Saturday, October 9, 2010

Sale Could Be Put Off By 9-Point Penalty

The prospective new owners of
Liverpool could be discouraged
from buying the club if next
week's court action fails to force
the deal through and the club is
then placed into administration,
incurring a nine ‑point penalty
from the Premier League.
Sources close to the Liverpool
battle said the loss of nine points,
which could sink the team into a
genuine relegation battle, would
mean "the economics of the club
are devastated", and New
England Sports Ventures might
reconsider its position.
It was previously thought that
the Premier League would not
deduct nine points, its penalty for
clubs which go into
administration, because the
holding company would be in
default, not the club. However it
emerged yesterday that the
league's chief executive, Richard
Scudamore, believes that the
holding company's
administration cannot be entirely
separated from the club, and the
nine-point penalty would apply.
NESV is not commenting on the
Liverpool situation until it is
resolved. However, it would be
natural, when considering its
position, for the consortium to
take account of the dramatically
changed circumstances Liverpool
would be in if the club lost nine
The penalty could be imposed
next Friday and, with no further
Premier League matches having
been played, Liverpool would be
bottom on minus three points,
eight points behind the two
clubs immediately above, Wolves
and West Ham United, and nine
points from safety.
That would be a huge setback
for a club still aspiring to be in
the top four, not fourth from
bottom, making it almost certain,
at the very least, that they would
not qualify for the Champions
League for the second successive
season. Financially, that would
have a major impact, and
relegation a catastrophic one, so
new owners might have to
contemplate spending more than
they planned on new players in
January to ensure Premier
League survival.
NESV, which owns the Boston
Red Sox, has concluded a deal
with the Liverpool chairman,
Martin Broughton, to buy the
club, a takeover which the
Premier League approved in
principle yesterday. However the
consortium, and its majority
shareholder, John W Henry, must
wait to see whether a high court
judge is prepared to declare that
Broughton does have the right to
sell the club, against the
unwavering opposition of the
current owners, Tom Hicks and
George Gillett, who are fighting
to get some money from their
exit out of Liverpool.
If Broughton's court action fails,
the £237m owed to Royal Bank
of Scotland by Hicks's and Gillett's
Liverpool holding company, Kop,
falls due next Friday, 15 October.
Hicks and Gillett, under financial
pressure in the US, are expected
to fail to pay, and RBS is currently
believed likely to put the club into
administration, although the
scale of the damage that could
do to Liverpool might cause the
bank to reassess.
"Going into administration needs
to be avoided at all costs, as the
negative impact would be
catastrophic," Broughton said.
"Setting aside the nine-point
deduction, it would have an
impact on Liverpool's value and
be wide open to predators,
whereas we have what we
believe is the right new owners
to take the club forward."
The whole prospect of NESV
reconsidering its position
dramatically increases the
importance for Liverpool of
Broughton succeeding with next
week's court action. He will ask
the judge, crucially, to declare
that as the chairman, he had the
sole right to appoint and remove
directors, so keeping his majority
on the board, with the managing
director Christian Purslow and
commercial director Ian Ayre. On
Tuesday, Hicks attempted to sack
those two and replace them with
his son, Mack, and Mack's
assistant, Lori Kay McCutcheon.
Broughton will also ask for a
declaration that Hicks and Gillett
cannot block the deal because of
undertakings they gave RBS not
to obstruct a "reasonable" sale.
Hicks argues the deal, which will
pay him and Gillett nothing,
"dramatically undervalues"
Liverpool, so he is fighting to
hold out for another deal
offering more money.
If Hicks succeeds, Liverpool are
expected to be put into
administration on Friday, then
for RBS to sell the club to NESV
for £200m. Yet that would be up
for negotiation, and a nine-point
penalty could severely affect the

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