybe or maybe not..

Now that’s a scary thought! There could be two ways to go about it. If the original promoters succeed in refinancing the money that they owe to RBS, they can take another loan from a different bank at a higher interest rate, pay it to RBS, and re-submit Kop holdings and its assets to the new bank.

Although it sounds unlikely, but if the Yanks succeed in pulling this off, it could spell doom for the club. The higher interest rate would result in a higher chunk of revenue being diverted towards sufficing those commitments, rather than buying new players. The move could also trigger a further depreciation in the overall value of the club, as the star players would certainly opt to leave the sinking ship.

Clearly, the directors and their points of view are understood to be the decisive factor here. The three directors have the right to block this move, as it does not substantiate any gain to the club for which they hold the office. It was also reported lately that Broughton and co are looking into the legal parameters, if and when the need arises.

A more realistic way for Gillett and Hicks to hold on to the club could be if they agree to dilute their respective equity stakes and bring in new partners, who would pay a part of the 350 million to lower the debt on the club. This could lead to an interesting situation, where Broughton and co may not be able to block this move, as lowering of the debt would help Liverpool at least for a short period of time. But what remains to be seen is that if some one is insane enough to invest around 200 million for a 30 -40 % of stake, rather than bargain the same deal for a much larger chunk with the RBS.

Dawn of a new era

Liverpool F.C is going through the most turbulent times in its recent history but amidst the drama and confusion there are few facts that are difficult to ignore before someone put-downs the club. The fact that the club remained profitable despite finishing seventh last season establishes its business prospects. The club does not require huge investments in players, adding a couple of top quality players to the present squad , which does not require to break the bank, would make the team competent enough for all the major trophies. And most importantly, Liverpool FC  has the history and the experience to deal with the business of football, seen lacking with its budding competitors.

Less than two weeks remain, and the future of the club is still uncertain. There are chances that things may go wrong, but thats exactly the way life is! So why worry?

54 Responses to “Kop Corner: Why Liverpool fans should not be worried about October 6th?”

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  1. Selva Balaji says:

    Just hoping for the best !!

  2. prakhar says:

    Too bad liverpool. although pool is not one of my fav teams (putting it mildly), and I love to see them humiliated, I still wish the m*******f****ing basters hicks and glltet don’t get re-financing. I’d be devastated if RM was gng thru such a phase. I only like 2 thngs about pool. 2) gerrrad 1) fans. truly feel sorry for such passionate fans.

  3. Anxious says:

    whats that lol for ?