Liverpool agree sale but legal battle ahead

Liverpool’s board has agreed to sell the club to the owners of baseball’s Boston Red Sox.

By (Reuters)

Published: Wed 6 Oct 2010, 12:29 PM

Last updated: Mon 6 Apr 2015, 4:34 AM

However, the fate of England’s most successful soccer team could yet be decided in court as an ownership dispute rages on.

The Premier League club said on Wednesday it had accepted a 300 million pounds ($477.6 million) offer from New England Sports Ventures (NESV) but the deal is being complicated by the club facing a legal challenge from its current owners.

On Tuesday, Americans Tom Hicks and George Gillett sought to replace two members of the five-man board with their own people in a final bid to retain control with the BBC quoting the pair as saying they would resist any sale that undervalued the club.

Local media reports had suggested Hicks and Gillett were looking for about 600 million pounds.

The proposed deal’s price tag of 300 million includes 200 million in writing down all acquisition debt and taking on some additional working capital debts and other liabilities.

The club’s American owners would also not have been happy to hear that a sale to NESV has the support of Liverpool’s major creditors Royal Bank of Scotland (RBS), according to a source familiar with the situation.

Liverpool chairman Martin Broughton said he was disappointed the current owners had “tried everything to prevent the deal from happening” but added the potential new owners were the best people for the job and would provide funds for new players.

The legal dispute over board membership will be a key part of whether the sale goes ahead, though with an October 15 deadline looming for the RBS debt to be refinanced the advantage seems to be with the prospective owners rather than the incumbents.

The five-times European champions owe 237 million pounds, mainly to RBS who could decide to take effective control of the club if the date passes without payment.

On Tuesday, Hicks and Gillett attempted to remove managing director Christian Purslow and commercial director Ian Ayre from the board and replace them with Mack Hicks and Lori Kay McCutcheon.

“It was the last chance for them to leave Liverpool with their heads high,” Broughton, speaking on Sky Sports News, said of the current owners. “It’s a pity they’ve chosen to go this route.”

Hicks and Gillett instructed Barclays Capital in April to find a buyer and appointed British Airways chairman Broughton to oversee the sale. He said the American owners had broken written agreements in the boardroom battle.

“Part of the terms of me taking on the role was that they gave a written undertaking that only I could change the board... and they also gave a written undertaking that they would not interfere and frustrate any reasonable sale,” he said.

“This is frankly a flagrant abuse of those two written undertakings.”

Hicks and Gillett bought the Merseyside club in February 2007 for 218.9 million pounds and have been unpopular with fans for burdening it with debt, leaving little money for transfers.

Fans have held many protests calling for their departure, blaming the club’s worst start to a season for more than half a century on a lack of new players, and struck a note of caution despite being pleased that they could be getting new owners.

“We’ve heard all these promises before and it amounted to very little,” James McKenna, a representative of the Spirit of Shankly supporters group, said.

“Supporters will be looking at how they (NESV) are going to finance it and how they are going to pay for the new stadium.”

Broughton sought to allay such fears, saying NESV wanted to create a 60,000-seater stadium in a “short timetable” — be it a new ground or an expansion of Anfield — and also pointed to their track record with the Red Sox.

“NESV’s philosophy is all about winning and they have fully demonstrated that at Red Sox,” he said, referring to the two World Series the team won in 2004 and 2007 after an 86-year wait. The first title came two years after the takeover by NESV, headed by multi-millionaire John W Henry.

The Liverpool deal will require Premier League approval although the legal dispute is the main issue.

“The legal battle is critical,” said Wyn Grant, professor of football economics at Warwick University. “If the NESV deal doesn’t go through RBS may ultimately intervene.

“I think RBS would be prepared to extend the loans for a short while to allow the sale to go through without putting the club into administration, but if it’s all held up too much they might just pull the plug on Hicks and Gillett, meaning the club would be available for purchase anyway.”

The Merseyside team would face a nine-point penalty if the club went into administration — which would take their Premier League tally into negative territory as they have just six points from seven games and are in the relegation zone.