16 May 2010

Liverpool fans BEWARE: "The State of LFC – An Idiot’s Guide" (posted on RAOTL) is FALSE. And here's the proof.

On the 11th May 2010, a member of the LFC forum RAOTL.com posted a sensationalized ‘analysis’ of LFC’s current debt problems. It painted the bleakest picture imaginable, and was – predictably – designed to place the club’s Owners in the worst possible light and fan the flames of fan discontent. That post was then disseminated around the net, and appeared on countless LFC sites, where it was just accepted without question, despite the fact that *no evidence whatsoever* was provided. Well, that post is a completely inaccurate, and I will now illustrate – with examples – why.

It really is amazing the lengths to which some 'fans' will go to create bad publicity for the club. And that's what it is - bad publicity for the CLUB. As I said in a previous article, some ‘fans’ are so consumed by their hatred for H+G that they’re willing to spread misinformation, even if a side-effect of that is making the CLUB look bad. It’s a cast iron case of cutting off the nose to spite the face.

Preliminary notes

* I will be using two separate sets of accounts for this post:

i) Liverpool FC and Athletic Grounds (LFCAGL) = The Club
ii) Kop Football Limited = H+G's company

Both of these reports are available to buy from Companies house.

A brief overview of how the companies related to LFC are structured

Kop Investment LLC
An American company, co-owned by Gillett & Hicks.

This owns:

Kop Football (Cayman) Ltd
A company registered in the Cayman Islands

This owns:

Kop Football (Holdings) Ltd.
A UK holding company

This owns:

Kop Football Ltd
Another UK holding company.

This owns:

Liverpool Football Club & Athletic Grounds Ltd
This is the club itself.

Anything to do with KOP CAYMAN and KOP INVESTMENT LCC are companies incorporated OUTSIDE the UK, and the CLUB cannot be touched by any debts relating to those two companies.

Analysis of the info posted on RAOTL


I will go through the post point by point (Click on images to enlarge):

"The figures released on Friday 8th May 2010 indicate that Liverpool FC is in net debt to the tune of £351m".


FALSE. As I illustrated in my article yesterday, Liverpool FC - i.e. Liverpool Football Club and Athletic Grounds Ltd (LFCAGL) has total debt of £226m:


H+G’s parent company, Kop Football Ltd (KFL), has a debt level of £347m:

It is totally wrong and deliberately misleading to say that LFC has £351m of debt. That debt is NOT on the club; it is on H+G’s company. Furthermore, LFCAGL is under no immediate threat from that debt.

1. KFL pays the interest on that debt, not LFCAGL.

2. As I illustrated in my article yesterday, LFCAGL owes H+G's company £100.8m, and this is confirmed in both sets of accounts.

LFCAGL Accounts



KFL Accounts


3. The interest payment on that figure for the last financial year was £9.3m:


Additionally, as you can see fom the image below, the person who wrote the RAOTL article has added the accrual’s figure of £4m onto the total debt of £347m to make £351. One problem: the accrual debt is *part* of the £347m:



"A total of £233.996m is owed to RBS, in addition to an inter-company loan of £144.441m owed to Kop Cayman”.

FALSE. The correct figure owed to RBS is £197.4m:


The amount owed to Kop Football (Cayman) Ltd (KFCL) is £145.3m:



* KFCL is incorporated in the USA, not the UK.
* It is the parent company of KFL *not* LFCAGL
* The £145.3m = Loans to KFL *not* the club

"Liverpool FC are not paying the interest off on that £144.4m however. It is being charged as a “compound interest”, meaning the interest isn’t paid, but is instead “rolled up” to the grand total".

FALSE. No evidence whatsoever to support this. The writer then goes on to give the following example:

For example, this year (if I’ve got this right): £144.4m @ 10% interest = £14.44m payable this year.Instead of paying that £14.44m, it is rolled onto the total making the outstanding debt owed to Kop Cayman £158.88m. The following year this is then charged at a further 10% interest: £158.88m @ 10% interest = £15.88m payable next year. Instead of paying that £15.88m, it is rolled onto the total making the outstanding debt owed to Kop Cayman £174.76m. The following year this is then charged at a further 10% interest: £174.76m @ 10% interest = £17.76m payable next year. Instead of paying that £17.76m, it is rolled onto the http://www.blogger.com/img/blank.giftotal making the outstanding debt owed to Kop Cayman £192.52m etc etc etc...


I am amazed that any self-respecting Liverpool fan would believe this. In any event, the loan from KFCL was to KFL *not* LFCAGL. Like the rest of the anti-Owner Liverpool media, the implication being made is that Liverpool FC (The club) is responsible for all this debt, and is being forced to pay interest on it. This is FALSE. KFL pays interest on the loan it received from KFCL, *not* LFCAGL.

"The financial figures released last week are for the 2008/09 season. Those figures declare the club made a loss of around £52m for that year, due to the interest repayments on the loans and another £22m spent on the new ground".


FALSE. The CLUB (i.e. LFCAGL) made a loss of £14m, not £52m.


What about KFL? Did they make a loss of £52m? NO. The loss was £27.3m, which is actually a *decrease* of 11m on 2008’s loss:



To give you an example of the kind of spurious ‘accounting’ going on here, I’ll illustrate what the ‘State of LFC’ write did to arrive ‘create’ the £52m: he took KFL’s loss for 2008 (!), and added on LFCAGL’s loss for 2009 (i.e. he took one figure that was a YEAR out of date, and combined it with another figure from a different company!)

£38m + £14m = £52m. Magic!

It’s utterly inaccurate. I hope that you can see this.

The rest of the post is the worst kind of unsubstantiated scaremongering, full of generalizations, unfounded assertions and nothing that should be taken seriously. It is all one person’s OPINION. There is nothing factual in it, and there is nothing even remotely close to reality.

The shocking thing is that Liverpool fans actually believe that article! Some fans are so wrapped up in their irrational hatred for the owners that they seemingly have an inability to THINK and ANALYSE what’s put in front of them. It really is groupthink/mass delusion on a disturbing scale.

As I’ve said previously, I have no personal allegiance/connection to Hicks and Gillett. My detractors will try and convince you otherwise because they are desperate to discredit me. And the reason is simple: I have not jumped on board the ‘H+G are the devil’ bandwagon. That makes the brainwashed superfans spreading the misinformation suspicious of me, which is why you will always see me being slagged on off various LFC forums on the net. How can I be a fan if I don’t hate H+G etc.

I care only about the truth. Spreading misinformation to achieve the goal of creating negative publicity for H+G is wrong, and it makes Liverpool fans look desperate and stupid. The knock-on effect of that is sullying the name of the club.

I also believe it’s time for H+G to move on, but I’m not going to twist the figures just to try and achieve that.

Fans should be wary of the campaign of lies and deceit that is being waged at the moment by one section of the LFC support. When you read something, consider the source; look for evidence; remove emotion from the equation and think about it logically. Do not just accept it hook, line and sinker because it reinforces your dislike of the Owners.

The poster on RAOTL at least got one thing right - the title: 'The State of Liverpool FC: An Idiot's Guide'.

It is indeed a guide for IDIOTS.

STOP BEING SO EASILY MANIPULATED.

(Just watch: Despite the FACTS presented above, there will still be fans who steadfastly refuse to accept the truth)


Jaimie Kanwar


See also: Liverpool FC's debt: The lies, misinformation and exaggeration exposed

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159 comments:

  1. If it's not our debt why's it in our accounts?

    ReplyDelete
  2. The CLUB has debt of 226m. That is in the CLUB'S accounts.

    The debt for Kop Holdings is 347m - that is NOT on the club, and it is NOT in LFC's accounts.  It is in Kop Holding's accounts.

    Kop Holdings is a parent company for LFC, but that does not mean LFC is liable for that debt.  Worst case scenario: Kop Holdings cannot pay that debt.  The banks go after H+G, NOT Liverpool FC. Why?  Much of that debt is secured against H+G (Via letters of credit etc), NOT against LFC.

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  3. Jamie.
    When you look at liabilities, you should include debt that is due within the year and after one year. Total debt on LFCAGL is 226.5 + 30.1 = 256.6m. For a stickler for accuracy, i am surprised at this basic oversight...

    meanwhile, the statement os "Anything to do with KOP CAYMAN and KOP INVESTMENT LCC is irrelevant" is wrong. LFCAGL is ultimately an asset in their balance sheet(s). If they go bankrupt, then their creditors have rights over these assets (i.e. the football club). What is correct, however, that LFCAGL are not contractually responsible to pay any debt / interest payments (in spite of being used for collateral). 

    It is fair to look at LFCAGL accounts to look at the financial performance to the club. However, to say they are not linked / interdependent is not correct.

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  4. Liverpool's debt today, at this moment, for the next financial year, is 226m.  I am dealing with current figures, not figures from next year.

    And as you say, LFCAGL is not contractually obliged to pay any debt/interest payments.  Thus, there's no point worrying about it.  If the worst case scenario did occur, and Kop Cayman went bankrupt, LFC are under no threat.

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  5. <span>STOP BEING SO EASILY MANIPULATED.</span>

    So says Jamie Kanwar, whose writing is constantly attempting to manipulate people towards his own anti-Rafa bias.

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  6. Well said Hmmm2:05 pm, May 16, 2010

    I was gonna say that too. Having started to read a bit abt Corporate Accounting and Finance, LFCGAL being *their asset* might be used to bring down the leverage. Also incase of G+H's bankruptcy LFCGAL can be used to service down the debts.

    May be if it comes down to that point the banks may then choose to sell the club on to the next highest bidder. G+H are doing exactly that now without giving the banks a chance.

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  7. Jaimie

    I think you are too wrapped up in the internet warzone to see the absurdity of what you're saying in this article (and yesterdays)

    So some of the articles on the internet have taken 2+2 and made it equal 5?  Let's just assume for a minute that your article is 100% correct. 

    So LFC "only" owe £197m to RBS instead of a higher figure quoted elsewhere. 
    So LFC "only" made a loss of £14m instead of a higher figure quoted elsewhere.
    So LFC "only" paid £9.3m last year instead of a higher figure quoted elsewhere

    By obsessively focusing on what you see as "lies" elsewhere, your articles implicitly condone the clubs situation and indirectly, the Gillettt & Hicks era

    If you were a Martian landing on earth and you looked at LFC compared to our direct rivals then you'd conclude that we were in a worse financial situation than all of them apart from Man U.  Even Everton have a better situation than us.  There is no debate.  Empirically we are in an unsustainable financial position and not in a position to compete long term with our direct opponents.

    Also, I'm not so sure you can completely divorce the club from Kop Holdings.  There is a precedent with Southampton FC.  The holding company went into administration but because it only had one asset (the club), the football league still imposed the 10 point penalty on the club. 

    Only when an acknowledged financial expert independently verifies the situation will the matter be finally put to bed.

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  8. So Jaimie, explain what happens to LFC, from a FOOTBALL perspective as far as the Premier League is concerned, if Kop Holdings goes into administration, due to the ongoing 10s of millions of pounds in losses that it racks up on a yearly basis.

    Then explain how therefore Kop Holdings debts aren't essentially LFC debts.


    *waits for post to deleted.

    ReplyDelete
  9. 1. Kop Holdings will not go into Administration.

    2. If it did, the banks would go after Hicks and Gillett, not LFC.  Why?  The loans obtained by KFHL are secured against H+G, not the club (via letters of credit etc).

    3. As Hmmm stated above, LFC is under no contractual obligation to cover the debts of KFHL.

    4. Furthermore, as stated in my article yesterday, H=G cannot take money out of LFC if to do so would have a negative financial impact on LFCAGL (i.e. LFC).

    The only loans LFC is liable for are the loans made by H+G *to* the club, which amount to 100.8m at present.

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  10. My articles do not 'implicitly condone the club's situation' or the H+G era.

    Did you not see the *explicit* statement I made in both articles stating that I want them both to leave?  Or have you deliberately ignored those?

    I am not taking sides in this instance - all I'm concerned with is presenting an accurate picture of the FACTS. People can make up their own minds.

    If fans want to be angry, then they should be angry for the *right reasons*.  get angry about the 100m in loans from H+G, for example.

    And re Southampton - their situation is completely different.  Furthermore, there is a massive difference between having to pay off millions of a Holding company's debt and being docked points.  I think most, if not all fans, would rather we got docked points than have to pay off 347m. don't you think?

    I have argued that LFC is not liable for KFHL's debt.  That is the truth.  the docking of points is another matter entirely.

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  11. VERY INTERESTING FIGURES/COMMENTS WE AS ETERNAL FANS SHOULD BE ENCOURAGED BY THE ARTICLES ,KEEP THE FAITH AND EVENTUALLY ALL WILL BE AS IT SHOULD BE.PATIENCE REALLY IS A VIRTUE WE NEED TO BE PATIENT AND A BIT MORE OPTIMISTIC KEEP THE FAITH.

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  12. Which is it, 'they will not go into administration' or 'if it did'?

    There is £110M worth of guarantees, so where do you think the banks will look to for the shortfall?
    Surely not to Kop Holdings and their ONLY asset.

    And my point about how it affects us on the footballing front? You chose to completely ignore it, and I'm not the only one to raise that issue. So for all of us, enlightened us, from a footballing perspective, where the Premier League is concerned, how does Kop Holdings situation somehow manage to be a seperate issue from the club's. Go one, humour me, if nothing else and explain the situation.  

    What Hmmm actually said was this:
    "I was gonna say that too. Having started to read a bit abt Corporate Accounting and Finance, LFCGAL being *their asset* might be used to bring down the leverage. Also incase of G+H's bankruptcy LFCGAL can be used to service down the debts." 

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  13. On a side note I would like to say that I am glad that you are back posting your insights about our club. It's been hard without you with only the black-and-white (Rafa good, Yanks bad) views to read all over the web.

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  14. Greetings from Norway, Jaimie!
    Thank you for being one of very, very few that stands up against the doom-and-gloom mafia. You are actually giving people hope, if not for a bright, but at least a future. I hope you will be the first to write about who our new owners will be. Many of us would like your opinion and views.

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  15. Are you a chartered accountant Kanwar, or do you just pretend to be one?

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  16. the real issue is how we get rid of h and g.SO GO ON jaimie you tell us how we can pressurise them to go because everyone agrees that they have to go regardless of what happens to rafa or torres or gerrard

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  17. 1. The first part was my opinion.  If I'd just left it there, I wouldn't have written anything else.

    2. 'If it did' - I don't believe this will happen, but this was using a hypothetical situation.

    3. What does Kop Holdings have to do with the Premier League, or the footballing front?  Nothing.  You are confusing my argument - there is a difference between what happens financially and what happens non-financially.

    * FINANCIALLY - LFC is not liable for KFHL's debts.  End of story

    * Non-Financially - If KFHL went into administration, it's possible that the Premier League might dock points from Liverpool.

    Anything is possible, however.  What we shold be looking at is what's *probable*

    What is the probability that KFHL will go into administration, and Liverpool will be docked points?  Practically zero in my view.  It's like saying 'It's possible Liverpool could get relegated in the next 10 years'.  Yes, it's possible, but the probability is zero. History proves that, and the same goes for the financial side of things: history proves that it is unlikely that LFC will be docked points, and that KFHL will go into administration.

    4. Re LFCAGL being used to service down KFHL's debts.  It's not as simple as that.

    a) LFC has no legal or contractual obligation to pay those debts.
    b) The accounts state - as I've already indicated - that KFHL cannot take money out of LFC if it would lead to the club becoming insolvent.

    ANALOGY:  I buy a house.  I get a mortgage from Bank X.  I rent out 2 of the rooms and make profit every month.  Despite this, I incur debts through reckless spending. I ultimately go bankrupt. 

    I can't just dip into the equity and use it to pay things off (banks wouldn't allow that because I'm...bankrupt). I can't use the money from my tenants because I need it to live/pay the mortgage.

    The only way I can use the house to pay my debts is if I SELL the house. 

    This is precisely the situation Liverpool are in: KFHL can sell the club and use the proceeds to pay off their debt, which is exactly what they're trying to do.

    I don't see the point in sweating over an eventuality that has no likelihood of occurring. What we should be focusing on is the *accurate* level of debt on LFC, and what that means.

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  18. You don't need to be a chartered accountant to interpret figures.  You don't need to be a football manager to understand football tactics.  You don't need to be a lawyer to understand a tenancy agreement. 

    What's your point?

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  19. Hey Ally - Thanks for the kind words :)

    You're spot on: the doom merchants have been working overtime over the last month.  It's just nowhere near that bad, and we need to let people know that.

    ReplyDelete
  20. Hey Anteater - nice to see you here. Thanks for the support :)

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  21. We don't need to do anything.

    They are on the way out, and they will be gone sooner rather than later (or at least, their stake in the club marginalised).

    Misplaced fan vitriol against the owners is counter-productive, as it deters potential buyers (Christian Purslow has admitted as much in public).  Who wants to buy a club with a rabid, unreasonable fanbase that is not intersted in the truth and manufactures lies and deceit against its owners.

    Everything is happening behind the scenes already.  If you want to attack the owners, the best way to do it is using accurate information, and in a civlised, intelligent manner.  This is why SOS have failed - their 'Yanks Out' approach is just not taken seriously.  They are viewed as small-minded thugs. is that the image you want of the LFC support?

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  22. superb idea jaimie lets all do nothing why dont you stop attacking fellow supporters and come up with something positive or are you saying that there is no legitimate form of protest

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  23. Jamie could you explain to me how Liverpool fc situation is any different to say Southampton fc before they were purchased by new owner?

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  24. Jaimie

    I am sorry to say you are wrong.

    The debt is the debt. In the accounts, they sub-divide what is owed in the next 12 months and what is owed thereafter. It would be like saying that if I take a 25 year £100k, then my debt is £4k as that is what I have to repay in the first year (for simplicity, I ignore interest payments). 

    Secondly, the balance sheet is a "snapshot" of what the assets / liabilities at a given point of time. It is not fixed, so strictly speaking, the clubs debts as of 31 July 2009 was £256.6m, of which £231.1m is due in the next 12 months. 

    Thirdly, I want to clarify my links. The rights of the debt holders in the Cayman island company is determined by the covenants set out in the terms of the debt. We are not privvy to this -- there could easily be clauses on dividend payments, retained earnings of subsidiaries or whatever. More importantly, if these covenants are broken, then they *could* exercise the right to take control.

    Given that the Football club is the primary asset, I would say there is a damn strong link between the two companies. So while the Cayman island debt may not be on the balance sheet of LFCAGL, the indirect consequences of the burden is.

    All in all, my message is that you cannot look at LFCAGL in isolation. The corporate structure, as well as the capital structure, is very important to understand as they are all interlinked.

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  25. "<span>What is the probability that KFHL will go into administration, and Liverpool will be docked points?  Practically zero in my view.  It's like saying 'It's possible Liverpool could get relegated in the next 10 years'.  Yes, it's possible, but the probability is zero. History proves that, and the same goes for the financial side of things: history proves that it is unlikely that LFC will be docked points, and that KFHL will go into administration"</span>

    So why do the accountants make an emphasis of matter statement regarding the going concern of the club (yes - I have read it plus the company's response). 

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  26. so that's a no then.  in which case, it would be wise to stop acting like the expert on a subject that you aren't qualified in.  or you can carry on making a t1t out of yourself, because it's quite entertaining actually.

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  27. The Kop's Bollocks3:59 pm, May 16, 2010

    what would your response be to someone who said: "Jamie Kanwar is wrong...that loan was taken out with Liverpool Football Club, Anfield and its assets as collateral"  It seems you know what you're talking about, I feel like I need to be better about our club's finances. I appreciate your input. 

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  28. Tell me the specific, measurable impact of the 'going concern' warning.  What difference it makes to *anything*.  We had the same warning last year.  Did it make any difference? No. 

    It's just like the bank warning me that if I miss repayments on my house, I may have it repossessed.  If I don't miss payments, I'm safe.  In isolation, the warning from the bank has absolutely no negative impact.  Same goes for the 'going concern' warning.

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  29. 1. Liverpools debt = a combination of:

    a) Loans taken out to buy the club
    b) Debt already on the club when it was purchased
    c) Further loans to fund transfers/working capital.

    The club itself is liable (currently) for 100.8m only - that money came from H+G's company, KFHL.

    The loans that were originally taken out to buy the club are NOT secured against the club.  Hicks and Gillett provided security for that loan, and for subsequent loans to their company later on.

    Anyone who says otherwise is wrong. 

    As the accounts show, LFC has it';s own bank loans to pay off - the total is 36m currently.  These loans are nothing to do with H+G.

    So - in short: No loans to buy the club were secured against LFC. The club was not used as collateral.  The article below confirms this:

    http://www.telegraph.co.uk/sport/football/leagues/premierleague/liverpool/5893918/Liverpool-and-the-350m-bank-loans-QandA.html

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  30. no

    it is a 'health warning' from KPMG. There are several degrees of statements and all it says is that things may not be quite right.

    The correct analogy is to say that health warning on cigarrettes are not relevant just because you havent died yet from smoking 20 a day.

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  31. In what respect?  Please be more specific.

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  32. Jaimie - considering the G&H set up, banks accounts in Cayman, £100m in loans on our clubs head owed to G&H (which I agree they will not recall to harm the club but at a time in the future - doesn't it seem obvious why finding investment is so difficult, and what do you think were the owners reasons for purchasing the club?

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  33. Hey Kanwar I saw this video. Just wandered what's your take on it. 

    http://www.youtube.com/watch?v=DmVscFeWHNw&feature=player_embedded

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  34. <span>
    <p>You're kind of right but kind of wrong. Let me try and unravel my thinking.
    </p><p> 
    </p><p>You are perfectly correct that the bulk of the debts are against the holding company and that the club's debts are at a much lower level than that of the holding company. You are also correct that the two companies are separate entities in their own right.
    </p><p> 
    </p><p>This is where you're wrong though. The football club is owned outright by the holding company. Thus what happens to the holding company will affect the club; although how much damage can be done is questionable. We are not in the same situation as Southampton, however that is not to say the holding company being taken into administration may not lead to a points deduction. This would simply be untested waters.
    </p><p> 
    </p><p>I would also point you towards the mortgage agreements for the companies, which do confirm that personal guarantees are in place against H&G *and that* the club's assets belong to the holding company and are to be used as security. I believe in the event of default, the bank would prioritise the club's assets ahead of attempting legal action against H&G to recover monies.
    </p><p> 
    </p><p>The danger lies, not in the club's ability to pay it's on going obligation (although a £14m loss primarily driven by interest is worrying), but on whether H&G can continue to meet the obligations of the holding company's debts. They have two options. They can allow the debt to roll up (to a point), or put in their own money. It is important to note at this point (to bring perspective as to why debts are worrying fans) that both Hicks and Gillett have recently defaulted on loan payments in the US and are both fighting separate legal actions against creditors.
    </p><p> 
    </p><p>As you know I don't believe that debts are bad Per Se, however they clearly are if there are doubts over the owners' ability to continue repaying when required.
    </p><p> 
    </p><p>There is a material uncertainty about the company continuing as a going concern because the bank aren't willing to commit to a longer term deal and presumably H&G don't have the financial ability to transfer the debts to capital by repaying the banks. As has been shown the banks are reluctant to take action against the club, however this would change very quickly should H&G not be in a position to keep up with repayments as and when demanded.
    </p><p> 
    </p><p>Should people be panic stricken and unable to sleep. No, I don't believe so. The owners appear to be trying to sell the club (although I have my doubts about this). However there is enough information flowing for fans to be genuinely worried about the owners ongoing ability to continue servicing its debt requirements.
    </p><p> 
    </p><p>As is seen in most cases the truth lies somewhere between the posts on RAOTL and your own. 
    </p></span>

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  35. I think Hicks has defaulted on one of his other clubs loans because then the respective leage would pay the wages. Read something along those lines somewhere the other day. As far as I know the league we play in doesn't work anything like the US sport franchise system and, from the article I had read, it made some kind of sense for a shrewed bstrd that Hicks is to default his other clubs loans. He and Gillett actually do have the resources to pay back the debt our club is saddled with (at least that is my impression), but they won't do it because of maybe fiscial reasons and their idea of a leverage buy-out.

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  36. I am not wrong.  I did not suggest anywhere that the club is *not* owned outright by the Holding Company.  It is not entirely true to say that 'what happens to the holding company directly affects the club'. Non-financially (in terms of possible point deductions), that may be true; financially, it is not, which is why you are right when you say 'how much damage would be done is questionable.

    As I've stated already:

    1. KFHL cannot take money out LFC if to do so would render the club insolvent.

    2. LFCAGL is under no contractual agreement to repay any debts relating to KHFL.

    I don't really undestand the basis for your reasoning here:

    <span>I believe in the event of default, the bank would prioritise the club's assets ahead of attempting legal action against H&G to recover monies. </span>

    As a matter of fact, the majority of the debt is secured against H+G, thus the banks would obviously go after them first.  What evidence is there that they would go after the club's assets first?

    Do you really believe that a bank would attempt to asset-strip one of football's most famous and prestigious clubs?! It would never happen.  Furthermore, RBS/Wachovia would not be able to do it anyway as there are legal protections in place which the club's lawyer's would invoke.

    In any event, this is all focusing on an eventuality that will not happen.  It's only being discussed as a possibility because of the ridiculous scare-mongering in the press that has whipped everyone into a frenzy.  The press - led by Liverpool fans *in* the media - has created a situation where fans are certain that we're going into administration etc.  It's a millions miles away from that stage.  We'll get relegated before that happens.

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  37. I agree with you - the financial situation probably means it is more difficult to find investment. having said that, I think there are other reasons it's difficult too, like the inflated valuation of the club etc.  And let's not forget, the economic climate is not exactly ideal to be throwing hundreds of millions of pounds around.

    The owners are businessmen - they clearly bought the club as an investment.  From an LFC fan point of view, that is unacceptable as we expect our owners to actually care about the club/and or have some kind of emotional connection.

    That doesn't make H+G's reasons for buying the club wrong.  That is what business is all about: making money.  I don't condone it, but from their point of view, I can see why they wanted to buy LFC.

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  38. <span>"I believe in the event of default, the bank would prioritise the club's assets ahead of attempting legal action against H&G to recover monies.  
     
    As a matter of fact, the majority of the debt is secured against H+G, thus the banks would obviously go after them first.  What evidence is there that they would go after the club's assets first?"
    </span>

    Err... the process of administration is actually quite clear and, fortunately, not to the whim of your opinion. 

    In the event of an administration, an administrator (a professionally qualified individual) is appointed. His (or her) obligation is to maximise the return to the creditors. End of story. So if Kop Holdings went into administration, the administrator could legitimately wind up the club and sell the assets if that is deemed to be most value creating solution.

    Remember, in the case of administration, the company loses the right to manage the club as these powers are transferred to the administrator. so your statement (which is quoted from the accounts) "<span>KFHL cannot take money out LFC if to do so would render the club insolvent." </span>would not apply in the case of an administration.

    And as for it not happening -- dont be so sure. Qualified individuals (KPMG) who have access to ALL the management and financial accounts have said publicly "hey everyone, things are fine for now but it could get hairy in the near future. If this company goes tits up, I just want to give you the heads up that it may happen. Be warned".

    I really dont understand why you are arguing for/against things which are legally stated. The fact that some of your suppositions are incorrect make you equally guilty of the people you try to disprove...

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  39. i think that asking about your qualifications to make statements and conclusions on financial accounts is fair. I for one have wondered about this too...

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  40. It's not going to happen.  You can keep suggesting it will, but it won't. Not in a million years.  Tell me: in the entire history of English football, how may top-tier teams have gone into administration...?

    I rest my case.

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  41. i am not saying it wont happen, but JUST BECAUSE IT HASNT, doesnt mean that it cant. History is LITTERED with case of things that could 'never happen' (read the black swan).

    Postulating an argument like that makes you sound delusional. Or even brainwashed.

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  42. It's never going to happen :-D

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  43. I don't hold myself out to be an expert - I am merely interpreting the figures.  Anyone can make statements and conclusions about financial accounts - that's why they're in the public domain.  What exactly are you suggesting - that no one can comment on anything unless they are directly qualified in that area?!

    Not that it really makes any difference, (as anyone with the ability to research and ask the right questions can interpret financial statements), I have legal qualifications.

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  44. Sorry Jamie you are wrong and sound like someone who has not had much dealings with high level bsnking practices. The bank would assett-strip the club at the drop of a hat, you state your opinion like it is fact, when it is just your opinion.

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  45. Sorry Jamie you are wrong and sound like someone who has not had any exposure to the banking world. The bank would assett-strip the club at the drop of a hat, you state your opinion like it is fact, when it is just your opinion.

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  46. If G&H have improved Liverpools income via Standard Chartered and Adidas deals, then surely the club is worth more than when it was first bought.

    It all seems such a shame - Liverpool could be much more profitable, I heard it was Hicks that bought to improve revenue and sell the club as a going concern (which, as you say, is fair enough), but what of Gillett? He is known for passing franchises about purely for his own bottom line.

    Then again, other reports would have you believe that it's actually the other way round and Gillett is the good guy trying to improve us - or most of all, both are a tragedy for the club.

    With all the bullshit flying around, plus the fact that we'll never know the full in's and outs, wouldn't it be best to forget this season ever happened and stick with Rafa short term at least? The more people involved with Lfc, that actually care about her, the better? At present at least?

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  47. If G&H have improved Liverpools income via Standard Chartered and Adidas deals, then surely the club is worth more than when it was first bought.

    It all seems such a shame - Liverpool could be much more profitable, I heard it was Hicks that bought to improve revenue and sell the club as a going concern (which, as you say, is fair enough), but what of Gillett? He is known for passing franchises about purely for his own bottom line.

    Then again, other reports would have you believe that it's actually the other way round and Gillett is the good guy trying to improve us - or most of all, both are a tragedy for the club.

    With all the bullshit flying around, plus the fact that we'll never know the full in's and outs, wouldn't it be best to forget this season ever happened and stick with Rafa short term at least? The more people involved with Lfc, that actually care about her, the better? At present at least?

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  48. If G&H have improved Liverpools income via Standard Chartered and Adidas deals, then surely the club is worth more than when it was first bought.

    It all seems such a shame - Liverpool could be much more profitable, I heard it was Hicks that bought to improve revenue and sell the club as a going concern (which, as you say, is fair enough), but what of Gillett? He is known for passing franchises about purely for his own bottom line.

    Then again, other reports would have you believe that it's actually the other way round and Gillett is the good guy trying to improve us - or most of all, both are a tragedy for the club.

    With all the bull flying around, plus the fact that we'll never know the full in's and outs, wouldn't it be best to forget this season ever happened and stick with Rafa short term at least? The more people involved with Lfc, that actually care about her, the better? At present at least?

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  49. Hey Jaimie, I'm not going to get caught in millions of comments but I will try and clarify some points.

    Financially, if the holding company goes into administration (and I'm not saying that's likely or unlikely to happen) then the club goes into the hands of the banks who, in normal circumstances, will put a block on any capital spend. Thus the club is financially impacted upon by the failure of the holding company.

    <span>"The loans that were originally taken out to buy the club are NOT secured against the club.  Hicks and Gillett provided security for that loan, and for subsequent loans to their company later on." The mortgage paperwork would say this is innacurate, subsequent reports also indicate that H&G did not initially provide full personal security. This was taken up at the re-finance in 2009.</span>

    LFC is under no obligation to repay the holding company's debts. But (and as buts go this one is a biggee) if the holding company fails, LFC goes into the hands of the banks.

    As for the logic behind my comment about the bank's preference not to go after H&G it is based on common sense, working with banks for the last ten years and speaking to bankers. In the event of the holding company failing, the bank will look to recover any losses as quickly as possible. So if they are owed (say) £250m and they can sell the club for £300m quickly and easily they will take this choice (together with the other creditors) over chasing H&G through courts. They will take the path of least resistance to get their money back.

    The bank wouldn't asset strip the club. They would put in a receiver / administrator who would immediately block capital and some operational spend (unless a necessity) and would look to sell the club in it's entirety quickly. Trust me, I've been there, if the holding club fails the club's lawyers can do squat!

    I hope you're right, but fans have every right to be concerned about a club, who's holding company has a lot of debt with owners who are defaulting on other loans. With respect it is your opinion 'that will not happen' but you (nor I) are qualified or close enough to make such a definitive statement. I have worked in and studied business a long time and am a realist about debts and modern business practices, yet I am concerned about what may happen if the club is not sold over the summer.

    Things may not be as bad as some would have us believe, but I'm not sure we are as 'safe' as you would imply either.

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  50. I'll repeat my post on the other thread (which you did not answer).

    If a structural engineer visited your house and issued a report stating that there was a possibility that it could fall down, would you:

    a) Be somewhat concerned and move out, or
    b) Tell the neighbours not to worry, its only the opinion of one structural engineer, and anyway, none of the other houses in the street have fallen down...

    You are making argument b). And quite frankly, for someone who appears to be reasonably intelligent, it is ludicrous.

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  51. Are you ever wrong about anything Jaimie?!

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  52. Hey Jaimie...

    Do you do, the more controversial you are, the more hits you will get and the more you will make from google ads...don't suppose this has crossed your mind at all?

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  53. God, not this lame argument again! 

    Google ads?! Please show me one advert on this site, Google or otherwise. Did you even check first?

    This site is and always has been, Ad free.

    please get your facts straight before making unfounded assertions.

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  54. Hey Jaimie

    At 19:10 you said "The press - led by Liverpool fans *in* the media"

    Let's stick to the national media shall we because I'd hope that my local Liverpool reporters in the Echo and Post were Liverpool fans.  Apart from Tony Barratt (and his boss Tony Evans) at the time, who are these Liverpool fans in the national media?

    I must've missed all of them throughout this season when we were being slaughtered all season long by the likes of James Lawton, Henry Winter, Patrick Barclay, Ian McGarry, Paul Hayward, Richard Williams, Brian Woolnough etc 

    All Liverpool fans the lot of 'em!!!

    Here's another Liverpool fan in the national media.  The well known investigate journalist and Manchester City season ticket holder David Conn.  He's wrote several excellent pieces about G&H in recent years and this season has helped the average fan make sense of the the financial situations at United, Pompey, Hull and numerous lower division teams. 

    Are you also going to take issue with his figures?
    http://www.guardian.co.uk/football/2010/may/07/liverpool-record-losses

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  55. Yes - I am going to take issue with his figures:

    Mr Conn states:


    The parlous financial position at Liverpool was underlined today when accounts were released showing the club £350m in debt. The figures covered the year to 30 July 2009, so included Liverpool's relative success last season, yet still the club recorded the biggest loss in its history, £55m, having paid £40m in interest on its loans.

    Just because he writes for The Guardian doesn't mean he's automatically right.  He - like almost everyone else (copying each other) has used the figures of KFHL instead of LFCAGL. 

    The debt level for KFHL is 347m.  Conn has rounded this up to 350m. he also states "accounts were released showing the club £350m in debt"

    This is WRONG, as I have illustrated. Kop Holdings is NOT the club.  LFCAGL is the club, and its debt level is 226m.

    Writers like Conn/Barratt/maddock/Insert name here are well aware of the difference between the two companies - they make a deliberate choice to misrepresent KFHL as the club because, wuite simply, the figures are bigger, and will provoke a more shocked reaction.  Furthermore, these writers know that most fans will just accept what they say without question.

    Once again: in the two articles I've posted this weekend, I've illustrated *with evidence* the club's real debt/loss levels.

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  56. Jaimie

    At numerous times in this thread you stage categorically that "IT (administration for LFC or Kop Holdings) IS NOT GOING TO HAPPEN"

    You are aware that George Gillett's company was declared bankrupt in 1991 and he was declared personally bankrupt in 1992?  That says to me that it can happen again whether you want to admit it or not.  I think you underestimate just how greedy and morally bankrupt our wonderful owners are.

    Full gory details here
    http://www.answers.com/topic/gillett-holdings-inc

    Key bits regarding bankruptcy here:

    ...in August [1990], Gillett Holdings defaulted on over $450 million in debt. By February 1991, bondholders frustrated with Gillett's half-hearted attempts at restructuring filed an involuntary bankruptcy petition. When the company failed to meet the resulting court-imposed restructuring deadline of June 25, the company was forced into Chapter 11 bankruptcy...By April 30, 1992, a plan was submitted to Federal Bankruptcy Court that was revised to reduce Gillett Holdings' debt by $75 million and rescind George Gillett's options to repurchase stock and buy back specified corporate assets. That same day, lawyers for Gillett Holdings filed 44 bankruptcy cases, placing nearly all of the conglomerate's subsidiaries under court protection...By late 1992, as Gillett Holdings looked forward to its emergence from bankruptcy court, Storer Communications defaulted on a $140 million principal repayment that threatened to cast the subsidiary into Chapter 11 as well. George Gillett himself was not immune to the "bankruptcy bug," either: In August he filed for personal bankruptcy, losing his collection of 30 sports cars and a 235,000-acre Oregon ranch in the process

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  57. Yes - I am going to take issue with Mr Conn's figures.  He states:  
     
    The parlous financial position at Liverpool was underlined today when accounts were released showing the club £350m in debt. The figures covered the year to 30 July 2009, so included Liverpool's relative success last season, yet still the club recorded the biggest loss in its history, £55m, having paid £40m in interest on its loans.  
     
    Just because he writes for The Guardian doesn't mean he's automatically right.  He - like almost everyone else (copying each other) has used the figures of KFHL instead of LFCAGL.   
     
    The debt level for KFHL is 347m.  Conn has rounded this up to 350m. He also states "accounts were released showing the club £350m in debt"  
     
    This is WRONG, as I have illustrated. Kop Holdings is NOT the club!  LFCAGL is the club, and its debt level is 226m.  
     
    Writers like Conn/Barratt/Maddock/Insert name here are well aware of the difference between the two companies - they make a deliberate choice to misrepresent KFHL as the club because, quite simply, the figures are bigger, and will provoke a more shocked reaction.  Furthermore, these writers know that most fans will just accept what they say without question. They are in the business of making things seem as bleak as possible. Misery sells.
     
    Once again: In the two articles I've posted this weekend, I've illustrated *with evidence* the club's real debt/loss levels.

    ReplyDelete
  58. Different country; different rules.  Furthermore, I think you're overlooking one thing: this was 18 years ago.  18 years!  Is it not possible that Gillett has learned from that situation?  The last 18 years without further bankruptcy would suggest that he has, would it not?

    It seems to me people are desperate to find reasons why the club might fail.  Glass half-empty syndrome.  There are good things going on at the club too, despite our atrocious season.  Why don't they factor into things.  I prefer to look on the bright side, and I have no doubt whatsoever that Liverpool's finances will be resolved in the right way.

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  59. No matter the ins and outs it was never supposed to be like this. We were told it was never supposed to be like this. We can't even sack your nemesis Benitez because we can't afford to. Surely even you can see the irony in that Jamie.

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  60. I can definitely see the irony. Giving Benitez a new 5 year contract was utter negligence on the part H+G.

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  61. Of course, just not in this specific instance.

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  62. sir bob paisley9:21 pm, May 16, 2010

    jamie


    i know one debt that does need to be paid ;)  that 500 quid bet we had about our next manager!

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  63. Jaimie

    It's not a question of doom-mongering

    It's a case of 'plan for the worst, hope for the best' with a liitle bit of 'know your enemy' thrown in.

    After extensively researrching the careers of Gillett and Hicks I have concluded 2 things:
    1) Do not underestimate their capacity for greed
    2) Do not underestimate their selfishness.  In 1991 Gillett made thousands of people unemployed yet even after personal bankruptcy he was getting a basic salary of $1.5m a year. 

    If they were left with no option but to sell our star players to save their own necks they would do it in a heartbeat.

    No scenario can be consider off limits with these 2 carpet-baggers

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  64. and don't forget - the Benitez contract was negotiated by "Mr Liverpool" himself Christian Purslow...

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  65. Negligence that has been symptomatic of both their reign and the Moores Parry comedy duo. Rafa, Hicks, Gillett, the lot of them can f**k off. The only difference is that Rafa has some small level of an excuse for his pathetic showing in the transfer market and subsequently on the pitch. Hicks and Gillett have none. Moores and Parry have even less for selling to them in the first place. Only a bribe can explain their decision to ignore all the red flags and go with the Americans instead of DIC. £4.3M worth infact.

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  66. Why?

    You don't...

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  67. Going to answer this one Jaimie? Or is it a bit too tricky?

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  68. Gillett's history...irrefutable, recorded fact

    The possibility he might have learnt from it...your opinion

    Stop offering opinions as EVIDENCE Jaimie

    Concentrate on the FACTS.

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  69. Why?

    You don't...

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  70. Going to answer this one Jaimie? Or is it a bit too tricky?

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  71. Portsmouth. March 2010.

    You know - 2 months ago.

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  72. Jesus, how can you not know that?!?!

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  73. And..erm...how about the banner across the top? oh, and the link to youtube when posting..

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  74. £226 million, thats a hell of a lot of debt Hicks and Gillett have piled on to the club in the last five years. 

    They did say they wouldnt do this, Hicks and Gillett.

    THicks and Gillett also said they would build a new stadium, which the club desperately needs. No sign of the new stadium Hicks and Gillett promised.

    Hicks has stated to the Wall street journal he expects to sell the club for £800 million. Why not spend half of the £800million, say £400 million on building Liverpool a new stadium, and Hicks and Gillett can then walk away with £400 million which will leave the Liverpool in a much better state and still Hicks and Gillett with a massive profit on their investment. Because Hicks and Gillett have no concern for the welfare of our club Liverpool. They are solely concerned with making money.

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  75. £226 million , thats a hell of a lot of debt Hicks and Gillett have built up during their five years at the club.

    No new stadium, which Hicks and Gillett said they will build.

    Hicks tells the wall street journal he will make £800 million from selling the club. Why not spend £400 million building Liverpool a new stadium and still leave with a massive profit. 

    Hicks and Gillett are solely concerned with making as much money as possible and have no interest in whats good fopr Liverpool.

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  76. Jaimie, if you're going to try and be patronising, can you at least try and be correct?

    Cue "please provide examples of where I've been incorrect"-style response.

    I can't actually decide what I dislike more about the site - the almost demented level of propaganda trying to defend the owners, or the tone he takes in doing it.

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  77. <span>
    <p>£226 million , thats a hell of a lot of debt Hicks and Gillett have built up during their five years at the club.
    </p><p> 
    </p><p>No new stadium, which Hicks and Gillett said they will build.
    </p><p> 
    </p><p>Hicks tells the wall street journal he will make £800 million from selling the club. Why not spend £400 million building Liverpool a new stadium and still leave with a massive profit. 
    </p><p> 
    </p><p>Hicks and Gillett are solely concerned with making as much money as possible and have no interest in whats good fopr Liverpool.
    </p></span>

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  78. Do you understand the of advertising for money?

    There is no banner across the top of the site; there are a series of image-links that link to other sites.  The Google News image links to...stories from this site appearing in Google news.  It is not a google ad; it is a link.

    Re the link to youtube when posting.  That is not a link - it is way of inserting youtube videos in posts (!)

    Nice try, but you're wrong.  Again.  There are no ads on this site, and there never has been.

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  79. Are you being deliberately dim?

    READ MY POST PROPERLY.  I stated:


    "In the entire history of English football, how may top-tier teams have gone into administration...?"

    In the entire HISTORY; not the last year.

    In more than 100 years of football history, only a handful of top-tier clubs have suffered the fate of Leeds/Portsmouth.

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  80. Negative publicity for the club? From the man who has now started a facebook group to attempt to rouse support for ousting the club's current manager. So it's OK to generate negative publicity for the club so long as it's just your opinion?

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  81. Wanting the manager to be replaced is not negative publicity for the club at all.  Please illustrate how valid and legitimate reasons for wanting a change of manager *advanced in a civilised manner* constitutes negative publicity on the club.

    My issue is with Rafa Benitez alone.  it has nothing to do with the club.  The debt issue is directly linked to the public perception of the club itself.  That's the difference.

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  82. I would ask the SE for specifics about his claim that there was a 'possibility the house could fall down'.  I would ask him what I needed to do in order to rectify the situation.  I would then attempt to fix the problem.  It might take a while and cost a bit of money but it would ultimately be worth it.  What I wouldn't do is run screaming into the street like a drama queen telling anyone who's listen that my house was definitely going to fall down, and that my family was doomed, and there was no way out.  That is precisely what some liverpool fans are doing re the debt right now.

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  83. How simple do you want this to be?

    It's PUBLICITY because it is published on the internet. Is it not your very intent to spread these views and have them freely expressed in a public forum? This is the discontent of SOME fans and you're fanning the flames. That's fine, I don't object to your right to do that, but it is publicity none the less. Not only can anyone in the world with internet access see it but it can in turn be picked up and reported on by other media sources.

    It's NEGATIVE because .... um .... do you need a dictionary? You are expressing discontent and dissatisfaction. There are positive aspects to what you say in terms of what you want for the club in the future but most of what you publish, most of what you've written in the past is negative. You focus on what you do not like, what you do not approve of, your belief that the performances are not good enough. If you honestly can not recognise the negative aspects of what you write then once again I am at a loss to try and explain it to you. 

    It is about the club because at this time Rafa Benitez and the players he signed are all a part of the football club. Indeed, they can all be replaced. Indeed, the club is not one individual. But they are still a very central and important part of the club. So are you. So am I. I understand, you're not directing your comments exclusively at the entity Liverpool FC but to suggest that your published views on Rafa have "nothing to do with the club" is not correct. 

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  84. If Kop Holdings has nothing to do with LFC why does it use the name of the thing that LFC is most famous for  THE KOP.

    You dont have to be a rocket scientist to work that one out.
    LFC is responsible for the debt the yanks have put us in thats that to suggest otherwise is just you being your usual controversial self !!!!

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  85. Feel free to offer your opinion, but please don't insult guest posters.

    You stated - "It won't. Not in a million years"

    I provided an example in the last 3 months. Therefore, you cannot say that it FACTUALLY cannot happen to Liverpool. You are just offering an opinion and ignoring the evidence which suggests it COULD happen.

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  86. No.  Saying 'It Won't.  No in a million years' is my OPINION.  That is obvious.  Or di I need to put 'IMO' after every sentence I write?!

    You are looking short-term: one example in the last three months is not credible.  I am looking over the whole history of football for patterns/examples.  If top-tier clubs going into administration has only happened 3-4 times in 120 years of football, I think that's more persuasive evidence that it's not going to happen than 'but it happened 3 months ago'

    Furthermore, adminstration has *never* happened to one of the top 4 teams in England (Liverpool, Arsenal, Man U Chelsea).

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  87. This is like we were German and someone says hey the Nazis killed 8 million Jews. Horrible people those Nazis. Then someone saying "hey I ain't no holocaust denyer but this belief that the Nazis killed 8 million Jews is false and damaging to our country. They only killed 6 million, stop being sheep". In effect Hicks and Gillett have got us a new sponsor and planning permission. The Nazis got us Fanta and Volkswagen Golfs. Guess it was all worth it then.

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  88. Not in a million years you said. And you were wrong.

    You just select evidence that fits your opinion and ignore the rest!

    No it hasn't...but then, they've never been in so much debt, have they...

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  89. Fanta? Really?

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  90. Apparently so. Coca Cola want to sell Coke in Germany during the war but couldn't get round the restrictions. So they worked on a new product to get around it. Now the German troops loooooooved oranges so the benevolent genuises at Coca Cola went to work and brought Germany Fanta. So without the Nazis we would never have this fizzy citrus beverage. A much overlooked benefit of Nazi Germany. Surely a positive aspect worth highlighting and defending.

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  91. Listen all we need to do is sell Babel to Citeh for £500 million and it will all be fine, simples!

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  92. Missed the point again.  Jamie who pays the interest in Kop Holdings?Perhaps it will just accrue forever? Dream on.  Kop Holdings only source of income is dividends/interest from LFC.  Therefore LFC must pay dividends out to Kop Holdings (so that it can finance its loans) in preference to buying players or inversting in a stadium.  In short, the long term plan of H&G was to pay for the club using the club's money.  That's why we want them out.

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  93. Sorry Ian, but that is supremely inaccurate.  As I've already stated in both articles over the weekend, the total amount of interest paid by the club to Kop Football Limited is 9.3m.

    The payment of this comparatively minor figure has absolutely NO IMPACT on investing in players or funding the new stadium.  Kop Football also has loans, and it's interest payments are bigger, BUT, the money to pay that interest does NOT come from the club.

    Money owed by LFC to KFL = 100.8m
    Interest paid by LFC to KFL = 9.3m

    End of story.

    it's all there in the reports: page 16 section 7.

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  94. Nice article, Jaime. Your contrasting opinions are always appreciated as they give much needed perspective.

    However, and i address this to everyone, the arguments being made as to whether KFHL can take money out LFC or whether LFC would be used in the event of administration to repay debts is irrelevant...because as has been pointed out, we are dealing with PROBABLE events, not POSSIBLE but highly UNLIKELY events.

    H+G cannot compete financially, and therefore on the pitch, effectively for a Champions League spot.

    This has serious financial implications on their debt servicing ability and ability to invest in players, a stadium, attract commercial sponsership deals and to generally increase the value of the club.

    H+G will make a profit, not nearly 800 million pounds, on selling the club, which has always been their objective and they will.

    So here's the point that is relevant here, forget administration, points docking, covenants, parent-subsidiary relations etc. The new owners will not be buying KFHL with all of its debts, they will be buying LFC with its associated debts of  220+ or whatever exactly it is.  Im not going through the accounts.

    The banks are not going to seize the club as the entity has large intangible assets/goodwill (fans, for example) and is worth more run by experts in the field of sporting franchises. The garbage being spewed about the banks not caring is ridiculous. Banks care very much about public perceptions and Liverpool is a massive English club, second to Utd in fanbase I believe.
    Seizing it serves noone well. It WILL be sold. The new owners will inherit the debts of 220+

    That is what we are servicing now, that is what we will continue to service and that is the relevant figure. Thank you Jaime for researching and clarifying where the debt lies and what it actually is. Lets stop dealing with hypothetical DoomsDay situations.

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  95. Interest paid by LFC to KFL = 9.3m So what interst are we paying to RBS ... ?

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  96. Excellent post, Vizion. :) As you say, the club debt - i.e. that of LFCAGL - is the relevant figure here.

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  97. Still not addressing the point that all dividends from the club's earnings go to Kop Holdings. No, the club doesn't have to pay the debt directly but it's a significant concern that the parent company is so massively in debt and the only asset of the parent company is LFC. Every shred of profit can be directly to Kop Holdings who are under no requirement to reinvest it. When they do reinvest it it's as a loan that the club must repay. So club profit goes to parent company and only makes it way back into the club spending by way of a new debt. 

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  98. RC - In the last financial year, we paid 6.3 to RBS in interest fees.  Please see the attached image for the a snippet from the club accounts that proves this.

    Red = interest paid to RBS
    Green = interest paid to Kop Football Ltd
    Blue = Total Interest paid in last financial year.

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  99. "When I was in the leverage buy-out business we bought Weetabix and we leveraged it up to make our return. You could say that anyone who was eating Weetabix was paying for our purchase of Weetabix. It was just business. It is the same for Liverpool; revenues come in from whatever source and go out to whatever source and, if there is money left over, it is profit," Tom Hicks.

    There you are, straight from the horses' mouth. Liverpool will pay for the owners to own Liverpool, through all their complex loan agreements. That is the ultimate truth.

    Why are you so deliberately blinkered?

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  100. I like your use of a smiley face. Obviously some unintentional irony there. The crux of the post, at least for me, is that the club has a debt of 220+ million and when sold will likely go for around 400+ million. I'm glad you're feeling so assured but I'll be very interested to meet this new buyer who is willing to paying that much money for a club that has more debt that it's entire worth when it was last sold. 

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  101. Fraggs - what dividends are you talking about?  please provide evidence that 'all dividends from the club's earnings go to Kop Holdings'.

    The only money paid by the club to Kop holdings is 9.3m in interest on the 100.8m worth of loans from Kop Football to LFCAGL.

    Furthermore, how can 'dividends' from the club's earnings to to KFL when there are no dividends?!  The image below proves this.  The accounts specifically state that no dividend should be paid, and the same was said in last year's accounts.

    ReplyDelete
  102. Not that i know much about interest on loans but £6.3m seems a great rate but how come the figure went up from 2008 if they reduced the loan to RBS or does that not kick in into 2010.

    Also have we paid kop holdings interest in 2008 and then £9.3m in 2009 or is 2009 figure just the interest 0f around £3.2 added to 2008 figure ..... if £9.3m seems very high to charge your own club.
    .
    .

    ReplyDelete
  103. Fraggs - The club is worth more now that it was when it was bought.  Many aspects of the club have improved in worth: the playing assets; the commercial side of the club etc.  This increases the worth and attractiveness of the club.

    As long as we have a manager who can keep us in the CL league every year, and challenging for honours, LFC will be an attractive proposition.  Unfortunately, next year we will take a financial hit due to Benitez's performance as manager this year.  The squad was more than capable of finishing in the top 4 this year; Benitez blew it, and consequently that will cost the club *more* money that anything it pays to Kop Holdings in interest.

    ReplyDelete
  104. That quote means nothing in the context of what we're discussing.  using it as absolute evidence of *anything* is prett laughable.

    ReplyDelete
  105. That quote means nothing in the context of what we're discussing.  using it as absolute evidence of *anything* is prett laughable.

    ReplyDelete
  106. Jaimie I still don't understand why you are so proud of being able to prove that Liverpool aren't going into administration. Whoopty-doo. We still cannot afford to compete with the best teams and we still are in serious danger of losing our best players. What point exactly are you proving? That we'll still have a club to support come 2013? Is that it? We were promised that we'ld have a new stadium and Snoogy Woogy by then! You may chastise some fans for not doing their due diligence about the situation (kind of like Moores and Parry) but you cannot deny their message that the Americans have not fulfilled their promise and have moved the club further away from competing with the best in England and Europe. Everyone getting into arguments with this guy involving the dangers of administration are missing the point. Even if Jaimie is right, the situation is very wrong. Everything else is mere details of the level of wrongness. The bottomline is that we can't confidentally hold on to our best players, we can't afford new players and we can't even afford to sack the manager if we wanted to. This is Hicks and Gillett's doing and we can't detract from that just to pointscore in internet squabbles.

    ReplyDelete
  107. <span>

    It means everything in the context of what is being discussed. Besides, you deleted the comment in another thread.
    It is the owner modus operanti. Everything they do in terms of the club equates to nil investment or risk on their part. You are, not convincingly, claiming that the overall debt on the club doesn't include the Cayman element.
    The owners are on record as saying that they purchased the club by means of an LBO, placing all debt on the club. It may be complex in the way they have done it, similar to Corinthians, but on the club it is nevertheless. Corinthians took years to unravel the levels of debt.
    LFC will pay for their ownership of LFC. Their ownership of LFC isn't indebted to $200 approx as you claim, it is more like the figure quoted elsewhere. By simpling ignoring the Cayman element as you have, won't make it go away unfortunately.
    It will take much more than £200 to get rid of the owners and clear the debt from the club because they will ensure they aren't liable for any outstanding amounts. How do I know this? It is their business plan, as evidenced previously in other areas. So, again, how can you say the figures being bandied about are innacurate?
    If there is anything 'laughable' in this conversation, it is your unwillingness to admit you are wrong.
    You have created a forum to express your views, rightly or wrongly, however if you really had the club's best interests at heart you too would join the fight to get rid of them. The fact you don't and are an 'apologist' for them, speaks volumes.
    </span>

    ReplyDelete
  108. <span>

    It means everything in the context of what is being discussed. Besides, you deleted the comment in another thread.
    It is the owner modus operanti. Everything they do in terms of the club equates to nil investment or risk on their part. You are, not convincingly, claiming that the overall debt on the club doesn't include the Cayman element.
    The owners are on record as saying that they purchased the club by means of an LBO, placing all debt on the club. It may be complex in the way they have done it, similar to Corinthians, but on the club it is nevertheless. Corinthians took years to unravel the levels of debt.
    LFC will pay for their ownership of LFC. Their ownership of LFC isn't indebted to $200 approx as you claim, it is more like the figure quoted elsewhere. By simpling ignoring the Cayman element as you have, won't make it go away unfortunately.
    It will take much more than £200 to get rid of the owners and clear the debt from the club because they will ensure they aren't liable for any outstanding amounts. How do I know this? It is their business plan, as evidenced previously in other areas. So, again, how can you say the figures being bandied about are innacurate?
    If there is anything 'laughable' in this conversation, it is your unwillingness to admit you are wrong.
    You have created a forum to express your views, rightly or wrongly, however if you really had the club's best interests at heart you too would join the fight to get rid of them. The fact you don't and are an 'apologist' for them, speaks volumes.
    </span>

    ReplyDelete
  109. Jaimie I still don't understand why you are so proud of being able to prove that Liverpool aren't going into administration. Whoopty-doo. We still cannot afford to compete with the best teams and we still are in serious danger of losing our best players. What point exactly are you proving? That we'll still have a club to support come 2013? Is that it? We were promised that we'ld have a new stadium and Snoogy Woogy by then! You may chastise some fans for not doing their due diligence about the situation (kind of like Moores and Parry) but you cannot deny their message that the Americans have not fulfilled their promise and have moved the club further away from competing with the best in England and Europe. Everyone getting into arguments with this guy involving the dangers of administration are missing the point. Even if Jaimie is right, the situation is very wrong. Everything else is mere details of the level of wrongness. The bottomline is that we can't confidentally hold on to our best players, we can't afford new players and we can't even afford to sack the manager if we wanted to. This is Hicks and Gillett's doing and we can't detract from that just to pointscore in internet squabbles.

    ReplyDelete
  110. <span>

    It means everything in the context of what is being discussed. Besides, you deleted the comment in another thread.
    It is the owner modus operanti. Everything they do in terms of the club equates to nil investment or risk on their part. You are, not convincingly, claiming that the overall debt on the club doesn't include the Cayman element.
    The owners are on record as saying that they purchased the club by means of an LBO, placing all debt on the club. It may be complex in the way they have done it, similar to Corinthians, but on the club it is nevertheless. Corinthians took years to unravel the levels of debt.
    LFC will pay for their ownership of LFC. Their ownership of LFC isn't indebted to $200 approx as you claim, it is more like the figure quoted elsewhere. By simpling ignoring the Cayman element as you have, won't make it go away unfortunately.
    It will take much more than £200 to get rid of the owners and clear the debt from the club because they will ensure they aren't liable for any outstanding amounts. How do I know this? It is their business plan, as evidenced previously in other areas. So, again, how can you say the figures being bandied about are innacurate?
    If there is anything 'laughable' in this conversation, it is your unwillingness to admit you are wrong.
    You have created a forum to express your views, rightly or wrongly, however if you really had the club's best interests at heart you too would join the fight to get rid of them. The fact you don't and are an 'apologist' for them, speaks volumes.
    </span>

    ReplyDelete
  111. Desy - Who says I'm 'proud'?  Just because you say it, doesn't make it true.  I have merely stated the facts in order to try and quell the rising hysteria over the club's future. 

    We still cannot afford to compete with the best teams and we still are in serious danger of losing our best players.

    Pleae provide evidence for this baseless generalisation.

    The bottomline is that we can't confidentally hold on to our best players, we can't afford new players.

    Again, please provide evidence for this.

    Did we not buy new players last season totalling 40m?  YES.

    You cannot say we cannot afford new players until the next transfer window shuts.

    Your post is a prime example of the wildly exaggerated hysteria afflicting many fans at the moment.

    ReplyDelete
  112. Hold on mate. This IS my doomsday scenario! Are you saying that whoever buys the club (figures of £600-800M have been reported) will have an additional £220M debt to clear plus a £250-300M stadium to build, plus an investment in players of £40M upwards. That's over £1BN before they can even make a red cent from the club. We lose Torres, Gerrard and Mascherano in one fell swoop yet keep Benitez because we can't afford to sack him. We'll sit back and watch Ngog, Lucas, Babel and Insua guide us through a relegation battle while Everton leapfrog us and put 3 past us at a creaking Anfield. And this is not Doomsday how??!!?

    ReplyDelete
  113. is it down to Benitez that the playing assets have improved Jaimie?

    ReplyDelete
  114. <span>Surely when/if the club is sold then the price for the club will be the current debt level of the club, 237m? so as to clear the debts to the RBS etc but also it will also have to cover the debt of the holding company which is what 350m?  
     
    Therefore the price to buy the club will not be anything less than approx £580m?  
     
    H&G are not going to want the Holding company once the club is sold which indicates that it is inherently linked to the club and therefore is a burden to any prospective buyer.  
     
    Any more to the point, where has all this debt come from, we were £44m in debt, then club was bought for £250m? which cleared that debt but then left the club approx 250m in debt. where has this other 350m of debt come from in the Caymen Islands?   
     
    Does anyone actually know?   
     
    Because it hasn't been spent on  
     
    a) new players  
    b) a new stadium  
     
    so £350m of debt has appeared out of thin air?  
     
    I am I missing something major here?  
     
    Excuse the figures I have just gone from memory and may be incorrect, however the point of my post remains valid I believe.  
     
    Anyone got any ideas about all of this?

    </span>

    ReplyDelete
  115. My mistake the club was sold for £5000 per share which valued the club at £174.1m and together with the £44.8m of current debt represents an enterprise value of £218.9m

    http://www.investegate.co.uk/Article.aspx?id=200702061223557923Q

    ReplyDelete
  116. You're obviously proud of your point Jamie. You've put in a lot of research into your argument and I concur that the debt level is not as high as rumoured. But it's still higher than promised. If we can't compete with Sunderland for Michael Turner or Lee Cattermole or can't even afford their reserve striker we obviously cannot compete with the top clubs financially. You eschew media bull about our finances yet then repeat them about our expenditures. You know Aquilani was more like £17M with about £5M upfront. You know the Johnson deal was based on the money owed on Crouch. You know we sold Alonso for close to £30M upfront. You know we still hadn't spent the Keane money. Yet you stick with the rounded up £40M figure that doesn't take those factors into account. Even the players are saying that we need new owners or investment to compete. We have no Champions League and with no prospect of investment at the moment why would players like Torres, Mascherano and Gerrard want to stay at the peak of their careers? The club is in limbo and Hicks and Gillett put us there. I'm not disputing your argument just disputing the difference your argument makes. We still don't have a competitive (net) transfer budget, we still are in significant debt and we still have not begun work on the new stadium. Moreover it is still a big ask to expect any potential buyers to buy the club at an inflated price with all these overheads.

    All your point says is that we're not expected to die.

    But we are expected to suffer.

    ReplyDelete
  117. You're obviously proud of your point Jamie. You've put in a lot of research into your argument and I concur that the debt level is not as high as rumoured. But it's still higher than promised. If we can't compete with Sunderland for Michael Turner or Lee Cattermole or can't even afford their reserve striker we obviously cannot compete with the top clubs financially. You eschew media bull about our finances yet then repeat them about our expenditures. You know Aquilani was more like £17M with about £5M upfront. You know the Johnson deal was based on the money owed on Crouch. You know we sold Alonso for close to £30M upfront. You know we still hadn't spent the Keane money. Yet you stick with the rounded up £40M figure that doesn't take those factors into account. Even the players are saying that we need new owners or investment to compete. We have no Champions League and with no prospect of investment at the moment why would players like Torres, Mascherano and Gerrard want to stay at the peak of their careers? The club is in limbo and Hicks and Gillett put us there. I'm not disputing your argument just disputing the difference your argument makes. We still don't have a competitive (net) transfer budget, we still are in significant debt and we still have not begun work on the new stadium. Moreover it is still a big ask to expect any potential buyers to buy the club at an inflated price with all these overheads.

    All your point says is that we're not expected to die.

    But we are expected to suffer.

    ReplyDelete
  118. Sorry Jamie.  You are wrong.  As Fraggs & Guest below have pointed out below.  Kop Holdings is the Holding Company of LFC.  It has its own obligations to pay the interest.  Its only source of income is dividends from LFC.  ie it must recieve income from its investments to pay the interest on its loan. Therefore it will want LFC to pay dividneds up to Kop Holdings in order to do this.  This is a very very simple accounting structure for leverage buy outs.  Your answers are clearing showing that you are not an accountant (which I am by the way), or financier and your stubborness to concede a point upon which you are not an expert ruins the good points you do make. 

    ReplyDelete
  119. Jaimie you cannot say LFC will never go into administration as though it were a fact, it isn't.

    Meryl Lynch - The largest investment bank in America and possibly the World was on the brink of going bust during the global economic meltdown, the United States government couldn't afford to save them and so convinced the then CEO of Bank of America to buy the company, AGAINST what was in the best interests of BOA I might add.

    Bear Stearns, Lehmann Brothers, "too big to sink"?

    If (KOP Holdings) ever went into administration, it would be stripped of its assets (LFC) like any other business, an incoming administrator doesn't care about "the fans" they care only about what can be salvaged in terms of revenue.

    It's probably easier to say you're wrong.

    As for the £226m debt? Again you're wrong. When LFC is sold it is sold as an asset of KOP Holdings, when that happens the debts liabilities of KOP Holdings will be cleared as a result of the sale, that means the full £350m+ (including the £226m directly levied against LFC).

    It is woefully delusional to believe that H&G will sell the Club but only clear the £226m levied against the Club directly. They will look to clear the debts owed by the Holding company (KOP Holdings), it's standard business practice - ANY accountant will confirm this information, myself included. They will then (most likely) dissolve the parent company and at the same time, their partnership; considering their company only consists of one asset!

    LFC may not be directly liable for the full £350m, but they will be used as the cash cow that clears the £350m - that's a fact.

    ReplyDelete
  120. Those figures you quote add up to 590m, not 1bn.

    ReplyDelete
  121. ShareLiverpool's latest email - maybe offers a glimmer of hope that they can do something, although I am not holding my breath.  Any news on the SOS scheme yet?

    Dear Simon,

    The 2009 financial statements published last week for the club and its parent companies Kop Football Ltd, and Kop Football (Holdings) Ltd, highlight the precarious financial situation that the club finds itself in as a result of the debt introduced by the present owners. The need for change of ownership and an immediate reduction in the ever increasing levels of debt is absolutely paramount.

    Examination of the accounts reveals some key issues that illustrate this point.
     Crippling interest payments
    •   The group suffered having to service over £40 million in interest and similar charges in the last financial year (up from £36.5 million in 2008). That equates to 22% of the club’s annual turnover, spent merely on servicing the debt, not repaying the capital.
    •   As the main trading company in the group, clearly this group cost has a direct impact on the club.
    •   Over £8 million of this was interest and charges due to the parent company, owned by Hicks & Gillett, for loans it has made to the Holding company.
    •   The group has suffered over £70 million in servicing the debt owed to the banks over the last two years for which accounts are available.
    •   Around £45 million pounds has been spent on a stadium that doesn’t yet exist
    The high cost of arranging finance under Hicks & Gillett
    •   Closer scrutiny of the “interest payments and similar charges” reveals the high costs of refinancing the short term credit facilities forced upon the present owners. The club’s bank debt at the end of Jul 2009 was £233 million, but it suffered more than £70 million in interest and similar charges over the previous two years.
    These finance and interest charges equate to over 20% of the club’s annual turnover (paid over two years) spent on arrangement fees, charges, consultancy & advice etc. All this cost just so that the owners can effectively renew their loan arrangements.
    Unsustainable Debt Levels
    •   The amount of net borrowings increased by £58.8 million in the last accounting year.
    •   The amount of debt owed to the banks actually decreased by £27.7 million last year, but the amount of debt owed to the parent company (Hicks & Gillett) increased by £86.5 million.
    •   Interest on the parent company’s loans accrues at 10% APR. Unfortunately for LFC this is approx 5% higher than the interest payable on the bank loans that have been paid down.  (Worryingly, a note in the accounts states that none of this interest has yet been paid to the parent company. Is it building up like a time bomb for future cash flow or is it a negotiating tool to ensure the maximum extraction of cash from the club when they finally depart?)
    •   Over the past two years the net level of debt in the company has increased by £107 million (An increase of £51.6 million in 2009 and £55.5 million in 2008). In the same period the company made losses of nearly £100 million.
    •   The company made a net loss before interest and taxation of nearly £21 million in this period (£15.2 million 2009 and £5.7 million 2008)

    ShareLiverpoolFC.

    ReplyDelete
  122. cont'd

    •   But these losses increased to nearly £100 million for the period, with the £76.5 million paid in interest and similar charges by the company (£40 million 2009 and £36.5 million in 2008)
    Could it be that the increase in debt (£107 million) has largely been taken on to enable the company to continue to pay the interest and charges (£76.5 million) on its existing debt? If so, time must surely be running out on Hicks & Gillett’s business model.
    The club cannot afford to continue to suffer the impact of such a large amount of its profit on servicing the debt. Bear in mind that the principal reason that the debt exists in the first place is to reimburse to the present owners their costs of acquiring the club. If the debt had been built up financing a new stadium, or spent on developing the squad to ensure success on and off the pitch, we might expect to see some increased revenue to help meet the interest payments.
    Bear in mind also that the record losses posted for 2009, were done so despite the club generating record turnover on the back of enjoying its best ever season in the Premier League. It is unlikely revenues will be as high in this current financial year, or next year for that matter, but it is extremely likely that debt and losses will continue to rise. The need to change the ownership and debt structure has never been greater.
    How does this affect our plan?

    Up until now, dealing with owners who have been both unrealistic in their valuation of the club and unwilling to deal with a fan owned shareholding partner has resulted in a stalemate. We know that this stalemate has been intensely frustrating.

    To press forward without a realistic chance of securing a shareholding in the club would be extremely costly. The costs involved in the collection of the financial pledges of the Share Liverpool FC registrants and the administration of these funds are extremely high. Prohibitively high, when the unwillingness of the owners to deal, means that the possibility of the funds having to be returned unused is too great. However as the situation changes at the club so too does our situation.

    In one sense the publication of the accounts merely reinforces what everyone already knew, that the owners need to sell up quickly as they do not have the finances to carry on running the club. However the scale of the debt and the costs of servicing it add urgency to the situation.

    We have begun a series of informal conversations and confidential meetings with club officials; with Barclays Capital and investment bankers. We cannot conduct this process ‘in public’ but need to engage with key players and prove our ability to maintain confidentiality. We feel very positive about the situation going forward. The prospect of acquiring some significant fan equity in the Club appears to be sharper and more encouraging than ever before.

    Ironically, as the general situation of the Club gets worse, our prospects  get better. The Chinese are right to translate the word ‘crisis’ as ‘opportunity’. We can almost tangibly feel the prospect of real engagement moving towards us. 

    We may very shortly reach the point where we can table a bid. When that happens  we need to rely on all of your support, not only in providing the funds to purchase the club, or a significant share thereof, but also in helping this project reach as many Liverpool fans as is physically possible. As things currently stand, ShareLiverpoolFC can only offer shares for sale in UK & Ireland (regulated by the Financial Services Authority in UK), but there are many thousands of Norwegians fans who may wish to take part.
    WE ARE VERY KEEN TO HEAR FROM ANY OF OUR NORWEGIAN REGISTRANTS - PROBABLY LAWYERS - WHO HAVE ANY [...]

    ReplyDelete
  123. ShareLiverpool's latest email -
    The 2009 financial statements published last week for the club and its parent companies Kop Football Ltd, and Kop Football (Holdings) Ltd, highlight the precarious financial situation that the club finds itself in as a result of the debt introduced by the present owners. The need for change of ownership and an immediate reduction in the ever increasing levels of debt is absolutely paramount.

    Examination of the accounts reveals some key issues that illustrate this point.
     Crippling interest payments
    •   The group suffered having to service over £40 million in interest and similar charges in the last financial year (up from £36.5 million in 2008). That equates to 22% of the club’s annual turnover, spent merely on servicing the debt, not repaying the capital.
    •   As the main trading company in the group, clearly this group cost has a direct impact on the club.
    •   Over £8 million of this was interest and charges due to the parent company, owned by Hicks & Gillett, for loans it has made to the Holding company.
    •   The group has suffered over £70 million in servicing the debt owed to the banks over the last two years for which accounts are available.
    •   Around £45 million pounds has been spent on a stadium that doesn’t yet exist
    The high cost of arranging finance under Hicks & Gillett
    •   Closer scrutiny of the “interest payments and similar charges” reveals the high costs of refinancing the short term credit facilities forced upon the present owners. The club’s bank debt at the end of Jul 2009 was £233 million, but it suffered more than £70 million in interest and similar charges over the previous two years.
    These finance and interest charges equate to over 20% of the club’s annual turnover (paid over two years) spent on arrangement fees, charges, consultancy & advice etc. All this cost just so that the owners can effectively renew their loan arrangements.
    Unsustainable Debt Levels
    •   The amount of net borrowings increased by £58.8 million in the last accounting year.
    •   The amount of debt owed to the banks actually decreased by £27.7 million last year, but the amount of debt owed to the parent company (Hicks & Gillett) increased by £86.5 million.
    •   Interest on the parent company’s loans accrues at 10% APR. Unfortunately for LFC this is approx 5% higher than the interest payable on the bank loans that have been paid down.  (Worryingly, a note in the accounts states that none of this interest has yet been paid to the parent company. Is it building up like a time bomb for future cash flow or is it a negotiating tool to ensure the maximum extraction of cash from the club when they finally depart?)
    •   Over the past two years the net level of debt in the company has increased by £107 million (An increase of £51.6 million in 2009 and £55.5 million in 2008). In the same period the company made losses of nearly £100 million.
    •   The company made a net loss before interest and taxation of nearly £21 million in this period (£15.2 million 2009 and £5.7 million 2008)

    ReplyDelete
  124. I am sorry Ian, but it is *you* who is wrong.  as I illustrated, the club did not pay any dividends in this financial year.

    Please provide evidence that Kop Holdings receives income/dividends from the club.  If such payments were made, they will be in the club accounts.

    You can view the latest accounts on this page:

    http://www.liverpool-kop.com/2010/05/rafa-benitez-or-hicks-gillett-who-is.html

    In s4 under 'Sources for the following figures'.

    If the evidence is there, please find it.

    ReplyDelete
  125. cont'd

    •   But these losses increased to nearly £100 million for the period, with the £76.5 million paid in interest and similar charges by the company (£40 million 2009 and £36.5 million in 2008)
    Could it be that the increase in debt (£107 million) has largely been taken on to enable the company to continue to pay the interest and charges (£76.5 million) on its existing debt? If so, time must surely be running out on Hicks & Gillett’s business model.
    The club cannot afford to continue to suffer the impact of such a large amount of its profit on servicing the debt. Bear in mind that the principal reason that the debt exists in the first place is to reimburse to the present owners their costs of acquiring the club. If the debt had been built up financing a new stadium, or spent on developing the squad to ensure success on and off the pitch, we might expect to see some increased revenue to help meet the interest payments.
    Bear in mind also that the record losses posted for 2009, were done so despite the club generating record turnover on the back of enjoying its best ever season in the Premier League. It is unlikely revenues will be as high in this current financial year, or next year for that matter, but it is extremely likely that debt and losses will continue to rise. The need to change the ownership and debt structure has never been greater.
    How does this affect our plan?

    Up until now, dealing with owners who have been both unrealistic in their valuation of the club and unwilling to deal with a fan owned shareholding partner has resulted in a stalemate. We know that this stalemate has been intensely frustrating.

    To press forward without a realistic chance of securing a shareholding in the club would be extremely costly. The costs involved in the collection of the financial pledges of the Share Liverpool FC registrants and the administration of these funds are extremely high. Prohibitively high, when the unwillingness of the owners to deal, means that the possibility of the funds having to be returned unused is too great. However as the situation changes at the club so too does our situation.

    In one sense the publication of the accounts merely reinforces what everyone already knew, that the owners need to sell up quickly as they do not have the finances to carry on running the club. However the scale of the debt and the costs of servicing it add urgency to the situation.

    We have begun a series of informal conversations and confidential meetings with club officials; with Barclays Capital and investment bankers. We cannot conduct this process ‘in public’ but need to engage with key players and prove our ability to maintain confidentiality. We feel very positive about the situation going forward. The prospect of acquiring some significant fan equity in the Club appears to be sharper and more encouraging than ever before.

    Ironically, as the general situation of the Club gets worse, our prospects  get better. The Chinese are right to translate the word ‘crisis’ as ‘opportunity’. We can almost tangibly feel the prospect of real engagement moving towards us. 

    We may very shortly reach the point where we can table a bid. When that happens  we need to rely on all of your support, not only in providing the funds to purchase the club, or a significant share thereof, but also in helping this project reach as many Liverpool fans as is physically possible. As things currently stand, ShareLiverpoolFC can only offer shares for sale in UK & Ireland (regulated by the Financial Services Authority in UK), but there are many thousands of Norwegians fans who may wish to take part.
    WE ARE VERY KEEN TO HEAR FROM ANY OF OUR NORWEGIAN REGISTRANTS - PROBABLY LAWYERS - [...]

    ReplyDelete
  126. *sigh*

    They are looking at the GROUP accounts - accounts for Kop Cayman/Holdings/Football Limited.

    The CLUB accounts (LFCAGL) are different, and contain different figures. The only accounts that matter for the purposes of assessing the CLUB's financial health are those of LFCAGL.

    ReplyDelete
  127. So what they get the club for free now???

    I was stating buying price of club (£400-800M) + debts (£220M) + stadium (up to £300M could be very very wrong on that) + new players (£40M at least) + getting rid of Rafa for a fresh start (£16M) = in or around the billion pound mark.

    ReplyDelete
  128. Sorry *you* are wrong! You are simply refusing to understand the point.  Kop Holdings owns LFC.  It is a special purpose vehicle (SPV) used to purchase 100% share capital of LFC.  It has borrowed money to do so.  Banks will lend to the SPV to fund the acquisition.  However the banks will want to receive interest on those loans.  The interest payments are in Kop Holdings as you say.  Kop Holdings will not have any other source of income and therefore it will be the expectation that dividends from its investment (ie LFC) will be paid up to the Holding Company to a) pay its interest and b) pay out dividends to the ultimate owners (if they wanted/could afford to).  You are correct to say that dividends have not YET been paid by LFC to Kop Holdings, however that is not the point.  They wil have to be in the future.  If H&G continue to own the club they will have an obligation to finance the debt in Kop Holdings.  The only way to do this are a) Inject capital into Kop Holdings to pay off the debt/interest.  They clearly do not have the money/wish to do this or b) pay dividends from profits of LFC.  The point you make that dividneds have not yet been made is moot.  If the ownership continues they will have to do so.   I suspect they have not done so as this would not look good.  As indeed it isn't.  
    I am wondering how you think the debt will be financed ie who pays the interest in Kop Holdings)?  Is there some magic lottery win they are hoping for?  
    It's a ticking time bomb unless profits are taken in the form of dividends from LFC to Kop Holdings.  unless investment is injected. RBS want their money back, so do Waicova.  Only the whiff of a sale has kept them in.  It may well be that the debt is under guarantee from the owners themselves.  Still the interest must be paid eventually too.  But what are the assets of the owners if they had to pay the loans. 
    Oh of course LFC via Kop Holdings!  Or of course they could sell their house first, or their hockey teams and put the real cash in.  but of course they've done that already and refuse to put money in.  You are stubbornly trying to be an accountant with one set of account in front of you but with little expertise on a subject.

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  129. Just answer one question.  Who do you think is/will be paying the interest in Kop Holdings?  Simple question.  No need to get your set of accounts out.

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  130. why are we worrying manu 900mil in debt all the others are unsecure lfc is most proberbly one of the most secure teams in the world this is all a conspirise made up by manure fans and all the other jealous football clubs

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  131. i can see were your coming from .. but ignoring the GROUP accounts - accounts for Kop Cayman/Holdings/Football Limited. 

    Seems wrong when their the head of the chain  ...

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  132. You really should be a journalist yourself given the fact everything you say is correct, added to the 'insiders' at LFC that pass you confidential club information.
    Any reason why you just keep mucking about with this blog instead of being an award-winning reporter such as David Conn??

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  133. apparently a website that is primarily aimed at ousting a manager is neither public nor negative.

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  134. Ian - kop holdings as a company has c.144m of debt provided from the cayman island company. it lends that to kop football ltd, a wholly owned sub.

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  135. Jaimie.
    Why can the Kop football ltd's debt of £200m be secured by the club if they are separate as you imply?

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  136. Yes.  And who pays the interest on this debt.  It is very simple.  Do not be confused by the various company and structure.  There is debt spread around the various companies.  Any mug can structure a group to separate debt from profits but ultimately the veil of incorporation must be looked through.  None of these holding companies has any source of income other than LFC.  Ultimately these companies will be required to pay interest on debt (eventually or immediately).  The only place this can come from is to move the profits from LFC up the chain.  It's straight forward.  I agree with JK on the level of the debt has been exagerated to an extent, but it is complete nonsence to try to defend the point that H&G have bought the club using the future profits of the club to pay the debt for their purchase.  

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  137. Who says KFL's debt is secured against the club?  It is secured against Hicks and Gillett via personal guarantees/letters of credit etc.

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  138. No, it is not even close to the 1bn mark. You are exaggerating:

    226m + 300m + 40m + 16m = 582m

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  139. Ian - you are making too  many assumptions.  We should be dealing in facts, and what is provable NOW.

    As Hmmm says, Kop Cayman has lent money to Kop Holdings; that is where the money for intrerest payments on that company comes from.  It does NOT come from LFC.

    You state:


    If H&G continue to own the club they will have an obligation to finance the debt in Kop Holdings.  The only way to do this are a) Inject capital into Kop Holdings to pay off the debt/interest.  They clearly do not have the money/wish to do this or b) pay dividends from profits of LFC.

    This is inaccurate.  The very fact that money has been injected from Kop Cayman is proof that H+G HAVE used their own money to pay off the interest.  Where do you think money comes from, thin air?

    The irrefutable facts at this point are:

    * LFC has not paid ONE PENNY of interest towards debts on Kop Football/Holdings lits.

    * No dividends have been used to pay down any debt (none have been issued!)

    * Kop Cayman has lent money to Kop Football - this money is what pays the interest/debts on Kop Football.

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  140. Public, yes.  Negative, no.  If I was just posting 'Rafa is a cu*nt style articles then that would be the case.  Every post I make about him contains legitimate, fair criticism.  It is reality.  I might  make my points in a forecful manner, but the points are still legitimate.

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  141. I am a journalist.  I have had the opportunity to write for newspapers in the past; I didn't want to pursue that route.  Why? I do not want to be at the behest of anyone's editorial agenda; I want to say what I want, when I want. I am independent, and always want to remain independent.  I have no wish to be part of the mainstream media.

    Furthermore, I already have a job I love, so I'm happy with that.

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  142. Conn should have made a distinction between LFCAGL and Kop Holdings.  He didn't, for the same reason every other journalist has not: it sounds worse to say that the debts for Kop Holdings = the debts for the club.  Doom sells.  Accuracy doesn't.

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  143. read the accounts. only 110m is guaranteed. the rest is on the club. Look at the notes.

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  144. Can you explain:

    What you will believe will happen to Liverpool Football Club if KFL fails?

    Why the mortgage statements would indicate that LFC is an asset and used as security for KFL, in addition to personal securities?

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  145. To understand that, you need to look at the liabilities of KFL and who the creditors are.

    KFL has two principle creditors - LFCAGL for the intercompany loan ("Group Undertakings") and the banks providing the £200m of debt. If we cant service the latter debt, then the banks can get up to £110m from the owners (as private individuals) and/or control of the club.

    It is in the accounts -- look in the notes for the creditors. If i can get a screenshot, I will post them.

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  146. Jamie - here is the excerpt out KFL

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  147. I will post an article later containing documentary evidence that the mortgage is not secured against LFCAGL.

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  148. You've still not included the price for the club Jaimie!!! It has been mooted as being anything from £400M - £600M (£800M if you believe the rumours of Hicks' valuation which I refuse to believe). Or do the new buyers do a Chelsea and buy the club for a pound? All I want to know is are these costs ADDED to the purchase price? If so the new owners will be looking at an outlay of close to £1bn or more dependant on the owners' greed.

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  149. liverpool a besoin un peu bon joeur et rafael benitez doit partir!!!!!!!!!!!!!!

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  150. Jaimie, I have the mortgage (now I have been to my office) in front of me and the mortgage for Kop Football Holdings is secured against:

    (a) all Real Estate in England and Wales vested in it on the date of the Security Agreement, and (here it comes)

    (b) all Group Shares belonging to it on the date of the Security Agreement

    I'm sure I don't need to spell out which shares (in their entirety) were held by Kop Football Holdings. Ergo the club is security against the debts H&G took out.

    I hate to say this but I get the sense you're filling the gaps in your knowledge and expertise with guesswork.

    There is a perfectly good reason why fans are worried. The owners (who have been defaulting on other loans and continue to face ongoing legal action from creditors in the US) have to continue paying back, as and when demanded, the capital and interest payments. If they don't, or if they fail on any of the other covenants contained within the deals the security against THEIR loans is our football club. We would end up in administration.

    Now I'm not saying that is likely or unlikely to happen, but I can see why fans have concerns. They should be allowed to express those concerns without being told they are over-reacting etc. Our club is not as financially strong as Arsenal (profitable, new stadium with high revenues), Chelsea (no debts - all converted to capital), Spurs (Profitable) and Man City (no debts - all converted to capital). The obvious omission is Man United who have used the same model, have higher debts (but higher revenues) and fans who are worried about how sustainable the underlying business is. Coincidence?

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  151. Hey Jamie, I'm from Sweden, I do also enjoy your posts/articles, since it's a different view to the other RAWK and TTT, and I feel it's more neutral analysis, especially when you find proof of what Benitez has done wrong and it gives a chance to argue with the other side that blames us for being the Dark Side of things.  
     
    I've read all the posts and what hits me is 2 things.  
     
    We'll start with the critics;  
     
    1.) With the argument that LFC won't go into administration just because it hasn't happened in English football during the past 120years is unfortunately a really bad argument. Since English football and the Premier leauge has developed during this time and it's getting more and more frequently now, Leeds 2003? Portsmouth 2009? That's 2 clubs in the last 7years! So with that said it can happen for LFC as well.  
     
    Now to the credits;  
     
    2.) The owners has put the club on sale, for what reason I have no clue, nor do I care, I am just glad LFC can get this bastards out, since they don't have any compentence/knowledge/will to administrate a footballing club of LFC's status and heritage. So I want them out.  
    I also don't believe that the club now will go into administration during the time the club is being sold, because that would be bad business from the banks and the owners as well and it wouldn't gain anybody, not LFC, not banks, not the owners, not tax office, nobody!!  
     
    What is beautiful with business is that is kinda clear cut sometimes, and if everybody loose on the deal, nobody is going make the deal. So from that perspective I feel we are secure for now!  
     
    What could change the situation is that the owners would change their minds since no "proper" offers are coming in and they would chose to keep the club, then we would have a different situation and that would be worrying...  
     
    What is more urgent is that the transferwindow is soon to be opened, and if the club/manager don't have any funds to invest in the squad and some players want to leave and we can't find proper replacements for these players (read; Gerrard, Torres, Mascherano, Benayoun) due to lack of finance, we will have a terrible season next year and also the competition with other clubs such as City, Tottenham, Villa, Everton will be get a headstart and we'll be even further away to reach the ulimate goal for the club, PL-title, CL-football, and trophies...  
     
     
    All the best and keep up the good work  
     
    Timo

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  152. The British tabloid press should be ashamed of themselves, printing slop. Thanks for an informative truth about the LFC's finances. Do the British really think H&G are that naive with business and accounting? They may be cowboys when it comes to football, not business... 

    While a new stadium may run 350-400 million, half of that amount will be funded by stadium naming rights and other commercial deals. These deals can be sold again later when the original deals expire... Simply adding the costs to a stadium for a future owner's investment is wrong...

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  153. <span>The British tabloid press should be ashamed of themselves, printing slop. Thanks for an informative truth about the LFC's finances. Do the British really think H&G are that naive with business and accounting? They may be cowboys when it comes to football, not business...  
     
    While a new stadium may run 350-400 million, half of that amount will be funded by stadium naming rights and other commercial deals. These deals can be sold again later when the original deals expire... Simply adding the costs of a new stadium for a future owner's investment is wrong...</span>

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  154. Huh - how come you have access to the loan agreement docs?

    and what 'expertise' were you referring to, btw?

    great post.

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  155. Hi Hmmm the mortgage records are in the public domain.

    Financial / business expertise. I'm not sure what Jaimie's background is but there are quite a few 'holes' in quite a few arguments.

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  156. All documents like these including mortgages are held at sompanies house.

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  157. Didn't Jaimie post saying he would publish an article with "documentary evidence showing that the mortgage is not secured against LFCAGL"? That comment has mysteriously - albeit predictably - disappeared.

    Most peculiar. *DONT_KNOW*

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