The new American owners of Liverpool FC last night refused to comment on claims that the club might shoulder the burden of paying multi-million pound interest charges on the debt they have raised to fund their acquisition.
While Tom Hicks and George Gillett have personally underwritten the £300m they have raised from Royal Bank of Scotland to buy the club, reports yesterday suggested that Liverpool could effectively foot the bill for a £21m annual interest charge on this debt.
While the new owners have previously said the club will not be responsible for repaying their loans or the interest, sources close to the deal have suggested Liverpool could instead pay a “big dividend” to a holding company owned by the new shareholders.
This dividend cash would be sufficient to cover interest payments that Hicks and Gillett owe to RBS. Such an arrangement would not contradict the wording of undertakings contained in an offer document that the pair have circulated to existing Liverpool shareholders.
A spokesman for the American investors said: “They are not going to comment on the financing of the club.” He added that their financial affairs were a private matter and described the owners’ dividend policy as “minutiae”. Asked about the future dividend policy of the club, Liverpool chief executive Rick Parry said: “I can make no comment on the point as it has never been discussed.”
However, some observers said that the payment of a dividend by the club would represent a huge change of policy, as Liverpool has not paid a dividend to share- holders for many decades, possibly never in its history. Neil Blankstone, a director of Blankstone Sington, a stockbroking firm that has specialised in buying and selling Liverpool shares, said the club has not paid a dividend “in living memory”.
Many Manchester United fans were angered at the prospect of their club being used to bear the cost of the loans used by the Glazer family to finance their acquisition of the Old Trafford club. Last night, one Mersey- side-based football expert said that any large dividend paid to Hicks and Gillett’s holding company would represent a drain on the club’s resources and predicted it could trouble Liverpool fans.
Professor Rogan Taylor, head of the University of Liverpool’s football industry unit, said: “Fans are interested in how the money is raised. People are nervous about taking on debt so that somebody else can take over. “But that’s what was happening with the Dubai deal, too. It’s now the normal way things are done. Abramovich is not the normal way. People coming along who want to spend their own big money are few and far between. “But this could unnerve fans, because it is a significant drain on resources.”
However, Prof Taylor said the club would be able to afford dividend payments because its income was expected to rise as a result of the Premiership’s latest television rights deal and a larger stadium at Stanley Park resulting in higher gate receipts.
James Dow, a corporate finance expert who runs Dow Schofield Watts, in Warrington, and who has previously advised Everton, Ajax and Barcelona, said he was not surprised by any scheme that would effectively see the club foot the bill for the new owners’ interest charges. He said: “What do you expect? They are bound to use income from the football club to service the loan used to buy it.“What this means is they are buying a club without digging very deep into their own pockets.”
Mr Hicks’s investment business, Hicks Muse Tate & Furst, was one of the first big private equity firms in the US specialising in leveraged finance. Hicks and Gillett have borrowed £185m to buy out David Moores and other shareholders.