China Eyes The Reds

It may just be more bluster about who’s trying to buy Liverpool Football Club, but American owners Tom Hicks and George Gillett reportedly received interest from an Arab consortium and the investment wing of the Chinese government.

Liverpool supporters may not care whether the club is bought by what’s believed to be a group of businessmen from the Emirate state of Sharjah or the sovereign wealth of the Chinese Communist Party, as long at it means the end of Hicks and Gillett.

For the last two years there have been high-profile protests outside the club’s Anfield ground, including fans waving banners saying “Yanks Go Home.” The supporters – like new first team coach Roy Hodgson – will want to see the matter settled as soon as possible.

Unless the new owners can wrap a deal in time to invest the funds needed to buy new players by the end of this month, “The Reds” will have to start the new season with the current squad.

In the UK, players can be bought and sold only during what are called “transfer windows.” The current one closes at the end of August and the next opens in January.

The other key player wanting a swift conclusion is Barclays Bank, which four months ago agreed to a refinancing of the Merseyside club with the aim of selling it when its trading position improved. The deal hinged on British Airways chairman Martin Broughton coming in to oversee the running of the club and attract would-be bidders, while Hicks and Gillett were forced to take a back seat.

The media is understandably skeptical about bids for Liverpool as so many appear to have fallen through, with most of the allegedly interested parties playing no more than a cameo role in an ongoing saga.

In January 2009 the Al-Kharafi family from Kuwait, which is headed by the 24th-richest man in the world and has the country’s Dunkin Donuts franchise, was reportedly making a bid.

Earlier this year American private equity firm Rhone Group reportedly offered £116 million for a 40 percent stake. The Daily Telegraph says Rhone has since returned with an improved £100 million bid for 25 percent.

The mystery surrounding both parties currently said to be showing an interest is where exactly the money is coming from.

The Chinese bid is being fronted by entrepreneur Kenny Huang, but there are conflicting stories about him being backed by China Investment Corporation, which apparently has £200 billion on tap from the country’s vast foreign exchange reserves.

“Next they will say CIC is going to buy Playboy,” a source lose to the fund told Financial Times, as many business analysts questioned whether the Chinese would consider an English Premier League soccer club a suitable investment.

The CIC, which was started by the Chinese government in 2007, has been more conservative since its early investments included losing $5 billion in Morgan Stanley and a further $3 billion in Blackstone as the U.S. banking and investment businesses imploded.

Syrian-born Yahya Kirdi is said to have been in direct contact with Hicks and Gillett since March, but – apart from a couple of reports mentioning the unnamed backers from Sharjah – there have been several pieces questioning whether he’s able to raise the money.

The two Americans bought Liverpool for £219 million in 2005 but their five-year stay has been littered with stories about them trying to offload it.

Even if 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 and entertainment promotions company Gillett Entertainment Group– could attract an offer as high £650 million, there is still the matter of settling with Barclays Bank and paying off the estimated £200 million-plus the club still owes Royal Bank Of Scotland.

So far both the interested parties have pledged to wipe debt, put capital into the building of a new stadium and provide a transfer kitty for Hodgson, which would mean Hicks and Gillett would find there wouldn’t be enough left to make their four-year investment in English soccer a profitable one.