SBD/Issue 87/Franchises

EPL Franchise Notes: Hicks, Gillett Continue Investor Search

Gillett (l), Hicks (r) Continue To Search For A
New Investor To Buy 25% Stake In Liverpool
In London, Jonathan Northcroft reported Liverpool co-Owners Tom Hicks and George Gillett "continue to cast around for a new investor to buy a 25% stake in their club," for $163.3M (all figures U.S.). But Hermes Sports Partners' Harry Philp said, "I don't see why anyone would buy that minority stake. You'd pay [$163.3M] into getting one quarter of a dysfunctional football club and your money would go straight to the bank, to service Hicks and Gillett's debt." Meanwhile, Liverpool Managing Dir Christian Purslow last week "branded building a new stadium as 'the key' to Liverpool being able to contend with other leading clubs," but Philp noted the cost for an investor of buying the club and building a new stadium would be $1.3B "before you start on players." Philp: "In the current market, finance for football club buyouts is brutally hard to come by and there are no investors out there saying, 'I'm desperate to lend to the football sector'" (LONDON TIMES, 1/17).

CLUB RESPONSIBILITY: EPL CEO Richard Scudamore said that any club that went out of business "would be guilty of 'rank bad management.'" Scudamore: "You can't say it is impossible to imagine a Premier League club going out of business, that would be foolish. Given the amount of central income that is generated by the Premier League, it would be down to absolutely rank bad management if a club itself was actually to go into administration." Portsmouth have "struggled to pay their players three times already this season and currently are banned from transfers," and Scudamore insisted that the club's "transfer embargo will stay in place until they have no outstanding liabilities" (PA, 1/17).

MORE BOND DETAILS: In London, Paul Kelso reports Manchester United owners the Glazers “could take out more than” $980M from the club’s revenues over the next seven years. Analysis of the bond prospectus distributed to investors reveals that in addition to annual interest payments of more than $490M, the Glazers can take a guaranteed $261M in “dividends, one-off payments and fees out of the club.” The terms of the bond also “allow the family to take additional annual eight-figure dividends based on a complex formula relating to the ratio of income to interest.” Applied to last year's figures, which saw net income of $68M, the Glazers "could have claimed a dividend of almost" $34M (London TELEGRAPH, 1/19).

SUBTLE LEADERSHIP: In London, Mikey Stafford noted while the American owners of Manchester United and Liverpool have been "unleashing unsettling bond issues and abusive emails," Aston Villa and Browns Owner Randy Lerner "has been grabbing attention simply by not being in the country." Aston Villa manager Martin O'Neill said of Lerner, "Ours has never been a case of going out and throwing lots of money at the whole scenario for a short-term fix. ... He's not (reckless). He's still very enthusiastic about it all, he's still got some plans for Villa Park as well, which will be great if they happen, but overall his view is not one where he will be reckless" (London OBSERVER, 1/17).

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