Open letter to the Chief Executive & shareholders of the RBS
We write as the concerned voice of a great many supporters of Liverpool Football Club. Many of our number are also customers of the Royal Bank of Scotland.
It has become apparent to a wide range of experts that the business model, set in place by the current owners of Liverpool Football Club, George Gillett and Tom Hicks, for taking forward this historic institution, and community pillar, is not a viable one.
The American consortium, substantially backed by the RBS, has continually issued false promises to the club’s supporters - it’s key constituency and ‘customer base’. We no longer have faith in their competence or ability to meet the commitments of their business plan, and we believe, that from a financial perspective, they are fundamentally harming the value of the club.
The value of the club going forward is inextricably linked to the success of its team on the pitch, and the revenues its accomplishments can yield. Key to these revenues is constant participation in the world’s premier football club tournament, the Champions League. These revenues, in normal circumstances, should never be taken for granted, as the vagaries of ‘the game’ dictate that relying on income from this tournament is an extremely risky strategy to pursue (witness the debacle at Leeds United over the last few years).
The Hicks and Gillett model has clearly been grounded in the club ultimately generating significant new revenues from the extra capacity provided by a new stadium for the club. At present they have no way to fund the development of such a stadium, despite having committed to doing so as far back as April 2007. By their own confession, only a week ago, the project of building a new stadium for LFC is now indefinitely on hold.
Therefore, what can the value of the club be going forward ? Reliance on ongoing Champions League qualification is a ludicrously risky anchor to any football club business plan, and has been further exposed as such, by this week’s developments at Manchester City, whereby a new ‘force’ has emerged in the world game, that, as things stand, will inevitably be to the detriment of Liverpool FC, and push it further down football’s revenue seeking ‘pecking order’.
That Hicks and Gillett are still in situ is largely down to the financial support they are receiving from the RBS, albeit tempered by widely reported 6 monthly re-evaluation stipulations that reflect that it is nervous as to the viability of their plan for LFC.
This ‘wait and see’ stance from the bank would be understandable if the world financial markets were sound, and prospects good. Yet prevailing conditions are the worst in many a financial expert’s living memory. Moreover, and crucially, the bank and the owners are aware that, there exists, in the market, a ready and willing buyer for Liverpool FC. A buyer, it must be stressed, who is prepared to pay above the market rate, and deliver to the existing shareholders a sizeable profit on an investment that is barely 18 months old, on a business that is increasingly proving itself to be barely solvent.
In procrastinating, the RBS is taking an unacceptable reputational and financial risk, not only to the Anfield constituency and Liverpool FC, but even, surely, to it’s own shareholders. Should the Dubai based offer disappear, then meltdown for the club, and in turn it’s value, is a very real prospect.
Ready alternative buyers are not in the market. If the owners remain at the helm, it is highly likely, as they have no prospect of generating the required investment, that the club will not build it’s new stadium, nor continue to qualify for it’s revenue ‘lifeline’, the Champioms league tournament. Its status in the world game will decline swiftly, and it’s turnover plummet. As a knock on consequence the Anfield area of Liverpool, will see it’s prospects of regeneration delayed, if not shelved, indefinitely.
We, the supporters of Britain’s most successful football club, and one of the top 3 best supported clubs in the world, would ask those in the positions of the highest authority at the RBS :
‘How can you justify artifically propping up such a clearly unsound business plan, and jeopardise the future, not only of such an historic football club and it’s worldwide legion of supporters, but also set back, possibly for decades, the prospects of the people of Anfield, Liverpool 4, for whom the criminally long-overdue regeneration of their locality is intrinsically linked to the development of a major new stadium for Liverpool FC’.
We find the RBS stance indefensible in the face of the weight of the evidence, and in the light of the fact that, in Sheik Mohammed’s consortium’s bid, a ready solution exists. We urge the bank, in the strongest terms to show it respects a great institution, and cares about the people of Liverpool, by withdrawing it’s support to the current shareholders of Liverpool FC, forthwith, and persuading them to accept the offer on the table from the Dubai based group.
The Spirit of Shankly – Liverpool Supporters Union
