Will Liverpool go into administration this Summer?

Mr.Pink

Mr.Pink

Mr.Pink

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As the title...Will Liverpool go into administration this Summer?

As the lazy journalists and ignorant fans concentrate and why the current predicement of the club is obviously solved by replacing Rafa, the wiser and more informed people have dug deeper and looked at the much bigger problem that currently exists.

The current debt is now over £350 million.
Liverpool have to pay over £110 thousand pounds per day to service the debt.
Hicks and Gillette set up an offshore company (that LFC are liable for) and loaned the club £140 million and charged the club 10% interest on the loan.

THe banks want the money, the club is up for sale. It is surely not a worthwhile investment to any buyer, since it has such huge debts, and H&G have valued the club high, and still make money on the loan whist it is unsold. They are happy for this to drag on.

This is becoming a familiar scenario in the premiership. No-one imagined Leeds could deterioate so quickly and Newcastle highlighted how vunerable bigger clubs have become. Man Utd will be able to cope with the next season or two, but they have a massive £700million problem facing them.

Portsmouth are surely a casualty that should never have been allowed to happen.

Richard Scudamore, Chief of Prem League is supposed to 'regulate' any financial transactions especially when new buyers come in to take ownership of clubs. They are supposed to run a fit and proper persons test, but surely this is a joke when you look at some of the people they have endorsed.
 
I don't think they will this summer, it all depends on if they can keep their players and qualify for champions league next season.

If they don't then they will really struggle and will have to sell players. Exactly what happened to Leeds, they missed on Champ League and couldn't afford to pay back the money the borrowed to buy players.

Likewise Liverpool won't be able to afford to pay all the expensive players they have atm if they go without Champ League footy for 2 seasons especially if they don't find new owners to get rid of their massive debt.
 
The short answer is no they won't go into administration. Despite the debts, losses etc, the clubs cashflow is extremely healthy. However our current situation isn't sustainable for much more than a couple more years and hopefully our lovely American owners won't be around for much longer.

The amount of debt is also much more complicated than you're implying; of the ~£240m of bank debt, around £140m (iinm) is personally secured by the Americans. Also the ~£140m of intercompany loans can only be paid back providing it doesn't threaten the solvency of the club. Therefore if the club were to go bust the Americans stand to lose the best part of £280m.

H&G are holding out for the best possible price they can get but eventually they're going to have to sell, even if that means selling at a loss because they stand to lose far more if they keep holding on.

I bet that greedy **** Gillett wishes he took DIC's offer for £250m now instead of holding out for a guarantee that DIC wouldn't pay more for Hicks' share.
 
The big problem is despite how big a commercial and worldwide brand Liverpool is, it could take somewhere between £1b to £1.5b to be spent for what is needed. They say the yanks want anywhere from £400m to £800m to buy depending on what reports you read. Then it will cost around £400m for a new stadium and then there is the money needed to invest in new players. The way the financial world is at the moment, there are very few people with that type of spare cash that want to invest. I don't think they will go into administration but it could be a rocky 6-18 months for them.
 
No - Liverpool are far from going into administration - although given the same situation two/three years from now and it could be a danger

Once the debts are paid off, the stadium could probably be built for "free" as Arsenal have shown how albeit agreeing to sell off Anfield to developers /for development

£500m should get the club and I cant see anyone without having a substantial amount to invest in the team also

would be very surprised to see H & G walk away with over £50m each after paying off the debts (and they should count themselves lucky imo)
 
FrankJH said:
Once the debts are paid off, the stadium could probably be built for "free" as Arsenal have shown how albeit agreeing to sell off Anfield to developers /for development
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that's over-simplifying things somewhat, our stadium was nowhere near free! We were saddled with over £300 mil of debt immediately after completion of the stadium, and although that figure has been drastically reduced from the sale of property built on the old Highbury site, and at excess land we purchased during the move, our debt is still pretty high: ~£200mil is a good guess.

The difference between our debt and Liverpool's is that we replaced the vast majority of the bank loans with bond issues - something that I think I'm right in saying had never been done before by a footy club. It's all pretty dull stuff, but the interest rates are lower for us, and they weren't affected too badly by the whole financial crisis. Interest rates on our bonds are between 5&6% and only cost us ~£20 mil a year to service. There is no early paying the bonds off though, we will have to pay that kind of yearly outgoing right up to the mid 2020s. This means as long as our wages aren't too high, we can continue to turn out actual profits if we keep filling the new stadium.

Sadly it looks like the precarious financial situation has made the interest rates on Liverpool's debt extremely high; bank loans at the moment are killers... Arsenal were shrewd and conservative when we built our stadium with bonds rather than bank loans, it's more expensive but much less risky; in the wake of the credit crunch, it appears to have been an excellent decision.
 
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Sorry but, Arsenal have their stadium built for free? What, just what?

We secured £400million of financing to build it and it will probably cost us around £500-600million with interest payments by the time its paid off. Its free?

Arsenal didn't sell off the old stadium to developers, ARSENAL are developing it, but thats neither here nor there.

If they knocked down the stadium and turned it into flats and made £20, or £800million, thats how much they'd have, the new stadium, will cost around £600million, the price might be offset, it might not, thats neither here nor there, it will cost circa £600million.

Considering Liverpool are in debt, and at the moment don't have anything like the finances that secured the loan that Arsenal got(it was secured against the club/owners who are billionaires put together) Liverpool would need an area to move the ground to, and be able to secure a loan for the stadium AND a redevelopement to do what Arsenal have done and I can't see that happening.

AS for administration, the second Liverpool can't pay a repayment they'll be in risk of administration, while they are paying the debt off, they aren't really at huge risk.

You could have a £1,000,000 debt and be unable to pay it off, miss repayments for ages and be in serious trouble or be £1,000,000,000 in debt, but happily making the interest payments with no problems at all.

The risk comes from not having CL football, having less money, lower sponsorship money, less game winning money, less league money, less money pouring in from other countries effecting their profits and thier ability to pay off those interest payments. At that stage it becomes about the deep pockets of the owners and if they can keep up the repayments, if at any stage they can't, Liverpool are suddenly plunged into HUGE problems.
 
I would suggest naming rights for Liverpool's new stadium would be worth a significant more amount than what Arsenal got from Emirates - I would also suggest /sq mtre that Ashburton Grove is more expensive than ....Stanley Park? Not only this but also maybe Anfield is worth more to developers (or to be developed on)

All factors as to why more of the new stadium could be in the long run not cost Liverpool very much at all

(edit - ok against that the general investment climate, but its also too good to turn down)

Ok maybe I was a bit cavalier with the expression but damn I didnt think people would take it literally
 
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I think we stand to make ~£100mil over the course of the 25(?) year naming lease
I know it accounted for a significant proportion of the debt we incurred to build the stadium
 
I think Liverpools problem is that they have more debt than Arsenal, but without the advantages of a stadium like the Emirates.

Compare the big 4:

Chelsea - Abramovich, false economy so forget them.
Man U - large debts but generate more revenue, have to charge less than London teams for seats due to local economy but always fill to 70k capacity which makes the difference.
Arsenal - moderate debts but managed, state of the art stadium that generates £1.2m per game, can charge more for ticket prices.

Liverpool - needs a new stadium, can't charge high ticket prices due to local economy like Man U, only 45k capacity. New stadium will cost more in interest due to current financial conditions than the emirates did.

Liverpool generate much much less money than both Arsenal and Man U, but have been spending as much to keep up. The big difference for me is that Liverpool run at an operating loss, even if you take away the debts from sale by H&G, the club spends more than it generates on wages and transfers. Man U and Arsenal always spend less than they generate.

Add that all together and it makes Liverpool a very unattractive club to buy, you'll have to generate more debts to build a new stadium which will push the total debt over £600m, and then hope that the club can stay competitive while spending less in the transfer market (as Arsenal have done).

Personally i think they're screwed, there's no money to buy the new players they desperately need without selling Gerrard or Torres, and potentially face years outside of the champions league as they struggle with debt. I don't think they'll go into administration but i do think it's the end of the road for Liverpool as a team competing for the big honours, at least until the money aspects are brought under control.
 
they need their own scouse version of the red knights!
we can call them the red scallys? :D

I don't think the situation is overtly grim for liverpool, I still expect them to be pushing for top 4 next season. They do need rid of those owners sharpish though.
 
Unfortunately not.

FrankJH said:
Not only this but also maybe Anfield is worth more to developers (or to be developed on)
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:/

Have you been to Anfield? The entire area the last time I went would have cost about £30 if it didn't have a stadium in it. You think the land is worth more than land in London?
 
drunkenmaster said:
The risk comes from not having CL football, having less money, lower sponsorship money, less game winning money, less league money, less money pouring in from other countries effecting their profits and thier ability to pay off those interest payments. At that stage it becomes about the deep pockets of the owners and if they can keep up the repayments, if at any stage they can't, Liverpool are suddenly plunged into HUGE problems.
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..And the highest wage bill in their history isn't helping.

As much as i hate to admit it, i see key players leaving this year.

It really is a catch 22 situation. We need to keep the better players so we can keep challanging for european places, and we need the better players to be a more viable asset to prospective buyers.

But, keeping the better players will be hard. Our wage structure will now be too high, and key players will definately be uncomfortable with the off-field climate, and lack of progression & CL this year.

As for any influential new signings under the current ownership, i just dont see it. To go from a debt of £40 million in 2007, to £380 million in 2010, without any stadium development says it all.
 
Gilly said:
Have you been to Anfield?
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Of course he hasn't, he's probably from Norway :P

Was just about to post the same as Gilly though. Anfield (and Goodison Park too, my beloved Everton would have the same if not bigger problems selling stadium land) is in one of the skankier bits of Liverpool. Even if you built apartments on the land and called it Anfield Towers or something similar it still wouldn't attract the kind of money that Arsenal got as the north east of England will never have property prices matching somewhere in London.

Liverpool are in a very precarious position, even before this seasons CL non-qualification. As much as I joke that I'd love to see them go bust I actually wouldn't and I think it's pretty scandalous that buyers can take over clubs and then load that debt back on to the club.

If either Gerrard or Torres go in the summer and Rafa isn't allowed to spend all of that money then Liverpool fans should get used to mid-table mediocrity I'm afraid.
 
Gilly said:
:/

Have you been to Anfield? The entire area the last time I went would have cost about £30 if it didn't have a stadium in it. You think the land is worth more than land in London?
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Indeed. Forget the difference in potential cash over the North/South thing, within Liverpool Anfield itself is in a very crummy area.

Converting it to flats just wouldn't be profitable. Don't forget as well, there's a massive surplus of property for sale and rent in the city already; it's quite obvious for all that Liverpool can't attract enough people to afford them all. The Capital of Culture (2008) did bring LOTS of new blocks of flats but these are still for sale/rent, it's just too small a city for that many people with the right amount of money.

I remember when thinking about possibly living here much longer I looked at a converted flat in an amazing old gothic building. It was a fully converted huge duplex, free car park space, no ground rent, near the main transport routes. Two weeks after the viewing the estate agent rang back and rather obviously tried to get me to make an offer well under what it was being advertised for.
 
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I don't know what the situation is with ANfield, in so much as if they can knock down the stadium and build a new bigger one directly in the same spot.

People are getting into two different things, new stadium doesn't automatically mean building flats and becoming property developers out of nowhere and making lots of money.

Arsenal couldn't build a bigger stadium on the Highbury plot, its surrounded by houses and too small to build something like the Emirates.

We HAD to move and had to spend a LOT on the bigger plot of land, 99% of the time you do this you'd just sell the original land for a decent amount of cash. WE have the funds/owners/people involved to decide to develope the land ourselves and make money off expensive flats that also have the Arsenal history attached to them.

Flat prices in London vs Liverpool(the whole north) aren't remotely close. Liverpool would never in a million years get the same cash Arsenal got for building flats on the land, London flat prices are outrageous compared to really anywhere outside london.

Liverpool, not doing great financially and having lost money for years on end, wouldn't be able to get the backing to complete two MASSIVE projects like Arsenal have.

Arsenal had generated operating profits in a smaller stadium for MANY years before we did this and we secured a fantastic loan deal aswell. Obviously if you get a rich enough owner who wants to do it himself, thats one thing.

But also keep in mind, the profits from the flats built on Highbury aren't being channeled directly into the club, they've been used to pay off debts so far but will end up in the owners pockets, quite rightly.

Ignore the flats, ignore the property developement, it worked great for us due to London location and cash involved, for a club in debt, in a massively cheaper area of the country theres far less profit involved and considering how much bigger the loan would be and how much longer it would take to pay off.

The only thing to focus on with Arsenal is they moved to a new stadium and secured a deal where increased operating profits of the CLUB ALONE are being used to pay off the Stadium.

Naming rights for the stadium, was a 10 year deal for shirt and stadium at £100mil, its a VERY bad deal compared to Utd/Chelsea/Liverpool shirt deals in all honesty. When its renegotiated we should be getting something MASSIVELY more for the shirt. Aren't Real/Utd getting like 20-25mil a YEAR, so our deal for shirt alone should be closer to £200mil for 10 years, and naming for the stadium should cost even more, we made a huge error on that.


Also naming rights for Liverpool will drop DRAMATICALLY, as will their next shirt deal. Honestly I can't see Liverpool being the team to knock spurs out the CL spot next year, City will strengthen further, get rid of more dead wood and likely bump Spurs out who will have a much harder year with an extra competition next season. Liverpool not making it in the CL for 2 years, or potentially a LOT more, they won't be worth anywhere near as much in terms of advertising(shirt sales/stadium naming, actual adverts around the pitch) or in terms of ticket sales with no Liverpool vs Barca games happening, as they are now.

Lets say they get sold this summer, break ground on a new stadium in 1-2 years, and takes 2-3 years to finish. In 5 years, they could be a Europa only team with less star names and worth significantly less.
 
How can it be called "investing" in a football club. Surely it's better to describe football clubs as "money pits". I guess it means less of your rich owners money ends up in the pocket's of the tax man lol...

cheets64 said:
No the players have some value so they would be sold before administration.
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Really? Aside from Torres I can't think of anyone else worth over £15m. Gerrard is 30-31 now isn't he? He is unlikely to get over £20m in this recession, unless Man City or Real get silly.

Who else is worth over £10m? Babel? Benayoun? I wouldn't pay more than 6-7m for them...

I hope Liverpool don't go into administration but they haven't won the league in decades and now find themselves klinging onto 7th and the Europa league. Liverpool fans have got to be really worried, they have Man City to deal with then behind them Spurs, Villa and Everton.

Are they ever going to be top 4 again? I think it's a serious question to ask...
 
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