Why there's a very real chance that Liverpool could go bust on October 6 unless fans act now

By David Maddock

Published 16:55 08/09/10

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October 6. Put this date in your diary. It is the day when the very destiny of Liverpool Football Club will be decided.

If that sounds dramatic, then it is meant to be so, because on that day there is a real danger that one of the most famous and historic clubs in world football could be brought to its knees.

Let me say now, that Liverpool are actually a well-run, well managed club, which, even with its current commercial performance and before stadium development, could be among the most profitable in the English game.

They are broke though, for one very good reason: The burden of acquisition interest that is place directly on the club. Or in simple terms for those who prefer their information in English, Liverpool are paying millions every month for the dubious pleasure of Tom Hicks and George Gillett owning them.

If that is allowed to continue, if Tom Hicks and George Gillett are allowed to continue with their ownership under its current format, then it spells disaster for Liverpool. It could even see them go bust.

It really could happen. Hicks and Gillett want to sell their ‘soccer franchise’, but they also want to make a profit out of it. Indeed, they want – and need – to make a big profit.

At the moment it is clear there are no takers at their asking price. Rather than sell, they are now desperately trying to refinance to ensure they can hold on to the business until they CAN sell it at their valuation.

But to do that, they will probably have to borrow even more money at even higher rates, and use the club’s assets to underwrite those loans. And we all know what that means. If you don’t, just ask Portsmouth or Leeds fans.

So October 6 becomes vitally important. That is the date that the Americans’ current lenders, the Royal Bank of Scotland, have set for repayment of loans totalling around £285million at the last count.

By then, the Yanks must have either sold Liverpool, or raised the funds to replace that existing debt with new debt. Or – and here is an intriguing third possibility – have persuaded the RBS to extend those loans once more.

Every single Liverpool fan the world over now recognises the danger of that happening, because it will merely extend an essentially unsustainable financial structure at Anfield. It will merely extend the threat of the club collapsing.

Even the much-maligned board at Anfield recognises it. Apparently, Chairman Martin Broughton and MD Christian Purslow, along with commercial director Ian Ayre, have already resisted one attempt by the Americans to use the club’s assets against new loans.

They know Liverpool could well be doomed if the Yanks hold on to power, and they seem to understand that the best interests of the club certainly aren’t served by that nightmare scenario.

I say seem to understand, because Broughton seems to have decided that the fans don’t deserve any information about what the hell is going on through the Merseyside media. He seems only to be prepared to talk to obscure business sources.

Purslow too, seems to have gone into hiding, bizarrely breaking off all contact with the fans, through the media, for the past six months. Attempts to ask him questions – as fans on a popular Liverpool website have tried to do recently – are met with silence, as are all interview requests.

But credit to them both and to Ayre, there is no question they are trying to resist the Americans’ attempts to retain control. For all the criticism aimed their way, much of it justified, they are trying to do what the fans so desperately want. They are trying to do the right thing, and fans shouldn’t forget that.

Without wishing to be too pessimistic though, there are no guarantees they will succeed. Already there are rumours of a legal challenge to the three directors blocking the two Americans on the board.

And who amongst us doesn’t believe that after decades of the most cunning business dealings that have made them both billionaires, that Gillett and Hicks aren’t stealthy enough to somehow pull off their latest despicable plan.

They are ruthless enough, after a combined ten decades in the leveraged buy-out business, that is for sure. Don’t think for one second they are going to roll over and simply accept that Liverpool will be taken from them and sold at a loss.

Which is why October 6 is so important. Let’s get real again here for a second. The RBS are making millions of pounds of profit from Liverpool, who so far have had no trouble at all meeting the repayments. In that sense, it is a gilt-edged investment for them.

So they will be reluctant to let it go easily, and still – possibly – open to persuasion from the Americans to extend, if yet more guarantees are proferred.

Other banks may well feel the same, that there is easy, unrisky profit to be made from extending credit to Hicks and Gillett, because the club will meet the liability. And that is the true danger to Liverpool as a storied club.

It is where the fans must come in, because it is down to them to stop either the RBS or any other bank perpetuating the current nightmare that has engulfed Anfield and threatened its very future.

Supporters are already responding in their thousands. I have highlighted here before the work of Kopfaithful, who are actively campaigning to ensure the RBS realise the risks of a massive backlash if they are to extend the Americans’ loans.

They have an intelligent, well-organised campaign which has spoken to MPs in the House of Commons, to major financial institutions in the UK and to major media outlets in the U.S., explaining the feelings of millions of worried Liverpool supporters.

They discovered that the Americans have approached at least 10 different institutions for refinance funding, and are now fervently trying to block that possibility, by orchestrating an email campaign to the likes of the Wall St Journal and NYTimes.

They are also making it clear to the RBS that there will be massive opposition if they don’t act in the best interests of Liverpool fans. The bank’s HQ in Edinburgh will allow access to vistors as part of an open house scheme on September 25, and guess who plans to be there?!

Kopfaithful want to talk to RBS Chief Executive Stephen Hester, to make clear the opposition to the Americans.

They are backed by several fans’ groups too, who are all aware of the dangers facing Liverpool right now. Influential websites such as Red and White Kop and You’ll Never Walk Alone are meeting along with several others this very evening, to discuss tactics. They are planning protests that will highlight the depth of feeling, and the potential power of such a massive body of committed support.

And that’s where you can help if you are a true Liverpool fan. October 6 is D-Day, and the more supporters make clear their opposition to any institution offering finance to the Americans, the less chance of it happening.

Back Kopfaithful, back Red and White Kop, back all the other fans’ groups who love Liverpool and are desperate to save the club. Do it calmly, nicely, but back them.

There is a chance that the Americans’ plans to refinance can be blocked, and if that happens, then there is a real chance the RBS can assume temporary control as they seek to sell the club to a responsible buyer.

If that can happen, then Liverpool can be great again. They already make an operating profit because they are operating efficiently without the Americans’ debt.

Without ownership debt on the club they can build a new stadium and turn profits – which can be invested in playing assets – that will make most Premiership MDs’ eyes water. So it is D-Day at Anfield on October 6, and you, the fan, can have a massive say in what happens.

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