Liverpool owners cap transfer spending at £20m-a-season for next five years

[Darkon]

As you pointed out the poor ****ers can't even read.

It's major scaremongering they've read "average" and turned it into cap.

The graph clearly shows that we've budgeted more than 20m a year.

It is a typical journo work, only half reading the material...

But I do have a feeling that we are moving forward currently, and I'd rather have a realistic 20m AVG transfer budget, than us spending beyond our means each year, especially with the new financial rules UEFA have put in place.

I would of course be way happier if the amount of debt we have right now weren't there, but I can't really see any realistic way that would happen unless our former owner where still in place, and can't really see how that would be any better?

[Havors]

Responses are unfair, they bought the club just prior to the credit crunch, we were crying out for new owners at the time IIRC. We're lucky that they were able to refinance at all. With the squad we have, we really should be able to manage on £20m net spend.

All I'm saying is that they are being prudent, regardless how popular that makes them. If they could afford a bigger budget then I'm sure they'd make it available. I'd rather we got our debt down instead of running the risk of going under.

at least someone is thinking with their head and not their heart! i agree with you, lets hope its sorted out sooner rather than later though.

[Neil Young]

I haven't read the whole thread because it descended into the usual farce.

Who knows anything about off-balance sheet accounting and PIKs?

[Joe King]

I haven't read the whole thread because it descended into the usual farce.

Who knows anything about off-balance sheet accounting and PIKs?

Off sheet balancing - I'm the person. Whaddya wanna know?

[pondus]

We won't be able to compete no matter what... One rule for some, another for someone else:

[Neil Young]

Off sheet balancing - I'm the person. Whaddya wanna know?

Is it likely our esteemed owners, who are apparently doing their best in very difficult circumstances which are entirely beyond prediction and their control, have put debts on the club which are off balance sheet?

And what about PIKs? I seem to remember reading as long ago as this morning (it's been a busy day) that they considered using PIKs for which the club would have had to pick up the punitive interest payments.

It was in The Guardian I think although surely by now the report has been discussed to death on here somewhere.

[Joe King]

Is it likely our esteemed owners, who are apparently doing their best in very difficult circumstances which are entirely beyond prediction and their control, have put debts on the club which are off balance sheet?

And what about PIKs? I seem to remember reading as long ago as this morning (it's been a busy day) that they considered using PIKs for which the club would have had to pick up the punitive interest payments.

It was in The Guardian I think although surely by now the report has been discussed to death on here somewhere.

Our respectable owners are unlikely to apply a transaction like OBS as the Club need as many assets as it can in order to have secured the extention this past June/July. Had the Club signed off the Club's assets, the Club would have had noticeably reduced creditors in the last financial period. According to Purslow, the Club's position has improved as they have had an equity reimbursement (PIK loan), not through any new cash flow processes.

PIK's are Payment in Kind. From my very little knowledge, the Club don't have to pay interest annually like traditional bank loans however the interest is greater the longer the Club delays it's repayments.

[Neil Young]

Thanks. The article suggests otherwise though.

Liverpool's risky refinancing option revealed

* Matt Scott
* The Guardian, Thursday 24 September 2009
* Article history

Liverpool's co-owners were ready to raise £50m in punitive payment-in-kind loans as they battled to secure the funds to refinance £350.5m of debts six months ago.

Leaked documents show that the Americans George Gillett and Tom Hicks entertained taking on the hugely expensive PIK loans, whose final repayment value would have been in excess of £100m over the five years.

The controversial PIKs were intended to boost income from a rights issue. The investment banks Rothschild and Merrill Lynch were engaged, and their prospectus drawn up in March invited investment in "one of the world's most successful football clubs", with the offer to market of a £50m minority stake.

The sums were earmarked to reduce debts to the club's senior lenders, Royal Bank of Scotland and Wachovia. Ultimately, the club's parent, Kop Holdings, achieved the refinancing without recourse to fresh equity investors.

But it is unknown how Gillett and Hicks raised the capital for that transaction and the flirtation with PIKs will spark fears among fans that the expensive debts are lurking off the balance sheet.

An alternative proposal that was not pursued was for an 8% rise in the club's average ticket price, a strategy that would have been hugely unpopular with fans at a time when other clubs had frozen or even reduced their gate fees. But an intention to sweat the stadium remains, and a plan to convert 1,000 terrace seats into a more lucrative corporate area before July 2011 is being held in reserve.

http://www.guardian.co.uk/sport/2009...l-owners-loans

Of course, there's no way the stalwart guardians of our great club would ever undertake such financial chicanery.

[Joe King]

Thanks. The article suggests otherwise though.


Of course, there's no way the stalwart guardians of our great club would ever undertake such financial chicanery.

Matt Scott has good contacts, I won't doubt him. It's a very risky move pulling OBS. Of course that depends on the assets in question.

[Neil Young]

Matt Scott has good contacts, I won't doubt him. It's a very risky move pulling OBS. Of course that depends on the assets in question.

That's reassuring. Hicks and Gillett don't seem like the type to take risks just to make a bit of extra dos...

[Joe King]

That's reassuring. Hicks and Gillett don't seem like the type to take risks just to make a bit of extra dos...

OBS is only used to improve the cash flow situation, namely working capital management, something Hicks has reiterated time and time again it is something he would like to improve. What working capital restructure suggests that these owners are here for the long term

[Darkon]

I was just thinking, that if we have roughly the same transfer budget as under our former regime, but with massive debt repayments as well, that must mean they have taken us a long way financially??

[Neil Young]

Oh FFS.

No-one would really deny they have increased revenue streams - the Standard Chartered deal shows that. The point is they're skimming off the excess to pay for their - I was going to say 'purchase' but they're not paying a penny for it - acquisition of the Club. In the meantime they're putting the Club at risk since any significant drop in revenue (failure to qualify for the Champions' League, etc.) would have potentially devastating consequences.

Call me unnecessarily risk-averse if you must. I suppose some people have stronger stomachs for this sort of behaviour than I do.

[Roboklopp]

Not to mention the increase in Premiership money, which people seem adamant to ignore.

[FatTony]

"In this game, you gotta make the money first. Then when you get the money, you get the power. Then when you get the power, then you get the titles" Tony Montana.

Seriously though, we're not going to win the premiership without some serious investment and we could even see ourselves slip out of the top 4 occassionally too, having a battle with Arsenal and Citeh. Last years close run in was more to do with Man Utd's poor form and Scolari, then our squad.

We may well secure financial stability with this plan, but we also have to accept that not having a significant transfer budget could put us deeper in the sh*t. If we lose our grip on the top 4, we will begin to lose our status in the international game, we will lose our attractiveness in the transfer market and our prized possessions will seek success elsewhere.

Its a very fine balancing act, a seesaw with EPL title battles and CL football on one side and UEFA Cup footie on the other. Money is the makeweight.