Liverpool could face points deduction

Tombstone · 9 Oct 2010 at 16:28

atpbx said:
http://www.sportinglife.com/footbal...STORY_NAME=soccer/10/10/09/manual_121221.html

From the horses mouth.

Seems as ever with these things clinging on to straws doesnt change what actually happens.

The holding company only has the club as an asset, just like the southampton case, if the bank calls the loan in then the club will be asked to pay the money, as obviously they dont have £230 million pounds, administration and asset stripping will commence should Hicks and Gillett succeed in blocking the sale and dont have the funds to pay the loan back themselves.

Bah, thats just Broughton making it sound calamitous in the hope that it will push things through faster. The Premier League themselves have already released a public statement saying that Liverpool will not be docked 9 points for administration and if anyone knows whether they will or not you'd expect it to be the Premier League themselves

Right now, as it stands, given the statements already made, I would be 100% willing to stake my entire years wages that Liverpool will not be docked points if they went into administration. Thats how sure I am of it.

BaZ87 · 9 Oct 2010 at 16:31

West Ham's parent company went bust and there was no points deduction because the club was solvent.

The rules clearly make it a possibility that we could be deducted points if our parent company goes into administration however it's down to the league's discretion and if the West Ham scenario is anything to go by then we won't.

xxalxx · 9 Oct 2010 at 16:45

Liverpool Echo said:
LIVERPOOL have dismissed fears they could go into administration and be hit with a nine-point deduction.

Reports have suggested that if the court battle over New England Sports Ventures’ proposed £300million purchase is not resolved by next Friday then the Reds could suffer the hefty points penalty.

However, sources close to the club insist that isn’t going to happen and labelled stories to the contrary ‘scaremongering’.

http://www.liverpoolecho.co.uk/liverpool-fc/liverpool-fc-news/2010/10/09/liverpool-fc-hopeful-of-avoiding-premier-league-points-deduction-100252-27434730/?

drunkenmaster · 9 Oct 2010 at 16:58

BaZ87 said:
West Ham's parent company went bust and there was no points deduction because the club was solvent.

The rules clearly make it a possibility that we could be deducted points if our parent company goes into administration however it's down to the league's discretion and if the West Ham scenario is anything to go by then we won't.

The difference is, West Ham were an ongoing ok financially team when outside factors caused the owner to lose a gajillion pounds.

Liverpool are NOT in that situation, not even close, they bought the club with leveraged debt, that debt is completely down to Liverpools owners doing and moving the debt from Liverpool to a lets be honest, shell company, doesn't change that.

I've commented before that the situation that almost any club can and pretty much do set up shell companies upon shell companies to hide/move debt and pay people in all manner of odd ways, including what I think half the league did and pay a huge portion of wages with far lower taxes by paying people from an offshore part of the company, or whatever the heck they were all getting away with.

Unfortunately I think the parent company situation will be easily exploited to push money into a parent company the "club" itself didn't earn, but use said company to pay half the wages and buy players on behalf of the clubs, getting around the average debt over 3 years rules.

BaZ87 · 9 Oct 2010 at 17:24

drunkenmaster said:
...

What on earth are you talking about?

All the debt on Liverpool's holding company, from a technical point of view, is not Liverpool FC's concern. It's not on the football club's accounts nor is it secured against the clubs assets. The debt is the owners debt, just like West Ham's owners problems were his problems.

And Liverpool FC is in a far more stable position financially than West Ham FC ever were.

It's very simple; West Ham's parent company went bust but the league decided that West Ham shouldn't be penalised as the football club is solvent. The exact same circumstances apply to Liverpool; the football club is profitable with plenty of cash to meet it's obligations.

The rules certainly make it possible for the league to deduct points and I wouldn't rule anything out but going by what they've said last week and how they handled the West Ham situation, it would be strange if it happened.

Jokester · 9 Oct 2010 at 17:30

West Ham's parent company went bust because of the collapse of Iceland's economy (not their fault), Liverpools parent company is going to go bust because of the failure of their business plan (their fault). Drunkenmaster is right, if Liverpool don't get deducted 9 points all it says is that you can offload all your debt onto a parent company to dodge the rules, indeed in Liverpool's case they're not even dodging the rules.

Edit:

62. The only ground upon which an insolvent Club may appeal as aforesaid is that
62.1 the Event of Insolvency was caused by and resulted directly from circumstances, other
than normal business risks, over which it could not reasonably be expected to have had
control; and
62.2 its Officials had used all due diligence to avoid the happening of that event.

BaZ87 · 9 Oct 2010 at 17:38

Jokester said:
West Ham's parent company went bust because of the collapse of Iceland's economy (not their fault),Liverpools parent company is going to go bust because of the failure of their business plan (their fault).

What a crock of ****.

It's not their fault they ran out of money?

Of course the economic problems played there part but that's part and parcel of investing money. You can't turn around and say, 'oh that wasn't meant to happen, it's not my fault'.

The reason why the holding company went bust has no relevance whatsoever.

West Ham's owners went bust; the football club remained solvent however their owners shares were used as security on other loans which meant the bank seized control of the club when the owners defaulted.

That is identical to what may happen at Liverpool.

Jokester said:
Drunkenmaster is right, if Liverpool don't get deducted 9 points all it says is that you can offload all your debt onto a parent company to dodge the rules, indeed in Liverpool's case they're not even dodging the rules.

You're as wrong as DM.

Offload who's debt onto a holding company? The debt isn't and never was Liverpool's debt.

Liverpool's owners borrowed money personally to purchase the club; the debt isn't and has never been secured on the club. Although the idea was for Liverpool to pay it off, legally it is not Liverpool's problem.

edit: There's only 1 difference between what happened at West Ham and what may happen at Liverpool; West Ham's parent company had other assets where as Liverpool is the only asset on the books of Liverpool's holding company. Whether that makes a difference, i don't know.

Jokester · 9 Oct 2010 at 17:51

BaZ87 said:
There's only 1 difference between what happened at West Ham and what may happen at Liverpool; West Ham's parent company had other assets where as Liverpool is the only asset on the books of Liverpool's holding company. Whether that makes a difference, i don't know.

That's the fundamental difference there, as I said West Ham's owners went bust because of the collapse of the Icelandic banks, Liverpool's owners will go bust because the business plan for Liverpool didn't work.

What you're essentially saying otherwise is that a company can invest money into a club, but keep the debt off the books so that they wouldn't fall foul of debt rules. It opens up a huge can of worms if they say it's acceptable for parent companies, where the only asset is the football club, to behave in such a manner.

BaZ87 · 9 Oct 2010 at 17:58

Jokester said:
That's the fundamental difference there, as I said West Ham's owners went bust because of the collapse of the Icelandic banks, Liverpool's owners will go bust because the business plan for Liverpool didn't work.

What you're essentially saying otherwise is that a company can invest money into a club, but keep the debt off the books so that they wouldn't fall foul of debt rules. It opens up a huge can of worms if they say it's acceptable for parent companies, where the only asset is the football club, to behave in such a manner.

I don't see how your fundemental difference is relevant to what the league are trying to enforce nor can I see how it can be used in court.

There is no legal connection between Liverpool FC and the debt nor is the football club, it's assets or employees at risk should the parent company default.

Equally it's clear to everybody that the debt is Liverpool's owners and not debt built up from the club overspending etc.

Liverpool FC is not connected to the debt (from a technical point of view), not at risk because of the debt and most certainly isn't the reason for the debt.

Jokester · 9 Oct 2010 at 18:03

So Liverpool didn't receive a penny of the money raised from the issuing of that debt?

BaZ87 · 9 Oct 2010 at 18:09

Jokester said:
So Liverpool didn't receive a penny of the money raised from the issuing of that debt?

No, all the debt on the holding company is the debt from the acquisition.

There was a seperate credit facility/loan taken out at the same time which is secured on the club's assets however as I've said before; the football club is more than capable of meeting it's obligations and remains profitable.

Biz.Kid09 · 9 Oct 2010 at 18:14

Please please get a deduction..have a lot of money on them going down

Tombstone · 9 Oct 2010 at 18:32

Its all a very very pointless (pardon the pun

) argument, we can all sit here and argue the semantics, the ins and outs of the legislation, the letter of the law and what we think rule x.y.z equals, but the simple fact of the matter is that the premier league have already categorically stated that Liverpool will not be deducted any points should they go into administration during this takeover deal. Anything else that anyone on these forums has to say on the matter is totally moot.

sammo62 · 10 Oct 2010 at 00:55

BaZ87 said:
No, all the debt on the holding company is the debt from the acquisition.

There was a seperate credit facility/loan taken out at the same time which is secured on the club's assets however as I've said before; the football club is more than capable of meeting it's obligations and remains profitable.

It's amazing how many people don't know this. A lot of other fans act like we recklessly spent £300m on players etc and Rafa messed it all up. All the debt was used in the buy-out of the club.

HangTime · 10 Oct 2010 at 01:45

http://news.bbc.co.uk/sport1/hi/football/teams/l/liverpool/9077048.stm

Latest news seems to be that the prospective buyers are getting scared off by the prospect of a points deduction.
Could just be some sort of ruse to encourage the EPL not to deduct points, given that NESV have been approved as potential owners by the FA, they might feel they could put pressure on them in terms of the alternative (Liverpool owned by RBS) being worse for their image.

HangTime · 10 Oct 2010 at 01:49

sammo62 said:
A lot of other fans act like we recklessly spent £300m on players etc and Rafa messed it all up

To be fair aside from the freak cases of Chelsea and Man City, the only club that has spent more than Liverpool is Tottenham.

Adrianr · 10 Oct 2010 at 02:14

HangTime said:
http://news.bbc.co.uk/sport1/hi/football/teams/l/liverpool/9077048.stm

Latest news seems to be that the prospective buyers are getting scared off by the prospect of a points deduction.
Could just be some sort of ruse to encourage the EPL not to deduct points, given that NESV have been approved as potential owners by the FA, they might feel they could put pressure on them in terms of the alternative (Liverpool owned by RBS) being worse for their image.

A business deal of that magnitude would be scuppered by 9 measily points? I somehow doubt it. Might have mattered if they were buying title contenders but not even Americans are that dellusional.

Jambo · 10 Oct 2010 at 02:26

Adrianr said:
A business deal of that magnitude would be scuppered by 9 measily points? I somehow doubt it. Might have mattered if they were buying title contenders but not even Americans are that dellusional.

I disagree. To go to -3 points at this stage of the season would put Liverpool on shaky ground in their current form. 9 massive points. You still wouldn't expect them to go down but it's not so easy to be confident when you are risking £300m.

BaZ87 · 10 Oct 2010 at 02:41

HangTime said:
To be fair aside from the freak cases of Chelsea and Man City, the only club that has spent more than Liverpool is Tottenham.

Over what period are you basing this on exactly? Since H&G bought the club, which I assume is the relevant period for this debate, the total net outlay has been ~£15m.

I'm fairly certain a few more clubs than those 3 have spent more in that time.

Tombstone · 10 Oct 2010 at 02:49

HangTime said:
http://news.bbc.co.uk/sport1/hi/football/teams/l/liverpool/9077048.stm

Latest news seems to be that the prospective buyers are getting scared off by the prospect of a points deduction.
Could just be some sort of ruse to encourage the EPL not to deduct points, given that NESV have been approved as potential owners by the FA, they might feel they could put pressure on them in terms of the alternative (Liverpool owned by RBS) being worse for their image.

Just yet more scaremongering by the media that's all, especially obvious as its supposedly from a "source" , I'm always skeptical when I see a news article from a "source". It's already been said there won't be a point deduction, everything else is just for the sake of selling media stories.