Liverpool Football Club Takeover

It is arguably the richest league in the world where some of the most popular teams in the world play. According to International Herald Tribune, six of the richest top twenty teams play in England, with four from Italy and Germany and three from Spain. Soccer in Europe is more of a business in today’s world. Most professional sports teams that have the money to buy the top players are usually the most successful. Like any business you want to have the richest owners; EPL Clubs are no different.

Foreign investment in EPL clubs is the new way to move forward and become successful. No longer do you have your local fans controlling soccer clubs, instead you have major foreign investors. The first major foreign investor was Abramovich at Chelsea Football Club. Chelsea FC was a weak team, struggling with debts and never winning any trophies. Roman Abramovich a Russian billionaire bought the club, cleared its debts, and bought the best players at high prices. Chelsea FC is now very successful at the present time mainly due to the money invested by Abramovich.

They are one of the big four teams in England along with Manchester United, Arsenal and Liverpool. The ‘top four’ are the best and richest teams in the EPL. Liverpool Football Club (LFC) is Britain’s most successful team. LFC has won 18 leagues and 5 European Cups in their history. David Moores has been Chairman of LFC since 1991. David was part of the Moores family who owned the gambling and retail empire Littlewoods. The Moore’s are renowned for being one of the richest families in the UK. Moores could still not compete against the other big clubs in the EPL though. Foreign investment was needed.

The main reasons LFC needed foreign investment was to compete in the market for the best players and to finance a new stadium. LFC’s current stadium is Anfield; its capacity is around 47,000. This is a huge difference compared to Man Utd’s at 85,000 and Arsenal’s at 75,000. The reason why this is a problem for LFC is because gate receipts are one of the main incomes for soccer clubs. At the beginning of 2007 Moores sold his stake in LFC to George Gillett and Tom Hicks. The two American tycoons won the race to own LFC as they had stiff competition from Dubai International Capital (DIC) who are LFC supporters.

Hicks and Gillett bought LFC for ? 5,000 per share, valuing LFC at ? 174. 1m. The two Americans wiped the clubs debts of ? 44. 8m and valued the club at ? 218. 9m. “We have purchased the club with no debt on the club,” said Gillett. “We believe in the future of the club, the future of the league, the new TV contracts are outstanding and we are proud to be a part of it. This is truly the largest sport in the world, the most important sport in the world, and this is the most important club in the most important sport in the world. ”

A lot of Liverpool supporters were wary of the takeover. LFC has never been run by people outside Liverpool let alone England. The American owners knew very little about ‘soccer’ and LFC is a traditional club with traditional values. The new owners promised to invest in new players and the new stadium so the supporters were happy and optimistic for the time being. In the summer of 2007 plans were made for a new 70,000 capacity stadium just down the road from Anfield. The owners financed to buy a top forward in Fernando Torres for around ? 20m and every promise seemed to have been met.

However, word got out that because of the credit crunch in America the owners would put the club into ? 350m debt instead of using there own assets. There were also rumors that the American owners would take a smaller loan out because of the volatile financial situation and the stadium would hold less people at around 60,000. LFC’s CEO Rick Parry stated, “The situation in the credit markets has not affected our design, program, or implementation of building our new stadium.

The priority has always been to build a winning team on the pitch and everything else we do is geared towards that. Obviously supporters were upset; they didn’t want the club in huge debts. LFC revealed new plans a couple of months later for a new 71,000 capacity stadium that will be built in time for the 2011-12 seasons. However, LFC supporters were still wary of the new owners and didn’t like all the rumors that the club would be placed in debt. To make matters worse LFC’s manager Rafael Benitez questioned whether the owners knew how the European transfer system works. The reason for Benitez’s comments was because he needed to sign a loan player, (Javier Mascherano) on a permanent basis.

The owners were stalling to give the funds, (estimated at around ? 18m) for the purchase of the player. The owners clearly weren’t happy with Benitez’s comments and arranged in private to meet with Jurgen Klinsman about possibly coaching LFC. Rafael Benitez is one of the best coaches in the world and Liverpool supporters are very fond of him. The opinions of supporters regarding the American owners were at a new low. The owners and Benitez finally arranged for the transfer of Mascherano to take place and they settled there differences.

Benitez claimed there was a misunderstanding between him and the owners mainly due to language barriers; Benitez is Spanish and his English isn’t perfect. A few weeks later word got out about the meeting with Klinsman and supporters wanted to know what was going on. They didn’t want there beloved manger to be replaced. Tom Hicks revealed publicly he had met with Klinsman. Hicks thought Benitez wasn’t happy about the transfer dealings of the club and suspected he was going to leave. This was definitely not the Liverpool way.

Hicks should never have made this public and all the attention off the field was undermining the team’s performances on the field. Supporters protested at every game that they wanted the owners to sell to DIC who were real supporters of LFC. Tom Hicks has refused to sell and has now backed Rafa Benitez completely. The new twist is that Tom Hicks and George Gillett don’t like each other and don’t even speak to one another. Tom Hicks wants George Gillett to sell his share of the club to DIC and also wants Rick Parry to resign as well.

I believe LFC were wrong to sell to the American owners. They had no knowledge of how the game works over in England, how the transfer system works and how passionate the supporters are. When investing in a foreign market you need to understand the environment and the culture. I believe the American owners understand the business side to sports. However, soccer in Europe is different in many ways.