Football Inc: Liverpool FC, Debt and Winning

It is considered an icon in the football world, but like all icons, rustiness can set in. Lack of attention can induce wear and tear. While Liverpool FC might be considered one of Europe’s most successful teams with an astonishing pedigree, it has a considerable handicap in the form of a burgeoning debt. Enter then, the financial white knight in the form of Boston Red Sox owner John W. Henry. The Liverpool board agreed on Wednesday to sell the club to Henry’s New England Sports Ventures (NESV) group, which promised ‘the resources to build for the future, including the removal of acquisition debt’ (Guardian, Oct 6).

The language of debt reduction here is the language of victory on the football pitch. One, it seems, entails the other. By squaring the accounts, the promise has been made to ‘bring back the culture of winning’. The NESV statement is exultant with the language of victory. ‘Our portfolio of companies are all committed to the one common goal: winning.’ Yet time and time again, we see that victory on the field is no guarantee for financial health off it. Henry, it seems, has confused a victorious boardroom with a victorious dressing room. The two don’t often mix, despite Henry’s efforts behind the Red Sox’s first World Series win in 84 years.

The agreement has not gone down well with current owners Tom Hicks and George Gillett. They are crying foul over the amount being offered. Under the proposed arrangements, debts shall be repaid to the Royal Bank of Scotland, costs associated with the construction of a new stadium in Stanley Park and an assortment of other liabilities. The crux of the matter is that Hicks and Gillett will be left short of receiving the money they themselves put into the club, totalling some £144 million in loans.

The issues Liverpool face are not unusual in the football world. Where there will be money, debt shall follow, even if trophies are gathered and fans satisfied. Star clubs are beings of credit rather than agents of thrift. Earlier this year, UEFA released a report showing how the accounts of England’s Premier League have veered markedly into the red, constituting over 50 percent of Europe’s foot balling debt. The debts between Liverpool and Manchester United alone come to £1 billion.

Second in the debt-ridden stakes comes Spain’s La Liga. The club with unarguably the most enviable European record – Spanish giant Real Madrid – has not been exactly prudent with its books, needing a good share of friendly support in the form of banking loans. Even Barcelona, Real Madrid’s age old rivals, could only boast a debt last year after sweeping all before it, putting pay again to the victory philosophy of Henry’s NESV group. A return of 8.8 million Euros is hardly an impressive return next to a debt of 350 million. The situation is replicated in most big named Spanish clubs, many of which are servicing mountainous debts. Such a dire situation has made a few pessimistic and funereal in outlook. ‘La Liga’, observed José María Gay, one of Spain’s experts on football finance, ‘is dying’ (Guardian, Mar 28). Despite this, the sporting victories for the major clubs continue to mount.

The English football market, while it has rapidly severed its roots to the small club in favour of a money drunk corporatocracy, has become a boutique, frequented by a globally based clientele less keen in football than the idea of ‘winning’. It is not merely players who are being acquired as performing exotica. Billionaires the world over are seeking a slice of England’s Football Inc. Clubs are up for grabs. But the paradox remains that finely balanced books provide no guarantee for a packed trophy cabinet. That truth has eluded Chelsea FC’s Roman Abramovich on more than one occasion, as it may well elude Henry.

Binoy Kampmark was Commonwealth Scholar at Selwyn College, Cambridge. He lectures at RMIT University, Melbourne. Email: bkampmark@gmail.com

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