A football club board-room is no place for the faint of heart, it would seem.
On the same day as it has emerged that Manchester United posted a pre-tax loss of £80 million for this financial year, board-room wrangling continues to frustrate the proposed transfer of another member of British footballing establishment, Liverpool FC.
Liverpool, who owe substantial debts to the Royal Bank of Scotland (RBS), had appeared to be in the process of being purchased by American company New England Sports Ventures (NESV) (owners of American baseball team, the Boston Red Sox) for approximately £300m.
The club owes RBS in the region of £280m in debts and fees.
However, the club’s current co-owners, Tom Hicks and George Gillet claim to have reconstituted the club’s board, in the past 24 hours, in a move which effectively scuppers the deal.
The question, now, is whether or not that boardroom reshuffle – which saw the sacking of two of the clubs directors, managing director Christian Purslow and commercial director Ian Ayre to be replaced by Mack Hicks (Tom Hicks’ son) and Lori Kay McCutcheon – was one the owners were legally entitled to make.
The board had previously outvoted the co-owners by 3 to 2 over whether to sell to NESV. The owners feel the deal offered undervalues the club. Hicks and Gillet would lose IRO £140m should the deal go through at the £300m valuation.
Another key issue, and one which will worry fans of Liverpool – who currently sit in the unfamiliar territory of the Barclays Premier League’s bottom three – is that RBS wants its debt repaying by 15th October 2010 and, should the sale not proceed, the club could be placed into administration by the bank, in a move which would very likely result in a 9 point deduction under Premier League rules.
The club’s chairman, Martin Broughton, who was brought in to oversee the sale, is the only remaining board member in opposition to the owners. Broughton told the media that the clubs owners had signed “written undertakings [to RBS] that I was the only person entitled to change the board and that they would take no action to frustrate any reasonable sale.”
The issue, it would seem, is whether or not those written undertakings are legally enforceable.
Fans of the club, and the football team’s day-to-day management will be keen on a speedy sale and resolution – particularly as NESV have promised to remove all debt upon acquiring the club, which would secure the short-term financial stability of Liverpool FC.
It looks likely the parties will head to court in the next week.