Wednesday, 6 October 2010

LFC: many unanswered questions

Edit at 12.45pm:

In his Sky Sports News interview, Broughton has just said that NESV would "do the right thing" on getting LFC a 60,000+ stadium but that they hadn't decided whether to build a new one or rebuild Anfield. I find this pretty extraordinary. Is this really a good deal for LFC without this issue agreed? Either NESV can't have a great deal of equity for investment or much confidence of raising debt finance for a new stadium. Time to put that scouse champagne (aka Diamond White) back in the fridge?

Where's the money for this coming from?

The fog hasn't cleared around the potential takeover of Liverpool Football Club by John W. Henry's New England Sports Ventures group, but already there are several key questions which Liverpool supporters should be asking:

  1. Although the LFC statement talks of the NESV offer "removing the burden of acquisition debt", is the c. £300m offer purely equity financed?

  2. If any new debt is being incurred in the purchase, what will this cost compared to the current c. £40m pa interest bill?

  3. With the current c. £100m pa wage bill, can LFC comply with the new UEFA Financial Fair Play rules without Champions League football? If not, will one of Gerrard or Torres have to be sold?

  4. The club requires around £400m to build its planned new stadium in Stanley Park, how will NESV finance this? Will further borrowing be incurred? Is any debt financing already arranged and on what terms?

  5. Part of NESV's success with the Boston Red Sox has been driven by increasing revenue through aggressive ticket price increases at Fenway Park, will the new owners pursue a similar strategy at Anfield/the new stadium?

Hicks and Gillett have boasted of "doubling profits" at LFC, but in reality the club is a financial pygmy on the European stage. Looking at the last accounts, revenue was almost £100m less than United's but the club's wage bill was only £20m less. That was in a season when Liverpool came second in the league and earned £20m from the Champions League...

The one thing that is certain is that there is no easy fix for Liverpool's financial troubles.