Bank Rescues U.S. Soccer Club
AEG and Live Nation have made highly successful forays into the UK’s live music business, but their compatriots appear to be struggling when it comes to running English soccer clubs.
Tampa Bay Buccaneers owner Malcolm Glazer is unpopular with Manchester United fans because his highly leveraged buyout of the club led to selling its best player for £60 million to meet the annual interest payments. U.S. sports tycoons Tom Hicks and George Gillett also look to be on their way out of Liverpool.
Barclays Bank has agreed to a refinancing of the Merseyside club with the aim of selling it when its trading position improves. The details were being thrashed out over the April 10-11 weekend, but Hicks and Gillett have had to agree to British Airways chairman Martin Broughton coming in to take on the same role at Liverpool.
Hicks, who owns the Dallas Stars hockey team and the Texas Rangers baseball team, and Gillett, a former owner of the Montreal Canadiens hockey team, are expected to take a back seat while Broughton and Barclays Capital look for a new owner.
Hicks and Gillett bought Liverpool for £219 million in 2005 but their five-year stay has been littered with stories about them trying to offload it.
A year ago Gillett told the Sportaccord Convention, an annual gathering of leading international sports execs held in Denver, there was no truth in newspaper reports saying Liverpool was up for sale. However, most of the substance of the stories appeared to be provided by his colleagues.
The club has also been talking to other investors. American private equity fund Rhone Group reportedly offered £116 million for a 40 percent stake.
Liverpool has outstanding loans of £237 million and in June is due to pay £100 million owed to Royal Bank Of Scotland and American bank Wachovia.
Barclays, which is the main sponsor of the English Premier League, will replace RBS and Wachovia and also supply additional capital for new players.
Business analysts are pitching Liverpool’s current value at £500 million, but The Sunday Times reckons it could be more if the trading position was improved.
It’s a close call as to whether Hicks and Gillett will be out of Liverpool before Glazer is out of Manchester, where a consortium of wealthy fans – known as The Red Knights – are trying to buy him out.
Both clubs highlight the financial problems faced by English soccer clubs struggling with high player wages and crippling debts, two problems that Cleveland Browns owner Randy Lerner is starting to experience at Aston Villa.
When Lerner paid £62 million for the Birmingham-based club in 2006, he said English soccer couldn’t continue to pay spiraling wages, which eventually will need to be capped as they are in American football.
This year Portsmouth, which has won through to the 2010 FA Cup Final, became the first Premier League club to be forced into administration.