English football, financial meltdown

[J_RFC87 761]

Read a story a few months ago that Chelsea's debt is £250million.

This is really not sustainable in the long run and could lead to a lot of problems. And it's not at all in the best interests of Roman Abromovich to pap out a quarter of a billion pounds to bail them out.

Takes me onto this article:

http://www.mailonsunday.co.uk/pages/live/a...d=1779&ct=5

Fernando Torres, starting to pay back his £21million transfer fee, scored twice yesterday as Rafa Benitez's Liverpool trounced Portsmouth 4-1 at Anfield to stay in touch with the Premier League pacesetters.

But off the field, the failure so far of efforts by American owners George Gillett jnr and Tom Hicks to refinance the £220million they borrowed from the Royal Bank of Scotland to fund their takeover of the club 10 months ago is pushing Liverpool towards an unprecedented period of uncertainty.

The American owners have missed a selfimposed deadline to strike a deal with RBS before Christmas.

The bank will not allow the club to go under but the problems facing Gillett and Hicks could hasten their departure — and see Dubai International Capital, the state-backed investment firm who were in pole position to buy Liverpool before the arrival of the Americans, back in the market as potential new owners.

Adding to the intrigue over the club's future, it is understood that former Germany World Cup coach Jurgen Klinsmann has been sounded out as a replacement for Benitez.

It is believed that contact between Klinsmann and the club has taken place at a high level and the German is thought to be interested in taking over at Anfield.

Despite assurances that there is money to spend in the January window, Benitez's public rift with Hicks and Gillett over the club's transfer policy may be beyond repair.

Boardroom backing for Benitez has been lukewarm in the wake of reports linking Klinsmann with the job.

Sources close to the ex- Tottenham striker and former Footballer of the Year believe he is eager to end his self-imposed exile from football and take a top manager's job.

A move for Klinsmann could proceed regardless of whether Hicks and Gillett remain the owners of Liverpool, but the crisis in their refinancing plans threatens to undermine the club both on and off the pitch.

Despite revelations last week that talks with RBS and American bank Wachovia over a new £350m loan had stalled, Kekst, the American owners' New York-based PR firm, continued to brief that a deal would be done before Christmas.

But Friday, the last day for business before the festive break, passed without announcement and although it is understood that negotiations will continue, banking sources on this side of Atlantic believe an impasse has been reached.

Hicks and Gillett have until February to refinance the £220m they borrowed from RBS to fund their takeover, plus the interest which has accrued in the past year, the credit notes used to buy Torres and Ryan Babel, and £60m to cover initial work on a new stadium.

If they are unable to strike a deal before the deadline and unable to persuade RBS to take up the option of extending the existing loan for another year, the bank stand to become the de facto owners of the club.

This is a massive problem for Liverpool, surprisingly not getting as much attention as it should.

With a lot of clubs in the top flight in England in the same position, might be a tricky few years..

[Stardog 11]

Yeah, don't Man Utd have debt of almost £500m including the loan the Glazers took out?

[Mike Newells Sexist Army 2]

The effect it's had on the rest of English football is starting to become apparent now also. Premiership taking all the money is slowly killing the rest of English football.

Since the ITV digital deal collapsed, there's very little money about. Which is why you see the likes of Luton going into administration, Coventry only saved at the last minute, Leeds only now just about (unfortunately) getting themselves back together, Southampton and Forest in the doldrums, etc.

[CanadianGer 1]

Interesting thread, J.

With the collapse of the world ABCP markets and a general tightening of credit across the board, there are a lot of stories of big private equity firms like KKR and Blackstone struggling to restructure debt on deals. Some large US hedge funds have been wound up. Glazers' money was always reported to be from hedge funds and Gillette and Hicks were obviously on some sort of CDO. Both teams are likely to face real issues as a result.

[Del Juve 1]

Without owner's like Abromovich these clubs would basically be f**ked, would love for Abromovich to leave Chelsea at some point.Anyone remember the likes of Lazio and Parma being big names in the european cups?Now look at them.The money wont last forever