Liverpool are expected to confirm shortly that, as The Daily Telegraph disclosed, Hicks and Gillett are to stand down as co-chairmen at Anfield in favour of Martin Broughton, the chairman of British Airways.
Royal Bank of Scotland and Wachovia are also preparing to offer a six-month extension on loans of £237 million, paving the way for the sale of the club. That process will be led by Barclays Capital (BarCap), an investment bank Hicks and Gillett have worked with in the past and which, through its retail bank parent company which sponsors the Premier League, has a vested interest in maintaining the health and reputation of one of England’s leading clubs.
Confirmation of the sale process and the boardroom reshuffle will mark the beginning of the end of the Americans’ tenure, though the sale of the club is unlikely to be swift.
Prospective buyers are expected to wait to begin negotiations until the end of the season, when Liverpool’s participation in Europe and the fate of manager Rafael Benítez, who has again been linked with Juventus, is clearer.
The Americans’ valuation of the club at upwards of £500 million is also bound to come under pressure from buyers, but what is certain is that Hicks and Gillett are ready to end their protracted and often bruising struggle to retain control. Until recently the pair remained determined to retain a stake, believing that the club they borrowed close to £300 million to buy in February 2007 remain undervalued.
Hicks in particular has enjoyed his association with Liverpool immensely, valuing their presence alongside his baseball and ice hockey interests in the family business, and has battled to find a way of retaining an interest.
Those hopes have been undone by the Americans’ inability to raise fresh investment, either externally or from their own assets, their failure to work together harmoniously, and opposition from supporters that has made life at Anfield uncomfortable and, at times, dangerous.
Unable to raise the money to stay, heavily leveraged across their empires – just this week George Gillett’s NASCAR team were reported to have defaulted on a $90 million loan, albeit for technical reasons – and facing continued opposition they have had no option but to prepare an exit strategy.
The crucial factor in the latest developments has been the looming summer deadline to refinance £237 million of loans from RBS and Wachovia.
The original deal with RBS was struck in the benign financial climate of early 2007, when the bank was willing to lend the Americans £185 million to buy Liverpool, with the option of a further £113 million to fund investment, secured against personal guarantees of just $100 million.
Unfortunately for the Americans and RBS, before this original short-term deal expired the financial weather turned for the worse, and they have faced increasingly tough conditions from a bank that is now 70 per cent state-owned.
In January 2008 they refinanced, with RBS lending £183.5 million and Wachovia £61.25 million. The price for this deal was guarantees and letters of credit from the owners to the tune of £185 million, increasing the strain elsewhere.
Last summer they again refinanced but had to pay down £60 million of debt to do so, and the banks made a further reduction of £100 million a condition of any new deal struck this summer.
The search for that investment has been long and fruitless, with the price of a minority stake and the questionable influence it would bring standing in the way of any deal.
Against that backdrop the Americans have sought an alternative route to appeasing the banks, starting with Broughton. His appointment, sealed over dinner in London, was secured after the Americans approached him, rather than following any pressure from the banks, and has bought them time.
With a credible business figure in place and the sale process under way, RBS is preparing to extend the financing deal until the end of the year, giving BarCap a window in which to find a buyer.
Liverpool’s managing director, Christian Purslow, has already begun working with them, passing on the details of investors linked with the club in the past year.
It is hoped that the changes will also appease supporters who have run a vehement personal campaign against the owners since they broke a commitment not to use club revenues to service their acquisition loans. It has intensified in recent months, with Hicks finding himself trapped inside Anfield after a Premier League game against Bolton in February by a protest co-ordinated by the Spirit of Shankly group.
His son, Tom Jr, meanwhile, also found himself humiliated at the hands of supporters. In 2008 he was drenched with beer after finding himself unwelcome at the Sandon pub near the ground on a match day, and a lurid email exchange with a supporter earlier this year cost him his place on the board.
Liverpool’s irate fans are one aspect of life at Anfield neither Hicks nor Gillett will miss when they walk away. Given the bitterness of the past three years, the feeling is likely to be mutual.
Owners would be unwilling to sack manager
In normal circumstances Rafael Benítez would be under huge pressure following Liverpool’s disappointing season, but the owners’ travails may again save him in the short term, should he reject overtures from Juventus reported on Tuesday.
Hicks and Gillett are understood to have agreed to provide a summer transfer fund if a buyer is not found quickly, but they are unlikely to be willing to sack Benítez and pay out his contract given the new circumstances.
The Spaniard retains the support of managing director Christian Purslow, but an offer from another club looks like an increasingly agreeable solution.
Replacing Benítez could be the first priority for the new owners, but building the new Anfield would not be far behind. That project was the reason David Moores sold to the Americans and, following their failure to deliver, the ground remains the key to moving Liverpool on to the next level.
Could this be a sign of the Gillett’s liquidity problems? Will the Gillett’s be increasing their liquidity by selling Richard Petty Motorsports? With the impending loss of their big dollar sponsor, Budweiser, will this team whither on the vine?
RPM has many questions swirling around regarding surrounding its future survival?
TILL NEXT TIME, I AM WORKING ON MY REDNECK!