Merseyside club suffers further financial heartache including massive payout to former chief executive Rick Parry.
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Liverpool’s parent company posted a huge loss of £54.9m for the year ended on 31 July 2009 as debt interest payments and severance costs hit hard.
The loss was 34% worse than 2008’s figure as £40.1m went on servicing the club’s £351.4m debt to Royal Bank of Scotland (RBS) and US firm Wachovia.
Pay-offs to senior staff, including former chief executive Rick Parry, accounted for a further £4.3m.
BBC Sport understands that Parry’s severance package was £3m.
This sum – twice what Keith Edelman received when he left the chief executive job at Arsenal – will raise eyebrows on Merseyside as it was Parry who introduced Tom Hicks and George Gillett Jnr to the club and pushed for their eventual takeover in 2007.
He would come to regret this decision as the American duo’s ownership has proved to be deeply unpopular with fans and Parry was ultimately forced out of the club in February 2009. He had been in charge for over 10 years.Hicks and Gillett may soon be following him out of Anfield as they have put the club up for sale: an apparent admission that their regime has been a failure on and off the pitch.
Of particular concern to the fans (and any potential buyer of the club) will be a warning in the parent company’s accounts from the auditors.
For the second year in succession, KPMG has flagged up its fears about Liverpool’s precarious debt position. This relates to the loans Hicks and Gillett took out to finance their purchase of the Premier League outfit.
Last year the pair were forced to pay off a £60m chunk of their debt to the state-owned RBS in return for a one-year extension of their “credit facilities”. That extension expired in March but is believed they have been given six months’ grace to find a buyer.
But until that happens the club is dependent on what KPMG calls “short-term facility extensions”.
“These conditions indicate the existence of a material uncertainty which may cast doubt on the parent company’s ability to continue as a going concern,” it said.
As well as the bank loans, Liverpool’s parent company also owes £144.4m to its parent company, the Hicks and Gillett-controlled Kop Football (Cayman) Limited. The interest on this was £8.1m, although it has not been paid.
Other items of note in the accounts are the expenses bills from Hicks and Gillett of £158,000 and £118,000 respectively. There is also a charge of £22.3m for work done on the much-delayed new stadium project.
It was not all red ink in Kop Football (Holdings) Ltd’s accounts, though. Manager Rafa Benitez managed to make £3.4m in the transfer market, following 2008’s £14.3m net profit.Mention was also made of the bumper shirt-sponsorship deal the club signed with Standard Chartered in September 2009. Worth £80m over four years, the first benefits of that tie-up will come in next year’s accounts.
With no Champions League football to look forward to next year, a squad in need of urgent overhaul and uncertainty surrounding Benitez’s position, the shirt deal will be scant consolation to Liverpool’s frustrated following. (BBC Sport)
This latest financial statement does nothing to allay fears that we could be on the verge of a significant downturn. The fact that £40m+ was forked out to service debts accrued by Tom Hicks and George Gillett is perhaps the most worrying facet of this report.
Without the safety net of Champions League football for the coming season one wonders how much lower can sink before we stabilize and the current level of debt will also greatly effect the likelihood of a new investor coming in to buy the club.
Its been a particularly trying season on the pitch and this coupled with factors off it have served to damage the club as a whole and its hard to know what direction we may go in. The fact we managed to secure a high profile big money shirt sponsorship deal with Standard Chartered does bode well though as it proves we are still a viable investment opportunity for big name companies and that we can dig ourselves out of a the hole we are currently in.
This summer will be crucial for the club and one that could well shape the long term future of Liverpool Football Club.
YNWA
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