Liverpool Win a Reprieve from Their Crushing Burden of Debt
by Brian Phillips · January 6, 2009
Liverpool owners George Gillett and Tom Hicks have been granted a six-month grace period by their creditors, Royal Bank of Scotland and Wachovia, to repay around £350 million in club-related loans that were originally due on January 24. This followed a written request from Gillett and Hicks, whose “just a couple of hardworking billionaires” routine presumably made their loan officer look down for a moment, his brow creasing, until he suddenly blurted out: “Look, I’ve got a couple of kids myself.”
There are still a lot of uncertainties surrounding the debt, according to the Guardian:
The Anfield club are currently the Premier League leaders but with £30m in annual interest repayments required, the supplementary income from Champions League participation is critical to their business. By July, Liverpool hope, those revenues will be guaranteed.
Although this provides breathing space in the short term, it is unclear how RBS-Wachovia will deal with the loan in the summer. The loan currently earns little more than 5% a year in interest, despite the risk involved with football clubs. City sources expect that even if RBS-Wachovia agree to renegotiate the debt in July they are likely to demand a very large fee, which will further increase Liverpool’s indebtedness.
In other words, there are some dark clouds on the horizon for the club even if they win the league this year, especially with George Gillett’s personal fortune bleeding out all over the floor in the ongoing economic downturn. It will be interesting to see what comes of this. The new stadium is looking further and further away.
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