What I don't understand is what on earth Hicks & Gillett thought they would get? It's obvious to an outsider that they never planned on building the stadium, and that their plan all along was that they simply thought they could make a profit by loading debt onto the club and taking real money out?
Which kind of makes sense, except the club has lost money because the gains they expected never happened because they didn't deliver on their investment promises, so the value of the club never could go up?!
Or am I being stupid and missing the point?
I think whatever their plan was, it was totally compromised by the credit crunch, and ensuing recession. Banks were happy to give credit and thus they bought the club in the 06-07 season, and might well have been able to have invested in a new stadium had they been able to get more loans.
However when the financial crisis started to go down, in late 2007 (iirc?) they were in the awkward position where they had to quickly pay off their short term, high-interest loans that they had taken out to buy the club, but only being able to do so by borrowing against the club at an unfavourable rate. I think any business plan they had depended on them being able to refinance their debt in a way that was beneficial to both them and the club, and they would have been able to carry on with improved operating profits from a new stadium despite the long-term debt. Instead the repayments on the debt are higher than turnover, they don't have the liquidity to invest in a stadium, and the club is haemorrhaging money.
If the financial crisis hadn't of struck when it did, they might have looked liked shrewd businessmen, plenty of property prospectors made fortunes this way in the late 90s/early00s. Sadly they look like idiots because of the timing of the collapse.
