Broughton publically shames LFC owners

Liverpool's chairman Martin Broughton (L) sits with Premier League Chief Executive Richard Scudamore (R) before their English Premier League soccer match against Arsenal at Anfield in Liverpool, northern England, August 15, 2010.   REUTERS/Phil Noble (BRITAIN - Tags: BUSINESS SPORT SOCCER) NO ONLINE/INTERNET USAGE WITHOUT A LICENCE FROM THE FOOTBALL DATA CO LTD. FOR LICENCE ENQUIRIES PLEASE TELEPHONE ++44 (0)

The past few hours have seen Liverpool FC announce the intention to sell the club to the New England Sports Ventures (NESV), and Royal Bank of Scotland have agreed with the deal, and the Premier League are currently discussing the change which could be in place by Friday.

The only men not happy are Tom Hicks and George Gillett, outvoted by the board, and outmaneouvred by their reliance on debt, which has now cost them control of Liverpool FC board.

It appears now that they will take a significant financial hit from their involvement with Liverpool Football Club, and by taking legal action it looks more likely that they will take even more financial damage.

Martin Broughton has given several interviews to various media outlets including the official website but he quite clearly was incensed by Hicks and Gillett’s attempts to bend the rules of the football club by removing board members (for which they do not have the power) and blocking the sale of the club.

Broughton said:

“This was frankly [Hicks and Gillett’s] last chance to leave Liverpool with their heads high and they have chosen to go this route.

“It is a difficult issue. Part of me taking on the role – and I was appointed by Tom and George – was that they gave a written undertaking that only I could change the board, they wrote that into the articles of the two companies Kop Football and Kop Holdings.

“They also gave a written undertaking to RBS that they would not frustrate any reasonable sale and this is frankly a flagrant abuse of those two written undertakings.”

The offer from NESV is believed to wipe out significantly the club’s debt, and reduce the club’s crippling £40M a year interest payments.  The club will have a similar overdraft facility of around £40M that they had back in 2007.

All eyes are now on Hicks and Gillett to see if they pursue a legal challenge to block the bid – a strategy that is highly likely to end in utter failure for the owners.

The full transcript of the interview with the official LFC website and Martin Broughton is reproduced here:

Martin, it’s been quite a dramatic 24 hours in terms of the sales process. Can you explain exactly what the situation is right now?

It certainly has been dramatic. The latest position is that we have a sale agreement in place, we’ve agreed the sale to New England Sports Ventures, that sale is subject to a number of conditions like Premier League approval and other normal conditions. The specific additional condition is that it’s subject to confirmation that the Board acted validly in drawing up the sale documents.

Last night fans read a statement on the official website claiming that the owners had sought to remove Christian Purslow and Ian Ayre from the Board. What was the reasoning behind this and were the owners successful?

The court will ultimately decide whether the owners were successful. The reasoning behind it was that the owners felt we were reviewing two bids which they considered undervalued the club and therefore they wished to remove Christian and Ian and replace them with Mack Hicks, who is Tom’s son, and Lori McCutcheon, who also works with him.

We don’t think it was valid to do it. Essentially when I took the role they gave a couple of written undertakings to Royal Bank of Scotland. Those written undertakings included that I was the only person entitled to change the board and that was written into the articles of the covenants, and also that they would take no action to frustrate any reasonable sale. And I think they flagrantly abused both of those written undertakings.

You announced on Tuesday night that the club received two excellent offers. Why, in your opinion, is New England Sports Ventures the right new owner for Liverpool Football Club?

I think both of them would have been excellent new owners. New England have a lot of experience in developing, investing in and taking Boston Red Sox – as the closest parallel – from being a club with a wonderful history, a wonderful tradition that had lost the winning way, and bringing it back to being a winner. Their commitment to winning is what it’s all about there and they’ve extended it from Boston Red Sox to Nascar and other things, but Red Sox is the main one.

I have been meeting them now for several weeks in Boston, in Liverpool, in London, and I feel they are totally committed to supporting and getting the winning mentality back into the team.

Is their winning mentality the thing which has impressed you most about them during this period?

Yes. Their commitment is to winning on the pitch and that helps you win off the pitch too. The two are mutually reinforcing.

Fans have already got lots of questions, with three of the main ones being:

a) Will the debt burden be removed completely?

To all intents and purposes, yes. All of the acquisition debt that was involved in the current owners acquisition will be removed completely. We’ll still have what we call normal working capital debt and there’s a facility there for the new stadium which will remain in place, but to all intents and purposes all the major debt that has been causing our problem has been paid off.

b) Have the proposed new owners committed to investing in the playing squad?

Yes. They don’t want any hostages to fortune, very sensibly, so they’re not going to make any comments about how much or anything like that. But this goes back to the winning mentality. I think the demonstration is: let’s look at what they have done at Boston, what they said in Boston, what they have done in terms of investing in players – and I think you get a high degree of confidence of their willingness to do that.

c) Is there a commitment from them to progress the new stadium project?

Yes, there’s definitely a commitment to invest in a stadium and we will finish up with a 60,000+ seater stadium. Where they haven’t finalised their view is whether that should be the new stadium or whether there are still opportunities to build at Anfield itself. They have done both. The people involved have built the new stadium at Baltimore Orioles, for example, and at Fenway Park they looked at the two options and decided that actually redevelopment with all of the tradition was better than a new stadium. So they have done both, they are committed to looking at both very professionally and seeing which is the best option, but there will be stadium development.

Just to clarify, what needs to happen now for the sale to be finalised?

The key thing is the court case. We need to go to the court to get a declaratory judgement, which is for the court to declare that we did act validly in completing the sale agreement, and then the buyers can complete the sale. We have to get Premier League approval and I’m certain that’s not going to be an issue. There are one or two minor things like that but the key issue is the court, which should meet I would think next week sometime. That is the most likely time, in short order.

Can the owners block the sale of LFC to New England Sports Ventures?

Well, we have to win the court case. So effectively yes, if they win the court case they can block the sale. But then we may have one or two other thoughts in mind as well.

Could the sale process be dragged through the courts for months before a resolution is reached?

No, I don’t think so. We should get a declaratory judgement I would have thought probably by the end of next week, in short order. There is an appeal process but that is also very fast.

How confident are you that Liverpool Football Club will soon be officially under new ownership?

I am confident. I wouldn’t have taken the Board through that process yesterday if I hadn’t been confident. I wouldn’t have exposed everybody to that risk if I hadn’t been confident, but you can never be certain. These things are legal judgements. We have been properly advised and I am confident.

Looking back, how thorough has the process been to identify the best new owners for the Club and how pleased are you with the final outcome?

Ideally one would have had buyers who were not only the best buyers but also satisfied the owners. That’s what we were looking for and we haven’t managed to do that second piece of it. Has it been exhaustive? Absolutely. We have, first of all through BarCap, contacted every plausible buyer. The media coverage has meant that you would have to be living on Planet Zog not to know that Liverpool was for sale and so if you had any interest in it you had the opportunity. We’ve talked to lots of potential people. At the end of the day, with the deadline for debt repayment looming we had two bidders, both very viable bidders. I think they were competing, there was competitive tension there and I think that demonstrates that we have the market price.

Finally Martin, what is your message to the Liverpool fans?

Keep the faith. We said we would deliver the best buyers for the club and I think we have delivered exactly that. I know they’ve been frustrated by not getting a running commentary and I know a fan wants to know what’s going on. I thank them for their patience because I do believe the only way you really get these things done is out of the media glare and it’s difficult to do it out of the media glare, but we’ve found the right owners. I thank them for their patience, their support, keep the faith, this is going to work. They’re with us.

5 comments on
Broughton publically shames LFC owners

  1. According to David Buik of Barclay’s Capital , Bob Diamond head of Barclay’s and the greatest Red Sox fan and a close friend of John Henry highly recommended Liverpool F.C.
    Seems Henry has many friends in high finance places!!
    Sound positive news


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