Any one with the facts and figures to hand want to comment on this?
http://football.guardian.co.uk/championsleague200708/story/0,,2206007,00.htmlLiverpool could face £20m a year interest to finance stadium
Andy Hunter
Tuesday November 6, 2007
The Guardian
Business commitments are expected to keep Tom Hicks and George Gillett from Liverpool's Champions League tie with Beşiktaş, although it is hard to imagine what engagements could be more pressing to the American billionaires than events at Anfield and in the city's council chambers today. The deal designed to bring their bold ambitions for the club towards reality perhaps?
It was the day after Liverpool slumped to defeat in Istanbul to fall bottom of Group A when Hicks first revealed that he and Gillett were close to finalising a finance deal to pay for a new 60,000-seater stadium on Stanley Park and that costs for the project had risen to at least £400m. "The deal will be completed within 30 days," said the Texan in London on October 25.
The package being sought is a £500m loan to cover the escalating costs of the new stadium and refinance the £298m the Americans borrowed from the Royal Bank of Scotland to buy the club this year. It has raised suspicions that Liverpool's new owners are the Glazers by stealth and that, far from the benevolent custodians who were welcomed with open arms in contrast to their compatriots at Manchester United, they have in fact sunk Liverpool into serious debt without dipping into their personal fortunes. The final answer rests on the success of their revised stadium proposals, which go before the city council's planning committee today, and Rafael Benítez's ability to sustain success on the field before the project opens in 2010.
Liverpool will miss out on £14m if they fail to reach the knockout stages of the Champions League. Small beer in the grand scheme of £400m stadiums, Benítez said yesterday, although his transfer budget may well be the first casualty of the financial hit once the £500m loan and the £20m annual interest repayments have to be met. "When you talk about a £400m stadium and the amount you get for reaching the final, then an extra £10m is not a big difference," said the Liverpool manager. "We want to win because we want to win trophies, not because we want to save the financial situation."
The Anfield club received about £23m for reaching last season's Champions League Final from Uefa and made approximately £40m for winning the competition in 2005. Gillett and Hicks bought the club with a Royal Bank of Scotland loan that is due to be repaid in 2009. It was always their intention to borrow to build the stadium, although now they are seeking to repay their payments on the club through a long-term loan their claims that they would not saddle Liverpool with debt are debatable.
The Americans intended to borrow from Goldman Sachs, in a deal arranged by Liverpool's financial adviser, Robert Tilliss, until the financiers responded to the global credit crunch by asking the sports tycoons to invest more of their own money into the refinancing package. With his employers reluctant to do so, Tilliss has held talks with other financial institutions, including Wachovia and Morgan Stanley. The deal is yet to be finalised but, given current interest rates, the Americans are likely to be refinancing under worse terms than they received from RBS.
A £500m loan is 16 times Liverpool's operating profits for 2007, which are expected to be about £30m thanks to the Champions League run last season. United's debt is eight times their operating profit although, unlike Gillett and Hicks, the Glazers borrowed to buy the club and not to build a new money-making stadium. Arsenal provide the fairest comparison with the Americans' plans for Liverpool, with the move to the Emirates Stadium raising turnover from £37m in 2006 to £200m in 2007 and doubling their matchday revenue from £44.1m to £90.6m over the same period. It is this framework Liverpool's co-chairmen hope to replicate, though sustaining success on the field before 2010 is crucial to their plans.
"Whether Liverpool are playing Championship football or Champions League football next season they will likely to be paying over £20m in interest payments each year following the expected restructuring. This makes the revenue from the Champions League and continued qualification even more important," said Jason Laws, a reader in finance at Liverpool John Moores University. "Once they move to the new stadium their match day revenues have the potential to increase substantially, as have Arsenal's following the move to the Emirates, and to such a degree that those interest repayments should not be a major problem."
