Football Management

Commentary on the management of over 160 English football clubs by Dr John Beech, winner of the FSF Writer of the Year Award 2009/10 Twitter: @JohnBeech Curator of! Football Finance

Denouement at Liverpool?

Posted by John Beech on October 7, 2010

The long-running saga of Messrs Hicks and Gillett’s failure, first, to bring Liverpool’s level debt down, and, next, to find a purchaser of the club willing to pay the unrealistic price they were asking, has until the last few days been, to me at least, a soap in which there is constant speculation on how the plot might develop but with very little meaty activity – a soap on an obscure satellite channel that I really couldn’t excited about enough to pay a subscription to view it.  Suddenly, on Monday night, all that changed.  Not only did  Twitter erupt into seemingly more unlikely and dramatic messages, even the club website sprung into unusual communicativeness, although it rapidly emerged that it was telling only one side of what was rapidly becoming, to use the now standard cliché, a civil war.  To see how little had actually happened up to this week, see the timeline provided by Sky Sports.

After the first round in the contest for ownership, we now have a break in activity until the matter of who does or doesn’t have the right to change the membership of the Liverpool board is heard by an English court, with most observers predicting that Hicks and Gillett will fail.  I’m certainly inclined to that view but a) I’m not a legal expert versed in the intricacies of this rather obscure area of the law, b) I’m not privy to what if anything was written down when the newer board members moved in and c) decisions by English courts still manage to be entirely unpredicted.  We shall see, although it seems likely that even if Hicks and Gillett win, short of them suddenly coming up the money to repay the Royal Bank, they are still likely to lose control as the bank will force Liverpool’s parent company into Administration, and the club will then be sold to John Henry as currently planned.  One big surprise in this scenario would be the fact that the Premier League have indicated that the 9 points would not be deducted for the parent company going into Administration – entirely the opposite view to the Football League in such circumstances, and not a view that will be well received in Southampton.  I have frequently railed against points deduction as a sanction (see my Working paper on the subject), but, if we must have it, we surely should see the rules being consistently applied across the leagues.

With this post-Dunkirk phase of the confrontation, most commentary seems to be around whether Liverpool would be moving out of the frying pan of one American ownership into the fire of another.  I really can’t get my head round this as an issue – is the nationality of the owner really the over-riding variable that determines whether it will be good for Liverpool?  Might it not just be to do rather more with the effectiveness of the new management team (and not just the owner), the ability of whoever emerges as (football) manager, and the skills of the playing squad to bring success on the pitch, and hence revenues?  To assume that all these factors are a function of the owner’s nationality is a nonsense.

Equally nonsensical is to extrapolate from Henry’s track record.  Turning the Boston Red Sox round is one thing, turning Liverpool round is an entirely different kettle of fish – different game, which he has virtually no experience of, different set of business rules, different governing bodies, different organisational culture, etc. etc.  You might as well argue that Virgin Trains would follow the success of Virgin Atlantic.

If Henry gains control, we will have to wait and see how he chooses to have the club run.  Certainly there are no contra-indications in his business record, but there is still plenty of scope for notching up his first big failure, not least because he is moving into a different ball game (pun intended).  He may emulate the failure of Hicks and Gillett to get to grips with running an English ‘soccerball franchise’, perhaps picking up some tips on the way from the Glazers, or he may follow in the rather more successful footsteps of Aston Villa or Derby County.  Only time will tell.

Speculation on the subject of new American investor-owners simply draws discussion away from the real issue here.  Do we want investor-owners at Liverpool, or any other club for that matter?  Or do we want a fan-owned co-operative in charge of Liverpool?  By now, if you are a regular reader, you will no doubt have guessed my preference.

4 Responses to “Denouement at Liverpool?”

  1. While I believe in the accountability that fan cooperatives have the potential to bring to club management I believe they are appropriate under certain circumstances. I don’t believe that Liverpool as a global club/brand would be suited to supporter ownership. Not that supporters should not be involved in management, I believe supporters should have a mandatory seat on all club boards a change which could give supporters a voice in management without limiting the financial flexibility of the club.

  2. I hope the FA and Premier League do not punish Liverpool fans with a 10 point deduction. after all it is them that sanctioned the Leveraged buy out in the first place

  3. John Beech said

    The court struggles may be over for the moment at least, but the shouting is far from over.

    For example, according to the Texas lawyer representing Hicks and Gillett (1), “Mr Hicks and Mr Gillett pledged to pay the debt to RBS so that the club could avoid administration that was threatened by RBS. That offer was rejected“.

    Sporting Intelligence meanwhile reports “Hicks and Gillett (or rather their representatives) made contact with RBS asking for specific details about how to transfer funds to repay debts of around £200m to RBS, upon the payment of which they could have laid claim to the club again, in theory. Those details were provided, opening a window for Hicks to make a payment, albeit with a proviso from RBS that Hicks should inform the Liverpool board of the source of the funds before making any payment. No payment was forthcoming. They had a theoretical chance to pay the money, including details of where it should go, but no money was transferred.” (2).

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