Dubai International to make bid for Liverpool FC

[CAD]

He sees only three likely outcomes:
1) Americans give in and accept an offer to sell before refinancing outcome is known.
2) Americans fail to achieve refinancing. In which case they will be forced to sell for a lower price.
3) In his opinion the most likely. Americans will get the refinancing, and will then sell.

If DIC is to come in short term it will be item 1. If G&H takes out a new loan they wont sell in the foreseeable future. Why?

Because then G&H will follow their (Hicks) first instinct and try to knock up the stadium or at least part of it before they try to sell again. Either DIC gets in before they refinance or they wont come at all. Not for the next 3-5 years that is.

Hicks ain't kidding when he says that LFC is worth a billion. He really thinks so - in 5 years time that is. If I were him I would sit tight - that is if Gillett has the money to play ball.

To refinance and then sell makes absolutely no sense imho.

[baz87]

A sale is just a matter of time. Whether the refinance puts them in a better position is a tricky one. If DIC were to stand firm over there price then the Yanks could be in trouble as the refinance would mean they would have to come up with the ~£45m a year to service the loan (as the club won't make that money). Over the short term this may not be a problem but the longer it drags on the worse position the Yanks would be in as they simply do not have the cash to cover this ~£45m per year and neither would the club untill the stadium is ready (which means more borrowing and at least another £20m per year repayments). The refinance would certainly give them a few more months but if a deal couldn't be struck by then, then the yanks would be in a big problem and would either have to sell assets (from us or other businesses) to meet the repayments or lose the club to the bank and DIC get us on the cheap.

[disco]

He sees only three likely outcomes:
1) Americans give in and accept an offer to sell before refinancing outcome is known.
2) Americans fail to achieve refinancing. In which case they will be forced to sell for a lower price.
3) In his opinion the most likely. Americans will get the refinancing, and will then sell.

If DIC is to come in short term it will be item 1. If G&H takes out a new loan they wont sell in the foreseeable future. Why?

Because then G&H will follow their (Hicks) first instinct and try to knock up the stadium or at least part of it before they try to sell again. Either DIC gets in before they refinance or they wont come at all. Not for the next 3-5 years that is.

Hicks ain't kidding when he says that LFC is worth a billion. He really thinks so - in 5 years time that is. If I were him I would sit tight - that is if Gillett has the money to play ball.

To refinance and then sell makes absolutely no sense imho.

That's what I'm struggling with, if they get the refinancing why accept any offer below, say, 7 or 800m - the amount they think it will be worth in 5 years time discounted for a few years? Surely £30-40m a year is **** all in the grand scheme of things for that level of return.

[Radar]

From Forbes 2007....

Dallas Stars

Team Value 1 $254 mil

The Dallas Stars
are owned by Thomas Hicks (Net Worth: $1.3 billion),
who bought them in 1995
for $84 mil.

The skinny
It is a good thing Dallas Stars owner Tom Hicks is a billionaire. Otherwise, he might not survive the mess he has made of the Dallas franchise. The team, which owns 50% of American Airlines Center, is saddled with $200 million in debt (the team's holding company, Southwest Sports, defaulted on $135 million of debt four years ago), a high payroll, and an under-performing team that can't make it past the first round of the playoffs. The natives have clearly gotten restless, illustrated by sagging ticket sales and waning interest in the Dallas market for the Stars. In the face of this Hicks has actually increased the team's marketing staff to boost ticket sales. What he really needs is a better product.

Texas Rangers

Team Value 1 $365 mil

The Texas Rangers
are owned by Thomas Hicks,
who bought them in 1998
for $250 mil.

Valuation Breakdown


The skinny
The debt-strapped Texas Rangers, still paying a big chunk of Alex Rodriguez' salary, have finally begun to invest more in players and marketing with mixed results. Last season the team bumped their payroll $10 million but only improved their record by one game. But season ticket sales, especially for big spending clients, are up for 2007. Look for the team to find a more lucrative naming rights deal after Ameriquest gave the rights back on its 30-year, $75 million deal in March, 2007. Team owner Tom Hicks is also going to spend $1 billion on four million square feet around the ballpark on retail, entertainment, commercial and residential development over the next eight years.

[baz87]

That's what I'm struggling with, if they get the refinancing why accept any offer below, say, 7 or 800m - the amount they think it will be worth in 5 years time discounted for a few years? Surely £30-40m a year is **** all in the grand scheme of things for that level of return.

Hicks and Gillett do not have the cash (there worth is tied up in assets) to cover the repayments and when the rest of the money for the stadium is borrowed these repayments will be around £65m per year. The club will only ever be worth £1bn (thats OTT too) when the ground is ready and the club will not be making enough to cover these repayments untill the ground is ready either.

Basically the Yanks are going to have to come up with around £200m of there own cash to cover these loans for the next few years (possibly another ~£10m per year after the ground too as its unlikely that we'll make £60m profit) and they simply do not have it.

[disco]

Cheers Radar, interesting read. He's obviously trying to improve both teams and invest a lot of money.... but with limited success so far.

Bas - how did you come up with £65m per year? £350m over 15 years would only be around £30m a year.

[CAD]

That's what I'm struggling with, if they get the refinancing why accept any offer below, say, 7 or 800m - the amount they think it will be worth in 5 years time discounted for a few years? Surely £30-40m a year is **** all in the grand scheme of things for that level of return.

Precisely - it makes no sense. If Hicks gets Gillett on board then they are going for the full monty. Hicks wants DIC to acknowledge the potential and pay for it. It's a gamble but from what I have seen Hicks is ready for it. The main issue is settling the debt on LFC. I'm sure that Hicks only considers the broken promise to the fans as a stepstone and something he will be able to handle while Gillett is more apprehensive. What will happen when Moores goes public with his anger? Something he will be forced to do to appease the fans. Hicks just don't give a ****e. There is no doubt in my mind that Hicks has the money and the connections to carry LFC until the stadium is in place. Then he will be looking for an exit. That's his gameplan anyway imo. This is what he's telling DIC as well.

Some absolutes in my world:

1) There is absolutely NO DOUBT that G&H can refinance. ZIPP! If they want to they can do it.

2) If they do it DIC is out of the picture for now anyway.

3) They will have money to finance the stadium and to build the squad but not in a tempo that would make the average fan happy.

4) LFC would pretty much stay where it has been for the last 15 years. Trying to qualify for CL and trying to win the odd cup.

Essentially we are paying for the stagnation over the last 17 years. There are not many sugardaddys in the world of business and you reap what you sew. We haven't been nifty at agriculture for a long long time.

[bigfooty]

That Rangers thing is slightly outdated as I believe they are no longer paying A-Rod's salary. That said they are still an underperforming franchise, having one winning season in the last seven - by which I mean a single season where they won more than they lost. They've never looked remotely like contenders for the big prize.

[Lecter]

He sees only three likely outcomes:
1) Americans give in and accept an offer to sell before refinancing outcome is known.
2) Americans fail to achieve refinancing. In which case they will be forced to sell for a lower price.
3) In his opinion the most likely. Americans will get the refinancing, and will then sell.

If DIC is to come in short term it will be item 1. If G&H takes out a new loan they wont sell in the foreseeable future. Why?

Because then G&H will follow their (Hicks) first instinct and try to knock up the stadium or at least part of it before they try to sell again. Either DIC gets in before they refinance or they wont come at all. Not for the next 3-5 years that is.

Hicks ain't kidding when he says that LFC is worth a billion. He really thinks so - in 5 years time that is. If I were him I would sit tight - that is if Gillett has the money to play ball.

To refinance and then sell makes absolutely no sense imho.

I'm not sure they have the cash or willingness to make it across the finish line

No way can the club shoulder the burden of a £30-40 million loan and have an additional loan needed for a revenue stream that is 4 or 5 years away

They will have to pump in cash almost certainly to keep the club afloat, definitely if the club fails to qualify for the Champions League

IF we are to absorb takeover costs funds will be needed to be injected otherwise I cant see us competing for 4th place nevermind higher

[baz87]

Bas - how did you come up with £65m per year? £350m over 15 years would only be around £30m a year.

Firstly its baz

The loan is likely to be over 25 years, £350m @ 8% interest (it'll be around that) works out at around £28m per year and thats just the interest, then there's the actual repayments of £14m (based on 25years). So thats £42m per year, they're then going to have to borrow at least another ~£175m. Again based on 25 years and 8% interest which is another £14m per year interest and another £7m per year repayment which would make the total repayments £63m per year.

[Lecter]

That's what I'm struggling with, if they get the refinancing why accept any offer below, say, 7 or 800m - the amount they think it will be worth in 5 years time discounted for a few years? Surely £30-40m a year is **** all in the grand scheme of things for that level of return.

Putting debt on the club doesnt increase its value though

Hicks' valuation is based on future earnings when the stadium is built and all the debt is paid off until then its nowhere near realtistic

[barnes10]

Hicks and Gillett do not have the cash (there worth is tied up in assets) to cover the repayments and when the rest of the money for the stadium is borrowed these repayments will be around £65m per year. The club will only ever be worth £1bn (thats OTT too) when the ground is ready and the club will not be making enough to cover these repayments untill the ground is ready either.

Basically the Yanks are going to have to come up with around £200m of there own cash to cover these loans for the next few years (possibly another ~£10m per year after the ground too as its unlikely that we'll make £60m profit) and they simply do not have it.

not necessarily. we have much more wealth than that in players on long term contracts... two of our stars per year to be sold would cover it easily... and pat rice as our next manager wont be complaining either.

fookin yanks.

[dawmdt]

Firstly its baz

The loan is likely to be over 25 years, £350m @ 8% interest (it'll be around that) works out at around £28m per year and thats just the interest, then there's the actual repayments of £14m (based on 25years). So thats £42m per year, they're then going to have to borrow at least another ~£175m. Again based on 25 years and 8% interest which is another £14m per year interest and another £7m per year repayment which would make the total repayments £63m per year.

You forget that as you make payments your balance reduces and thus the amount of interest you pay is reduced...

My calculation on £350mm 25 years @ 8% is £32.4mm pa

On £175mm 25 years @ 8% is £16.2mm pa

[Imy]

You forget that as you make payments your balance reduces and thus the amount of interest you pay is reduced...

My calculation on £350mm 25 years @ 8% is £32.4mm pa

On £175mm 25 years @ 8% is £16.2mm pa

[Slinky Skills]

Don't know if this has been posted. Taken from the Echo today

http://www.liverpoolecho.co.uk/liverpool-news/local-news/2008/01/22/trouble-hits-liverpool-fc-owner-s-plans-for-huge-loan-100252-20379031/