Dubai International to make bid for Liverpool FC

[Dhav]

DIC might load us with debt as well, but they can borrow on much better terms and the club's interest repayments would be far less crippling under them compared with G&H

[tsb]

How would people feel if DIC came in and bought the club and then leveraged some of the purchase as debt on the clubs balance?

I know that sometimes it's good business practice to do this as debt can sometimes be cheaper than using cash to buy something.

Very basic example, if I wanted to purchase a house and I had the cash available to buy it outright, I still might want a mortgage at 6% interest and invest my money elsewhere to get a higher than 6% return. At the end of the term I can pay off the debt and have more money left over than the original purchase price.

DIC could buy the club for £350million, get a load for £250m (against the club) and use £100 of their own money. Fund the stadium and the squad seperately while helping with the interest payments on the £250 loan.

I'm just concerned that a lot of emphasis is being placed on not loading debt onto the club when actually thats exactly what DIC could do.

Spot the accountant!!! There's no doubt that debt is cheaper than equity. However the price of equity depends on the investors expected return.

[Bob]

I unfortunately posted just before RS4's rant ( - only kidding mate, fair play for speaking your mind. A lot of what you said rang true )

DIC are a Private Equity company.
PE companies buy companies using lots of debt and not much capital
They then turn the business around and sell for a massive profit after anything from 3-10 years.
So...... other than having more money themselves (which might be the clincher for a lot of people here) they're still going to have a lot of debt and not much capital - it's a business afterall.

If you've seen Charlie Wilson's war there's a very good point about thinking something is for the best, but not-many-years-later realising its not.

I'm not saying DIC aren't better than G&H, just forewarning that may be not much will change....

Selling it on is one thing, but this is only possible if there's a buyer. Even if DIC make us a profitable force i think they'd clearly be looking a return... and that's a lot to be looking for.

IMO, DIC have other interests such as their brand to market... IMO i don't take the view they're only 100% in it for the money.

[Imy]

Selling it on is one thing, but this is only possible if there's a buyer. Even if DIC make us a profitable force i think they'd clearly be looking a return... and that's a lot to be looking for.

IMO, DIC have other interests such as their brand to market... IMO i don't take the view they're only 100% in it for the money.

Until recently wasn't it only the Mancs that ever made a profit in football?

I honestly feel they will speculate to accumulate.

[Red Chilli]

Selling it on is one thing, but this is only possible if there's a buyer. Even if DIC make us a profitable force i think they'd clearly be looking a return... and that's a lot to be looking for.

IMO, DIC have other interests such as their brand to market... IMO i don't take the view they're only 100% in it for the money.

If you run this club properly, there is a profit to be made, not only through income but also through re-sale.

[disco]

DIC might load us with debt as well, but they can borrow on much better terms and the club's interest repayments would be far less crippling under them compared with G&H

I bet the interest payments won't be MUCH different.

Basically, judging by the previous replies, the belief is that DIC will be better because they will spunks billions in the transfer market. I'm not convinced. I hope they do, but they might be just the same as H&G

[dawmdt]

How would people feel if DIC came in and bought the club and then leveraged some of the purchase as debt on the clubs balance?

I know that sometimes it's good business practice to do this as debt can sometimes be cheaper than using cash to buy something.

Very basic example, if I wanted to purchase a house and I had the cash available to buy it outright, I still might want a mortgage at 6% interest and invest my money elsewhere to get a higher than 6% return. At the end of the term I can pay off the debt and have more money left over than the original purchase price.

DIC could buy the club for £350million, get a load for £250m (against the club) and use £100 of their own money. Fund the stadium and the squad seperately while helping with the interest payments on the £250 loan.

I'm just concerned that a lot of emphasis is being placed on not loading debt onto the club when actually thats exactly what DIC could do.

Well indeed and as you rightly point out if you have the cash it's rarely a good idea to not use debt against the asset. For example, in a previous place I worked, they required IT projects to have an 18% return before they were generally approved as it was felt that they could make that kind of return with active investment of the cash rather than spending it on a project that would make a return.

Debt on a busienss is not necessarily a bad thing, but it does depend on whether that business can afford it and if the new owners are willing to further invest into that business to boost its profitability so the gearing on the business becomes less relevant. The problem is football's a very risky game, it doesn't matter how much or little you invest it's impossible to guarantee winning anything -- you just need a moment of madness, a blind ref or an unlucky deflection to dump you out of a cup run, for example.

And that risk should be factored into the level of gearing a buyer is willing to put on the club. I don't know, but I'd guess this might be what's taken so long negotiating the new deal - RBS might not be happy that the club can afford to be in that much debt, especially in the short term, and they've asked the two wise monkeys to personally guarantee any shortfall for a period of time and I imagine they've refused.

Just guess work and speculation, but it's a possibility

[Bob]

How would people feel if DIC came in and bought the club and then leveraged some of the purchase as debt on the clubs balance?

I know that sometimes it's good business practice to do this as debt can sometimes be cheaper than using cash to buy something.

Very basic example, if I wanted to purchase a house and I had the cash available to buy it outright, I still might want a mortgage at 6% interest and invest my money elsewhere to get a higher than 6% return. At the end of the term I can pay off the debt and have more money left over than the original purchase price.

DIC could buy the club for £350million, get a load for £250m (against the club) and use £100 of their own money. Fund the stadium and the squad seperately while helping with the interest payments on the £250 loan.

I'm just concerned that a lot of emphasis is being placed on not loading debt onto the club when actually thats exactly what DIC could do.

What you are talking about is fine, they would be doing it for good business sense - there's GOOD debt sometimes.

Where G&H differ is they're doing it out of financial necessity and therefore, unfortunately, it is BAD debt.

Simply put.

[Rafa Shankly]

Of course it's affecting the team but who created it? Who has tried to call the board's bluff? Who feeds the media with stories about returning to Madrid or being wanted by other clubs? Who was sulking in a tracksuit?

Honestly, lads, you've all fallen for it hook, line and sinker...



So if we've got better players but we're still not beating teams like Wigan, Middlesborough, Reading, Birmingham and Villa yet Rafa is a great manager then we must be incredibly unlucky, eh?



Sorry, I ran that through Babelfish but still couldn't understand it...

i suspected you were drunk.

again ill say it,an incredibly naive and ridiculous claim to make,everything is rafas fault:whatever:

of course rafa has his faults,no one said he hadnt,but to allude that peoples feelings towards G&H have been clouded because of something rafa has done,that we dislike G&H because rafa created all this,and G&H played absolutely no part in it is laughable.

and ill repeat the line of the post you had so much trouble understanding,hopefully in a way you can understand it..

you are claiming no one knows whats going on behind the scene yet you can without any hesitation state that whatever is going on behind the scenes has played absolutely no part in the teams poor performances.

just dont understand how you can claim we all know nothing in one line and claim you know that all the **** is not affecting morale.

sounds like you have an agenda against rafa tbh.

[Red Chilli]

I bet the interest payments won't be MUCH different.

Basically, judging by the previous replies, the belief is that DIC will be better because they will spunks billions in the transfer market. I'm not convinced. I hope they do, but they might be just the same as H&G

DIC have the ability, the knowledge, the expertease and crucially THE RESOURCES to make us profitable.
To be profitable the team needs to be successful.
That's where they differ from H&G, they have the resources to make us successful, H&G don't. Sorry, that's the way I see it.

[disco]

If you run this club properly, there is a profit to be made, not only through income but also through re-sale.

Other than their **** PR, is there actually any evidence that the club isn't being run properly (i.e. income streams)? If we don't qualify for CL, do we really expect DIC to stump up?

We simply don't know what transfer budget there's going to be this summer under G&H, it's all speculation.

[Jayesh87]

Trouble hits Liverpool FC's plans for huge loan
Jan 22 2008
EXCLUSIVE by Tony Barrett, Liverpool Echo

CONTROVERSIAL plans by the owners of Liverpool FC to restructure their debt have hit a problem.

City sources said today that the proposed £350m deal with the Royal Bank of Scotland could collapse, and DIC is waiting in the wings to make a move for the club should that happen.

Tom Hicks says the deal is on course, but speculation is growing about George Gillett's ability to secure the loan.

The source said: "There is no doubt that Hicks is ready to put up the money that the RBS has asked for. But the situation may not be the same with Gillett."

The situation is also clouded by the ongoing crisis in the US and Canadian stock markets.

Financial experts now believe a recession is almost inevitable.

With Hicks and Gillett having secured the initial loan to buy Liverpool against assets in American and Canada, their financial position is not as strong today as it was just 24 hours ago.

The source added: "This crash could not have come at a worse time for Hicks and Gillett, there is no question about that.

"Every bank and lending agency will be tightening its belt and RBS maybe more than most because they suffered big losses in yesterday's downturn.

"That means anyone seeking a major loan will have to prove to them that they have the necessary assets to secure it against and Gillett could have a hard time proving this is the case – and that's if he wants to prove it."

Tom Hicks recently promised to have financial restructuring – which would heap around £350m of debt onto the club – completed by the end of last week.

With that deadline now having passed, he is facing a race against time to get it done because the initial one-year loan the duo took out with the RBS to buy the club a year ago expires in a fortnight.

DIC is watching events unfold with interest and, should refinancing not take place, is ready to bid for the club.

Meanwhile, fans’ movement Reclaim The Kop is to ask supporters to boycott RBS and its products should the bank push ahead with the loan to Hicks and Gillett.

http://icliverpool.icnetwork.co.uk/0...name_page.html

[Red Chilli]

Other than their **** PR, is there actually any evidence that the club isn't being run properly (i.e. income streams)? If we don't qualify for CL, do we really expect DIC to stump up?

We simply don't know what transfer budget there's going to be this summer under G&H, it's all speculation.

I'm not saying H&G aren't running the club properly, there's no evidence for that.
I'm saying they don't have the resources to make the team successful and therefore they won't make a profit on their investment.
They've overstretched themselves, you'd have to go a long way to claim DIC have done the same.

[Bob]

I bet the interest payments won't be MUCH different.

Basically, judging by the previous replies, the belief is that DIC will be better because they will spunks billions in the transfer market. I'm not convinced. I hope they do, but they might be just the same as H&G

Will they approach Berti Vogts to be the next manager and then go public with the info?

Nah **** it, all things considered, DIC are the best way forward for us. I've convinced myself, it's not one thing it's many.

Hicks had a precedent for ****ing up sports franchises before and he's now doing it to us as well. DIC have history of great sporting achievements. It was clear at the time of the take over and it's clear now.

IMO, people are arguing simply for the sake of turning this thread into a rival for the "what are you listening to thread"?

[Rich]

I think we're all hoping that DIC understand the business side of the club; yet realise that they need to leave the footballing matters to people that truly understand them.

Hicks' biggest crime (IMO) has been to singularly misunderstand "soccer" and alienate himself with the fans by "stabbing Rafa in the back"