plekhanov
20-03-2007, 21:21
Well surprise surprise it would seem that far from being a free spending Abramovich type sugar daddy in the the new liverpool 'franchise' owners are leverage buyout profiteers very much like Glazer only on a smaller scale.
Indebted FC: born in Liverpool, owned in Dallas, Delaware and the Cayman Islands
Details of American duo's tax-efficient Anfield takeover blows sugar daddy myth out of the water
David Conn
Wednesday March 14, 2007
The Guardian (http://football.guardian.co.uk/News_Story/0,,2033197,00.html)
The American businessmen Thomas O Hicks and George Gillett Jr have acquired control of the great football club they still bite their tongues not to call a franchise. The previous owners of over 80% of Liverpool have accepted the Americans' offer of £5,000 for each share, which means David Moores, the club's former chairman, will, within a fortnight, receive £89.615m for the 17,923 shares he agreed to sell last month. Hicks and Gillett will now take ownership of the club they plan to steer into increased global media revenues and a £200m, 60,000-seat stadium to be built in Liverpool's historic Stanley Park.
Hicks' and Gillett's offer document, sent to all shareholders, furnished some detail beneath the headlines of this acquisition whose future impact, on the club and on the wider game, will take time to be felt. For a start, the document thumps away the fantasy that these two men are sugar daddies who have flown into Liverpool to lavishly indulge a suddenly discovered sentimental attachment to "Reds". According to their financial adviser Robert Tilliss, of the Inner Circle Sports merchant bank based in New York, they see themselves as "custodians" of the club and want to take it "to the next level" as English football rises in financial value.
"American sports over the last 15 years have had tremendous money invested in stadia and they attracted new, sophisticated businessmen who have developed revenues from sponsorship, advertising and an upgraded supporter experience," said Tilliss. "English football clubs are the great brands of the world's No1 sport but their ownership was still quite parochial. The sport has a tremendous following in Asia, and Liverpool has great untapped potential in terms of building the value of the brand."
Tilliss was reluctant to be drawn on whether Hicks and Gillett would seek to make money themselves out of the club, but said: "If you get things right on the field, and invest in the stadium, the player roster and the youth academy, maybe eventually there will be a return of some sort."
Even billionaires do not habitually spend cash buying companies outright, and Hicks and Gillett are in fact borrowing £298m from the Royal Bank of Scotland to finance the deal. That comprises £185m to buy the club itself - £174.1m for the shares plus fees for Rothschild, their merchant bank in London, and for Inner Circle, lawyers, accountants and financial PR advisers, with other associated costs - and a further £113m borrowed to absorb Liverpool's £44.8m net debts, fund preliminary work on the stadium and provide working capital.
The interest is 1.5% above banks' current standard rate of 5.74%, so 7.24% in total, which on £298m means that interest of £21.5m will be payable to the bank this year. The document contains a standard assurance that Hicks and Gillett "will not depend to any significant extent on the business of Liverpool" to pay the interest, but the club could still be expected to service that debt. One professional close to the deal said the club could make regular payments towards the interest or pay Hicks and Gillett "a big dividend" at the end of the year to finance the borrowing. Rick Parry, Liverpool's chief executive, said it was "too early" to say how the financial arrangements would be worked out.
The extra £200m required to build the stadium will also come from banks, taking the total borrowings by Hicks and Gillett at Liverpool, backed by personal guarantees, close to £500m.
The Americans, well advised to talk in awed tones about their acquisition's great heritage, even gave the companies they formed to buy the club a resonant title: Kop. Named after the great stand from which Liverpool fans belted out You'll Never Walk Alone during last week's timely Champions League victory over Barcelona, the Kop Football Group will own Liverpool in a corporate structure ultimately based where Hicks and Gillett will have to pay the least possible tax on any gains they make.
Two Kop companies are based in Britain but they are owned by Kop Football (Cayman) Limited, registered in George Town in the tax haven of the Cayman Islands. It in turn is owned by Kop Investment LLC, registered in the US state of Delaware, which has low corporation tax and no capital gains tax. One of Hicks' and Gillett's advisers summed it up succinctly: "This was the most tax-efficient way to do it."
Parry said this was standard practice and the pair have never talked about what financial professionals call "an exit" - to ultimately make a personal gain by selling or floating the club. Their sons, Thomas O Hicks Jr and Foster Gillett, are directors of Kop, and the offer document repeats the sentiment that they want to make a "multi-generational family commitment" and be to modern Liverpool what the Moores family was between the 1960s and David Moores' tearful, handsomely paid exit.
Moores said he had taken the club as far as he could on his personal wherewithal, which he inherited as part of the Littlewoods dynasty, and the document reveals that he lent Liverpool £10m last summer while finances were stretched as the club awaited a takeover. Moores himself lent £2m and the other £8m came from a family trust of which he and his wife Marjorie are trustees. Parry said that while Liverpool were working on a takeover they did not want to take on extra debt, so the club's resources were fully engaged funding the wage bill and preparatory work on the stadium. Moores' loans provided some money for Rafael Benítez to spend on players, effectively paying for the Dutch striker Dirk Kuyt. Then in January only an unexpected £3m, from a sell-on clause when Milan Baros moved from Aston Villa to Lyon, enabled Benítez to buy the right-back Alvaro Arbeloa from Deportivo La Coruña on transfer deadline day.
Parry, smiling again now after his three-year search to find the club a buyer, has been criticised in his time as Liverpool fell behind Manchester United financially, but he and Moores have prided themselves on balancing tradition with commercialism, taking quiet pride at having made the "FC" in their club's badge larger in the same season that United removed theirs.
"Life will change," Parry said. "The new owners have been immensely respectful, researching the club's history, and the Barcelona tie could not have scripted a better demonstration of what makes the club so special. They felt the atmosphere of a fantastic night, between two great clubs."
Liverpool fans, who seem sanguine now that the long-awaited takeover is going through, also clearly relished their great European night and the chance to show Hicks and Gillett the passion that fires the brand. It was, without question, a clash between two great clubs, even if Barcelona are genuinely that - a club, a worldwide icon owned democratically by their local supporters - whereas Liverpool are now owned by a company which has a head office in Dallas, Texas, but is registered, so as not to pay much tax, in Delaware, by way of the Cayman Islands.
So there you have it far from splashing huge amounts of cash allowing benitez to sign all La Liga's best players, like some here claimed, the take over is going to mean £20m plus a year is going to be taken out of the club to service the debts incurred in the takeover, reducing not increasing the cash available for players.
Indebted FC: born in Liverpool, owned in Dallas, Delaware and the Cayman Islands
Details of American duo's tax-efficient Anfield takeover blows sugar daddy myth out of the water
David Conn
Wednesday March 14, 2007
The Guardian (http://football.guardian.co.uk/News_Story/0,,2033197,00.html)
The American businessmen Thomas O Hicks and George Gillett Jr have acquired control of the great football club they still bite their tongues not to call a franchise. The previous owners of over 80% of Liverpool have accepted the Americans' offer of £5,000 for each share, which means David Moores, the club's former chairman, will, within a fortnight, receive £89.615m for the 17,923 shares he agreed to sell last month. Hicks and Gillett will now take ownership of the club they plan to steer into increased global media revenues and a £200m, 60,000-seat stadium to be built in Liverpool's historic Stanley Park.
Hicks' and Gillett's offer document, sent to all shareholders, furnished some detail beneath the headlines of this acquisition whose future impact, on the club and on the wider game, will take time to be felt. For a start, the document thumps away the fantasy that these two men are sugar daddies who have flown into Liverpool to lavishly indulge a suddenly discovered sentimental attachment to "Reds". According to their financial adviser Robert Tilliss, of the Inner Circle Sports merchant bank based in New York, they see themselves as "custodians" of the club and want to take it "to the next level" as English football rises in financial value.
"American sports over the last 15 years have had tremendous money invested in stadia and they attracted new, sophisticated businessmen who have developed revenues from sponsorship, advertising and an upgraded supporter experience," said Tilliss. "English football clubs are the great brands of the world's No1 sport but their ownership was still quite parochial. The sport has a tremendous following in Asia, and Liverpool has great untapped potential in terms of building the value of the brand."
Tilliss was reluctant to be drawn on whether Hicks and Gillett would seek to make money themselves out of the club, but said: "If you get things right on the field, and invest in the stadium, the player roster and the youth academy, maybe eventually there will be a return of some sort."
Even billionaires do not habitually spend cash buying companies outright, and Hicks and Gillett are in fact borrowing £298m from the Royal Bank of Scotland to finance the deal. That comprises £185m to buy the club itself - £174.1m for the shares plus fees for Rothschild, their merchant bank in London, and for Inner Circle, lawyers, accountants and financial PR advisers, with other associated costs - and a further £113m borrowed to absorb Liverpool's £44.8m net debts, fund preliminary work on the stadium and provide working capital.
The interest is 1.5% above banks' current standard rate of 5.74%, so 7.24% in total, which on £298m means that interest of £21.5m will be payable to the bank this year. The document contains a standard assurance that Hicks and Gillett "will not depend to any significant extent on the business of Liverpool" to pay the interest, but the club could still be expected to service that debt. One professional close to the deal said the club could make regular payments towards the interest or pay Hicks and Gillett "a big dividend" at the end of the year to finance the borrowing. Rick Parry, Liverpool's chief executive, said it was "too early" to say how the financial arrangements would be worked out.
The extra £200m required to build the stadium will also come from banks, taking the total borrowings by Hicks and Gillett at Liverpool, backed by personal guarantees, close to £500m.
The Americans, well advised to talk in awed tones about their acquisition's great heritage, even gave the companies they formed to buy the club a resonant title: Kop. Named after the great stand from which Liverpool fans belted out You'll Never Walk Alone during last week's timely Champions League victory over Barcelona, the Kop Football Group will own Liverpool in a corporate structure ultimately based where Hicks and Gillett will have to pay the least possible tax on any gains they make.
Two Kop companies are based in Britain but they are owned by Kop Football (Cayman) Limited, registered in George Town in the tax haven of the Cayman Islands. It in turn is owned by Kop Investment LLC, registered in the US state of Delaware, which has low corporation tax and no capital gains tax. One of Hicks' and Gillett's advisers summed it up succinctly: "This was the most tax-efficient way to do it."
Parry said this was standard practice and the pair have never talked about what financial professionals call "an exit" - to ultimately make a personal gain by selling or floating the club. Their sons, Thomas O Hicks Jr and Foster Gillett, are directors of Kop, and the offer document repeats the sentiment that they want to make a "multi-generational family commitment" and be to modern Liverpool what the Moores family was between the 1960s and David Moores' tearful, handsomely paid exit.
Moores said he had taken the club as far as he could on his personal wherewithal, which he inherited as part of the Littlewoods dynasty, and the document reveals that he lent Liverpool £10m last summer while finances were stretched as the club awaited a takeover. Moores himself lent £2m and the other £8m came from a family trust of which he and his wife Marjorie are trustees. Parry said that while Liverpool were working on a takeover they did not want to take on extra debt, so the club's resources were fully engaged funding the wage bill and preparatory work on the stadium. Moores' loans provided some money for Rafael Benítez to spend on players, effectively paying for the Dutch striker Dirk Kuyt. Then in January only an unexpected £3m, from a sell-on clause when Milan Baros moved from Aston Villa to Lyon, enabled Benítez to buy the right-back Alvaro Arbeloa from Deportivo La Coruña on transfer deadline day.
Parry, smiling again now after his three-year search to find the club a buyer, has been criticised in his time as Liverpool fell behind Manchester United financially, but he and Moores have prided themselves on balancing tradition with commercialism, taking quiet pride at having made the "FC" in their club's badge larger in the same season that United removed theirs.
"Life will change," Parry said. "The new owners have been immensely respectful, researching the club's history, and the Barcelona tie could not have scripted a better demonstration of what makes the club so special. They felt the atmosphere of a fantastic night, between two great clubs."
Liverpool fans, who seem sanguine now that the long-awaited takeover is going through, also clearly relished their great European night and the chance to show Hicks and Gillett the passion that fires the brand. It was, without question, a clash between two great clubs, even if Barcelona are genuinely that - a club, a worldwide icon owned democratically by their local supporters - whereas Liverpool are now owned by a company which has a head office in Dallas, Texas, but is registered, so as not to pay much tax, in Delaware, by way of the Cayman Islands.
So there you have it far from splashing huge amounts of cash allowing benitez to sign all La Liga's best players, like some here claimed, the take over is going to mean £20m plus a year is going to be taken out of the club to service the debts incurred in the takeover, reducing not increasing the cash available for players.