Sale of Liverpool soccer team another loss for Tom Hicks
12:00 AM CDT on Saturday, October 16, 2010
By ERIC TORBENSON, GARY JACOBSON and BRENDAN CASE / The Dallas Morning News
Tom Hicks lost his soccer team Friday after pulling his own legal punches, allowing the Liverpool Football Club's board to sell the storied franchise out from under him.
It's the latest humiliation in sports ownership for Hicks, who appears to be on his way to losing more than $300 million on his soccer, baseball and hockey teams.
"If he is not the least successful sports team owner in the 21st century, he is certainly in close competition," said Andrew Zimbalist, a Smith College economics professor who has studied the business of sports. "Normally it is not easy to lose money owning a sports franchise."
Hicks punted on his last-ditch effort to stop the Liverpool sale Friday morning, asking a Texas judge to dissolve a restraining order won Wednesday.
He also dropped – for the moment – a damages lawsuit that had sought $1.6 billion from the club's directors and from the bank that he claims conspired to boot him out of town.
"I feel very betrayed," he said of the way Liverpool was sold without his approval.
Hicks is set to lose more than $100 million on the deal, according to the team's chairman. New England Sports Ventures, owners of the Boston Red Sox, bought the team in a deal valued at about $475 million.
It could have been far different. Hicks said he had what he called "serious negotiations" this summer with Middle Eastern investors for a deal that valued the team at about $960 million.
Liverpool was supposed to be wallet redemption for Hicks, whose fortunes as a professional team owner have gone from unlucky to unfortunate to unwatchable.
Overleveraged and underwhelming on the grass and ice, Hicks-owned franchises in the past decade haven't seen much champagne sprayed in the locker rooms.
After selling Liverpool and the Texas Rangers this year, he's down to just the Dallas Stars hockey team, which provided him his only championship.
Hobbled by the Great Recession in 2008, Hicks' finances weighed down his sports teams like cement shoes. Major League Baseball took over the Rangers when Hicks couldn't meet payroll. And Liverpool's debt forced Hicks to the bargaining table to try to sell the team or to refinance the debt.
The Dallas financier, 64, will have to add the Liverpool losses to "a couple of hundred million" he said he'd lose on the Rangers and Stars. All told, that would put him down more than $300 million as a pro sports owner.
The Rangers opened the American League Championship Series against the New York Yankees in Arlington on Friday. Starting against them at third base was ex-Ranger Alex Rodriguez, whose $250 million contract with the team transformed Hicks into a poster child for overspending.
There's more salt for that wound: The Rangers still owe A-Rod $24.9 million, courtesy of Hicks' decision to have the team cover much of the huge contract when Rodriguez was shipped to New York in 2004. Hicks said he planned to watch the game in person Friday night.
High expectations
After buying the Liverpool team in 2007, Hicks expected the English Premier League club to soar in value. He and fellow American George Gillett bought the team for nearly 220 million pounds, which at the time was worth about $440 million but would only be about $350 million at current exchange rates.
Earlier this year, Hicks said profits from selling Liverpool would make up for losses on the Rangers and Stars.
Sports valuation publications such as Forbes thought Liverpool should fetch a substantially higher price – as much as $675 million – than what New England Sports Ventures paid, even though the team is struggling and Hicks was scrambling.
New Liverpool owner John Henry didn't mince words in taking the helm Friday. "There's a lot of work to be done to get this club to where it needs to be," he said in an interview posted on the team's website.
Instead of having debt payments of up to $48 million a year as Hicks faced, the new ownership group will pay $3.2 million to $4.8 million annually, freeing up cash to improve the team.
Club chairman Martin Broughton said the team's new owners "understand about winning."
That summed up the vitriol from Liverpool backers who launched a sort of jihad against Hicks and Gillett to get them out of the English Premier League.
"We just want what's best for the club," said Tony Godfrey of Fort Worth, one of four Liverpool fans to attend a hearing in Dallas District Court on Friday morning where Hicks capitulated. "Look what Mr. Henry has done with the Red Sox."
A virtual mob of fans flooded the inboxes of bankers and institutions that made contact with Hicks about helping him refinance his debt.
A sample message sent to Macquarie Group, an Australian bank Thursday night: "Be aware that if you are involved with any refinancing by Tom Hicks regarding Liverpool Football Club, we will be forced to, as a united and well-informed group of supporters, target your assets in any place over the world."
Hicks said the persistent e-mail campaign spooked his talks with Blackstone Group LP about refinancing the debt.
"Blackstone was targeted by Internet terrorists," Hicks said. "It absolutely had an impact on them."
Ventures continue
But Hicks' losses on sports ownership don't mean he's done as a businessman by any stretch.
His special purpose acquisition companies – essentially a company where shareholders give Hicks money to buy and run a company – continue to interest Wall Street.
His first such company, now called Resolute Energy Corp., shows on-paper gains of $100 million for Hicks and his executives.
This week, his second acquisition raised $150 million in a public offering. This deal could also be lucrative for Hicks if he completes an acquisition by mid-2012.
"We were very pleased with the result," Hicks said. "We have a good private equity group."
As for Liverpool, Hicks says he's just getting started on a legal strategy.
An English court's ruling on Thursday prevented Hicks' lawyers from pursing their Texas strategy that aimed to wrangle the case from across the Atlantic.
To ensure Hicks didn't violate that order, he pulled back the legal action in front of state District Judge Jim Jordan, who seemed wary of Hicks' attempts to ask for relief that English courts had denied. Hicks reserves the right to bring suit again.
"This is the first skirmish in a long battle," he said. "People can't do what they did."
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