We Capitalists have warned of the dangers of leveraged finance in football clubs for a long time. When you think about it,the Premier league is akin to a poker game in a casino, one player in the poker game using his overdraft up against a Sheikh and a Russian billionaire. It takes no genius to know who is going out first.
However, the most interesting piece of news here is that no one has yet done the due diligence to see what the new owners will do. At Man Utd the new owners circumvented rules that are designed to stop companies being bought with debt raised against their own assets (they did this by re-financing after the deal). Who is to say the New England investors won't do the same?
Liverpool will then be left with debts half of what they have now, which is a plus, but will still be heavily indebted - and to American owners who have not proved a good match with Scouse fans (socialists and capitalists are never going to make happy bedfellows are they?).
Worse for Liverpool, the New England investors are not going to give Gillette and Hicks a penny, that will mean RBS foreclosing on the loan and Liverpool being docked points in the Premier League. Ouch, I look forward to the solutions suggested to get around this.
