Football Economy roundup - Liverpool FC, Portsmouth FC rescued from financial troubles

The last month has finally seen the end of the long drawn out sagas at both Liverpool and Portsmouth, no doubt to the relief of fans at both clubs.   They can now look forward to a more sustainable future.

The end game at Liverpool was nothing if not dramatic as Tom Hicks and George Gillett tried to retain control of the club.   When the board they had appointed chaired by Martin Broughton to sell the club decided to accept an offer from New England Sports Ventures (NESV), the owners of the Boston Red Sox, they tried to replace the board with their own nominees.

Having failed in this ploy, they then tried to block the sale in the High Court in London.  Given the restraints of judicial language, the judge was quite forthright in his condemnation of their conduct.   They then got a court in Dallas to intervene, but this desperate last throw of the dice also failed.

Hicks and Gillett have portrayed themselves as victims of an ‘epic swindle’ and a plot by the British establishment.   Their failure to keep the promises they made, and their lack of involvement with the club, enraged Liverpool fans.   The former owners have said that they will sue Royal Bank of Scotland and others for a $1.6 billion in damages, although quite how this sum is arrived at or what the basis of the claim is remains unclear.

At the Red Sox, NESV have had considerable experience and success in turning round an historic brand that had somewhat faded.  Their rivalry with the New York Yankees has a parallel in Liverpool’s rivalry with Manchester United.

NESV are not going to splash the cash, but intend to take a long, hard look at the business and see how it can best be developed.   One difficult decision on which they have an open mind is the stadium.   Liverpool loses out in relation to Manchester United because Anfield lacks the capacity of Old Trafford so gate revenue is far less.   Above all, Anfield lacks corporate boxes which can be a big revenue earner.

Not all Liverpool fans wanted to leave Anfield and one option is to re-develop and refurbish it which is what happened at Fenway Park.   However, this would mean closing the Main Stand for at least a season with a consequent loss of revenue.   The new stadium in Stanley Park would be less disruptive, but also more expensive.   The possibility of a stadium share with Everton has been ruled out.

It is likely that the owners will increase seat prices as they did at Fenway Park.  They have a good record in maximising merchandise revenue.    Expect to see jerseys celebrating the Red Sox and Liverpool, teams which are united by the passion and dedication of their fans.

Portsmouth also has a very dedicated fan base.   Under successive owners, they have had a very difficult time.    For one weekend in October it looked as if they might be liquidated.  A statement to that effect on the club website alarmed many fans.    There had been difficulties in reaching agreement with former owner Sacha Gaydamak on compensation for land surrounding Fratton Park.

If the statement was intended to concentrate minds, it had that effect and by the end of the weekend Portsmouth was out of administration.   Former owner Balram Chainrai has taken over as chairman.   The new owners and fan organisations are agreed that what is needed is a sustainable business plan for the future.

Sheffield Wednesday is the latest club in trouble.  They face a winding up order in the High Court on November 17^th over an unpaid tax debt of £600,000.   Potential new investors have been hovering around for some time in the form of a Dubai-based oilfield services company.   However, for whatever reason, actually sealing a deal has not been possible.   Various supporters’ groups have come together to form a ‘Save our Owls’ campaign which is attempting to raise money to help pay off the tax debt.

Perhaps the club is in greatest danger is Dundee who went on a spending spree last season, encouraged by a benefactor who turned out not to have pockets as deep as were thought.  They failed in their bid to win promotion to the Scottish Premier League and entered administration with a large tax debt and what the administrator has estimated as a 50-50 chance of survival.   One bid came in from Italy from a former director who made it clear that he thought the fans lacked expertise and credibility, but they responded by exploring their own bid on the model of Stirling Albion.

Blackburn Rovers is set to be the first Premier League club to be owned by an Indian firm as the bid by chicken industry and pharmaceuticals giant VH Group nears completion.   The Rovers chairman John Williams told the club's website, 'Both parties are hopeful that the transaction will be completed in November.'  The process of due diligence has begun.

Sports agency Kentaro is part of the bid.    The worldwide agency specializes in the acquisition and distribution of the international television rights of national football federations, football clubs and leagues.   Last year they completed a corporate partnership deal with the highly regarded Sport Entertainment and Media Group.   SEM represents more than 150 professional footballers and clubs in Europe's top league.  If the deal goes ahead, they could use Blackburn as a way of introducing some of their top foreign talent to the English game.

Indian tycoon and rival bidder Ahsan Ali Syed has not given up on his efforts to buy the club and is not entirely out of the picture.   However, doubts were raised earlier in the year about the assets he had at his disposal.    Rovers fans seem to prefer the new bid as more credible.

The prospect of the new Uefa financial fair play regulations which come into place next season is increasingly concentrating the minds of new clubs.   It did not deter Manchester City, which has a wage bill in excess of the club’s turnover, from contemplating paying Wayne Rooney £200,000 a week.

Nevertheless, Chelsea has called for a cap on players’ wages.   Such a move would probably have support from fans that see their wages being held back in the recession.

Once again it is non-league clubs who have been taking the biggest hit from the downturn.  The prime minister used his weekly question time to praise the phoenix club formed by supporters at Ilkeston Town, but now it is the club that plays in the Queen’s back yard, Windsor and Eton, that is in trouble.  The Royalists, who play in the Zamaretto Premier League, have been unable to pay their tax debts and have asked fans to bail them out.

Wyn Grant is a regular contributor to Albion Road and also the publisher of footballeconomy.com, a website covering the business and economy of the game of football.