EPL Dealmaker Says Credit Crunch May Trim Team Values Up To 20%

Harris Says Clubs' Equity Value Declining

Seymour Pierce Chair Keith Harris yesterday at the Soccerex London Forum said that because of the global credit crunch EPL clubs "seeking a buyer must expect a reduction of up to 20[%] in price," according to Ian Herbert of the London INDEPENDENT. Harris said that owners "could expect '[10-20%]' less for clubs they were trying to sell." Harris: "The equity value of football clubs has declined over the last six to nine months. The run up to the end of the calendar year was appalling." Herbert notes the decline in value would mean Liverpool co-Owners Tom Hicks and George Gillett would be "barely covering the value of the bank loans they have taken out to finance their acquisition" if they sold the club. Despite the drop in values, Harris believes that the prospect of EPL clubs finding a buyer "has brightened after a three-month period at the end of 2008 in which the business environment was 'a disaster.'" Harris: "There's a better feeling, a more encouraging environment to think about investment." Herbert notes this assessment "appears to offer some hope" for EPL clubs Everton and Newcastle United (London INDEPENDENT, 5/14).

LIVERPOOL: In London, Jeremy Wilson notes Harris has been "involved with potential investors at Liverpool, Newcastle and Everton over the past year and, after working into what he called 'the teeth of the gale of this recession,' he says there are encouraging signs." Hicks and Gillett need to "refinance their [US$528.4M] loan with Wachovia and the Royal Bank of Scotland by July," and Harris is "more optimistic about their chances of reaching agreement" to pay off that loan (London TELEGRAPH, 5/14). In London, Kevin Eason notes Hicks and Gillett "put the club on the market last year but failed to achieve a sale, with an asking price of about" US$754.9M, but Harris said that the "relaxation among banks anticipating an end to the credit crisis may mean that they could buy themselves some breathing space by successfully renegotiating" their loan agreement. Meanwhile, Eason writes the "days of leveraged deals that allowed Malcolm Glazer to buy Manchester United by piling his purchasing debt back on the club, and the high-risk strategy of Hicks and Gillett, are probably over" (LONDON TIMES, 5/14).

AROUND THE LEAGUE: In Manchester, Matt Scott notes if there is one place Harris "would like to effect regime change" it is ManU. Harris: "You can't seek to suck cash out of a business that absorbs cash." Meanwhile, a former Aston Villa exec said that staff members are "privately grumbling" about Owner Randy Lerner's "monocratic style, which they say amounts to a few junior managers and himself through his proxy," BOD member Paul Faulkner. The former exec said that the "saving grace ... is that Lerner 'has money' but some even doubt that the benefit will be felt in the transfer market this summer" (Manchester GUARDIAN, 5/14).