October 27th, 2010 by SeveSanchez
I feel old. A recent birthday will do that to you, especially when you hit a milestone year (if my life was a marriage, I’d be blinging in all sorts of silver gifts). But I’m too young to be feeling nostalgic about the Premiership. I can’t really whine, “when I was your age” because I probably am your age– or younger. Yet so many things in English football have moved incredibly quickly while certain aspects, especially for Liverpool supporters like me, haven’t changed nearly fast enough. In short, it would be difficult to disagree with the notion that the last 8 years or so have reinvented, expanded the arena in which club football competitions are won or lost.
Take me back to days before it became fashionable for billionaires (and wannabes) to buy up football clubs and construct sickening squads of star power. Before 75,000 seater-stadia grossed extra cash at the expense of architectural character. Before ridiculous wage offers trumped personal ambition. Before marketing wars and licensing rights maneuvered for global position. Before Cristiano Ronaldo declared himself a slave. And so on.
But wait, I must restrain myself . Journey too far back and I might become complacent with the historical successes of my own team, Liverpool. I might forget that a football club must operate like the billion dollar corporation that it is, and just remember the good ol’ days. Of course, you couldn’t blame me, could you? These are strange times enveloping Anfield– ones that any redblooded fan might wish to ignore. But like it or not (honestly, I hate it) the crisis has arrived and deserves immediate scrutiny.
Quick note here. Although I write as if everything on Merseyside had been peaches until recently, the truth is that I haven’t the time nor the heart to rehash the steady decline of the club since 1990 (our last time atop England). Feel free to take your pick among Hillsborough and the European ban, the departure of Dalglish, the arrival of Souness, the Spice Boys culture, or the rise of Alex Ferguson. There’s no denying that there have been serious underlying issues but for the sake of our tale let’s jump in at 2006.
Why? Because I believe it’s at this very moment we can pinpoint the cardinal reason for Liverpool’s most recent plight. (SPOILER ALERT: it’s pretty much an issue of ownership).
It’s the end of the 2nd year at Liverpool for Rafa Benitez. Although his initial league campaign was rough, finishing a distant 5th, winning the Champions League via the greatest comeback in Finals history planted Liverpool firmly among the competition’s elite (something confirmed by Steven Gerrard’s decision to stay with his boyhood club). And Rafa followed that up in his sophomore season finishing a respectable 3rd on 82 points and winning the FA Cup via another dramatic late show.
Away from the pitch, things got Franck Ribery ugly though. Sometime in 2006 then-chairman and majority shareholder David Moores picked up steam in his quest to sell the club. While Moores was never known for his loose wallet (or neckties), he’d soon be made to look like the Monopoly man, or at the very least as affluent as the Planters Peanuts guy.
Enter George Gillett and Tom Hicks on February 6, 2007 as new owners of the club. I don’t recall the day but perhaps my mind has since repressed it as one might a painful childhood memory. (EDIT: It was a Saturday, I was 21, and in college. I now suspect I might not remember it for entirely different reasons…). That was the day that set Liverpool back approximately 4 years.
Okay, time for our second timeout. I know I’m not exactly breaking fresh ground (pun intended, to be explained soon) heaving the brunt of the blame on G + H. In fact, doing so has become the third most popular activity among Liverpool fans right after posting angry comments on internet forums and watching old Fernando Torres highlights. But there’s really no way to spin the fact that the club has only known pure heartache and zero trophies since the two cowboys took charge. Yes, the run to the 2007 Champions League Final was lovely, as was the arrival of the the boy Torres, but we’d soon learn that these were nothing more than blips on the radar– ones which masked a serious unraveling of the club’s stability.
Now I’m going to deliver the abridged version of what happened behind the scenes as quickly as I can to minimize the bitterness seething in my account. Bear with me and remember that I’m no economist, so we’ll both have to take everything at face value. (Perhaps the one amusing thing in this whole Liverpool sale situation is how football analysts and pundits have suddenly become finance experts– you wouldn’t go to Stan Collymore for investing tips [unless you're buying stock in beating your missus], so why listen to him now?).
At the onset of the American ownership, G + H made three critical promises: to build a new stadium (aforementioned pun explained), not to borrow against the club, and to inject fresh capital into the transfer budget so that Rafa could buy whoever he wanted. The entire club, administration and fans– myself included– found themselves so enthralled by these marvelous claims that we never questioned the deepest motivations of our new owners. We fell in love with their sweet talk, and like many a teenage townie, never realized that we were getting used until our heart was broken. In some ways, maybe it was all our fault for hearing what we were so desperate to hear.
Perhaps it had been the Americans’ intentions to honor the three promises, but thanks to the global credit crunch we’ll never know. When the economy hit the gutter, the downfall escalated faster than Milos Krasic in a penalty box.
See, essentially the Tom Hicks business model is based on 1) borrowing money then 2) paying back the interest when the value of the collateralized asset (Liverpool) increases significantly and 3)eventually selling the asset and paying off the debt to still walk away with a massive profit. It’s never an ideal plan, but had things sailed smoothly then Hicks would’ve sought to increase the value of the club with a new stadium and title-contending roster– both positive steps for the club.
Of course, as the economy faltered the lenders called in their loans. All the banks that G + H had wooed now wanted their money back and grew stingy with the extensions. With their hands tied, the Americans refinanced too soon and piled more debt upon more debt. Sometime during this period they also directly broke their promise and borrowed against Liverpool. Naturally, all plans for a new Anfield went out the window. And yep, you guessed it, bi-yearly transfer budgets shrank like decaffeinated Colombian coffee crystals. Three promises up, three promises down.
And while I claim that all of these ills came as a result of the owners having no options, that isn’t true at all– not by a long shot. All they had to do was sell. There were so many chances for G + H to do the right thing, cut their losses with Liverpool , and sell to an owner with a more stable financial plan for the club. Hell, how about Moores and former executive Rick Parry actually completing due diligence in their decision to find a buyer, seeing as DIC got snubbed for the Americans? And how many names of potential bidders and investors did we hear tossed around in the last 3 years, only to have Old Man Hicks rattle off some form dismissal about “not meeting the valuation of the club?”
If we’re to believe the reports then at some point George Gillett did want out. Tom Hicks, however, was determined not to leave until he made his profit on the club. But this is unconfirmed speculation. What is certain is the duo’s quite public falling out first with each other, then with the club members, and finally with the fans. They stopped speaking to one another, stopped coming to games, had broken all three of their promises, and generally aired their dirty laundry for all to see. It became evident that their tumultuous reign was built upon deceit, a lack of respect for the traditions– both of success and comportment– of the club, but above all, it was founded upon the principles of greed. When times got tough they were going to get theirs, no matter how much it damaged the structural integrity of Liverpool FC. They turned out to be nothing more than deadbeat homeowners, treating their house like a decrepit meth lab.
Timeout #3. Understand how difficult it’s been to be a Yank fan of Liverpool during a period of self-destruction instigated by two American owners. While not every Liverpool fan is as idiotic as the ones that burned the American flag a few months ago, the phrase “Yanks out” and much worse anti-American sentiments have been widespread and essentially encouraged since the onslaught of the G + H fiasco. Look, I can definitely sympathize with the frustration, but such an attitude is not only culturally insensitive but also damaging from a business perspective. You can’t afford to alienate the American market in a time when you need all the profit you can muster.
I don’t know the numbers, but I can tell you what I’ve seen here in the United States. (Stop me if you’ve heard me say this before). Four years ago in the monthly Eurosport magazine Liverpool and Manchester United each had almost equal spreads of merchandise; now it’s United and Chelsea with full pages of gear and Liverpool kits are crammed on the same page with Rangers. Four years ago every Liverpool game in the Premiership was televised, now I’m watching far too many of them on delay as Spurs and City matches get network priority. God, how I hate the 21st century.
But back to the the G + H saga. Despite their decaying administration of the club, Liverpool goes on to have a terrific 2008-2009 season. In a word it was… fabulous. Liverpool were playing good football, getting results, and we all forgot a little bit about the crummy ownership situation. But in spite of all the last gasp comebacks, topping the Big Four mini league, losing only 2 games, boasting the best goal difference in the league, doing doubles over Chelsea and Man United, and finishing second on 86 points, Liverpool was hanging by a thread.
For all the good breaks and positivity flowing in the 2008-2009 season, Murphy’s Law ruled the following season. (That Murphy is a #*$&%*). Freak goals, freak injuries, you name it and it happened to Liverpool. It appears it takes years to construct a title-contending team but only a handful of months to destroy one.
And you know what the first casualty of an awful season is? Innocence confidence. It’s also the greatest. Perhaps it’s no wonder Torres went into the World Cup as enthusiastic as a sack of tapas. And the lack of belief currently manifesting itself on Merseyside this season– yup, also fallout from last year.
Now if you’ve been a clever girl, you’ve noticed my glaring omission of a major figure in these turn of events. Mr. Rafa Benitez.
For the most part, he performed magnificently. He worked diligently and tirelessly, making the most of limited transfer kitties and an eclectic squad. From his first match with the Reds to his last, he kept the club a knockout specialist within Europe. Rafa never lost his faith despite the owners (whom he constantly battled) publicly brandishing Jurgen Klinsmann over his head. And he always observed the holiest of traditions of the club. Hell, to this day he continues to donate to Liverpool charities and foundations as the boss of Inter.
But even Benitez had his faults. He was stubborn, domineering in his management style, and took advantage of disinterested owners/a nebulous hierarchy to score himself a ridiculous 5-year contract that gave him czar-like executive control of the squad. For as patient and skilled a manger that he was– and yes, I think he will return triumphantly to Liverpool one day– he bit off more than he could chew. When the 2009-2010 season soured so horrifically there was no way to cleanse the club of its failures without a regime change. And Rafa also expressed his unwillingness to tolerate the fallacious behavior of G + H, meaning it was time to say adios. Okay, I suppose am wearing something of a “Team Rafa” T-shirt, aren’t I?
Enter Roy Hodgson. If only I hadn’t already used the expression “biting off more than he could chew!” So Roy takes the reins, and this season picks up in the same miserable spot where the last one ended. Worse really, with Liverpool in the bottom three of the Premier League almost a quarter into the year. And if you somehow found a way to watch the games, the funk has looked officially depleted.
But while the results have maintained a nice congruity of awfulness, the mentality has drastically changed… It all comes down to poker theory, which relates to 98% of everything else in life. (Someone should really write a book about that). There’s an expression in cards called “going on tilt.” When you lose many chips in a big hand and get all red-faced and emotional– that’s tilt. When you immediately size your next bets too high in an attempt to recover your “lost” chips– tilt.
My buddy Louis was a master of this in our late night sessions in college. If he lost a major hand, he would immediately flood the subsequent pots with aggressive handfuls of chips. Also, he’d proceed to chug all of the beers that were supposed to last the whole table for the night. Also, he’d sweat, but to be fair, he was about 6’6 and 280 at the time and I purposely kept the room like an oven. Sure he won his share of games, but he’d probably have won all of them if he could’ve prevented himself from going on tilt. It’s not just Louis though– it’s human nature.
Your mind grows accustomed to a certain level of chips at your disposal, so when your stack takes a drastic hit you’re mentally still playing as if you had many more chips. And of course, any competitive person feels horribly embarrassed when they lose. When you’re on tilt, to avoid making more mistakes one must rid himself of emotion and adjust his playing style to his new stack size.
So when Liverpool endured a horrible start to the 2009-2010 season follwing a terrific campaign, the club essentially went on tilt. It still believed it was a dominant title contender and continued to approach their matches as such. Frustrating results escalated emotions, and both of those things only worsened the situation. Liverpool finished 7th and Rafa went.
But there’s also such a thing as overadjusting when you’re on tilt. You can bet too small and get overrun in every pot until you bust out… Liverpool adopted the mentality of a mid-table side and hired a mid-table manager in Hodgson. Liverpool began to play down to the level of teams that have never tasted a European Cup Final, yet alone won 5. Unsurprisingly, when you start making inferior teams feel like they belong on the same pitch as you, they’re going to begin taking points from you. Sadly, I feel this overadjustment makes it impossible for Hodgson to remain at Liverpool much longer, especially given the latest change in ownership.
The truth is that Liverpool were flattered by the 2008-2009 season, but they aren’t a mid-table team. They’re better than the type of team that Hodgson is adept at managing. Entering this season, Liverpool should have been a strong contender for a Champions League spot and adopted a competitive approach for such, no more no less.
But hold on a second, how do G + H fit into all of this? Finally an easy question. Let’s return to the behind-the-scenes running of the club.
In April 2010 G + H appoint Martin Broughton as chairman to oversee the sale of Liverpool FC. The creditors, Royal Bank of Scotland, were not blind to the massive debts and could see the path the American were trodding down. They demanded a change in the board, with the two owners being joined by Broughton, Managing Director Christian Purslow, and Commercial Director Ian Ayre. (A special shout out to former board member Hicks Jr. who sent the email equivalent in vulgarity of a Brett Favre text to an irate fan– resulting in his firing). RBS gave the Americans until October 15 to sell that club ipso facto repaying their loans.
I know Purslow, initially hired to find investors, mucked around with a minority offer from The Rhone Group which was flatly rejected by G + H. Many have used this as an accusation of incompetence, along with the firing of Benitez to paint a portrait of Purslow as nothing more than a sycophant to the Americans– but I like to believe otherwise. Maybe Purslow knew the Rhone offer wouldn’t be accepted, and thereby blocked G + H from falling into the debt that would eventually force them to sell. Maybe he knowingly took that wrath from the fans to prevent G + H from prolonging their stewardship of the club. Could be the optimist in me, but more on this a little later.
I know even less about Ayre, but again, more on this in a second.
That Broughton though, what a legend. How ironic that it would take an admitted Chelsea fan to save the Reds. As per the terms of RBS, he had control of the 5 member board that could approve a sale. He held the cards, and unlike when G + H where in that position and put their own greed ahead of the best interests of Liverpool, he made good on his promise. Earlier this month when New England Sports Ventures came calling, he said, “Alright then guvnahs, fancy a spot a tea then, yeah?” (Every Englishman has said or will utter that phrase at least once in his lifetime– bet you a quid).
The majority of the board (guess which two dissented) agreed to sell the club, debts and all, to NESV for £300 million. I’m still not certain about the intentions of Ayre and Purslow, but I know this. When push came to shove they voted to do the right thing and approve the sale to NESV (for which I will never forget them).
Considering that price was about £200 million short of what the Americans were holding out for, they predictably sought to remove Ayre and Purslow from the board to block the sale. They also tried to get a restraining order in a Texas court to stop the transaction, both of which ended with the High Court telling them to “quit playin.” The sale became complete on October 15, 2010– my 25th birthday. Those three and a half years which felt like an eternity had come to pass.
Gillett and Hicks are currently suing the board for damages for a ridiculous amount of money, and they will lose. They’ve got nothing, they dug their own graves, and more than anything they’ve come across as pathetic scumbags. My guess is we’ll never hear from them again. Or maybe that’s my wish– ever since Liverpool changed owners it’s been difficult to separate my dreams from reality.
NESV, headed by John Henry and currently at the helm of the Boston Red Sox, now calls the shots. If you want to learn more about them, there’s plenty of info available online. Wiki, Soccernet– have a blast. I can’t predict the future, just as I never saw the collapse of G + H in 2007. But what I do know is that if NESV brings the same success to Liverpool as it did to the Sox, then they’ve already won me over. And I have no choice but to trust NESV and pray that they succeed where their compatriots failed.
What all of this mess has made clear is that in order to do so, the owners of a club require either a pile of money or an impeccably sound business model. NESV must build a new stadium, which they have enthusiastically promised to do (or renovate Anfield at the least). They must boost revenues and commercial interests, something they’ve shown ambition for by retaining the services of Ian Ayre. And they must inject cash into player acquisitions, another area they’ve assured the fans will not go neglected. Frankly, they must make good on the three vital promises broken by G + H, and must do so without accruing copious amounts of debt.
Achieve this and the results on the pitch will follow. That’s the only truth I believe in these days when it comes to football operations. A lot of people have asked me “what I think” about the sale of Liverpool, and I simply don’t. I mean, the new owners can’t be any worse than H + G, so by simply buying the club it’s already a definite improvement. How much so remains to be seen. I’m optimistic, but forever cautious of promise$ now. And if you want to know what I’ve learned through this whole ordeal, here it is:
While footballing philosophies and productive academies used to prevail in the English game, today’s globalized Premier League is driven by finances. Assemble and sustain an elite squad with a top manager and you protect yourself from going too far on tilt, from the freak goals and injuries, from the dips in confidence. You can assure a campaign like Liverpool’s 2008-2009 season and avoid the pain of 2009-2010.
There’s no use crying about it. You gotta have money to realistically compete in the Prem. Will your team flounder in debt or will your team evolve? And how? Will it it go the Daddy Moneybags route with a loaded billionaire cutting checks like butter? Or will it go with the more subtle stability model? I know which direction my Liverpool is going. I hope. I can’t handle any more aging.Tags: Benitez, Gillett, Hicks, Liverpool, NESV