The news yesterday that Chinese businessman Kenneth Huang was attempting to purchase Liverpool Football Club from its current owners has been swiftly followed by reports of at least 6 bids on the table for the club (should we even call it a club now, how about “franchise” or “cash cow”?). All this follows an interview given by Chairman Martin Broughton, when Roy Hodgson was appointed as LFC manager. They were expecting bids in mid-July, and would then decide on a suitable candidate. The news that the consortium that Huang represents was one of these was presumably released early in order to either generate fan interest which would in turn put pressure on the banks and the current board to sell, or to scare off other potential investors.
This offer is described as being “remarkably serious” and backed by the richest sovereign wealth fund in the China. Only you will have to forgive me if I’m not overwhelmed with joy at the prospect of another bunch of rich investors whispering sweet-nothings into LFC’s ear. Heard it before, didn’t like it one bit.
There was a time when news of a group of people from China wanting to purchase a debt that belongs to two men from America wouldn’t have been interesting to anyone. And it shouldn’t be now, only this debt and potential future earnings happen to be all that investors see when it comes to making new investments. This isn’t about the nationality of the investors either, I would feel the same if it was an English businessman wanting to buy the club. Forgive me if this sounds a little sentimental or even unrealistic, but when I was a kid growing up, to me Liverpool FC represented the kind of working class socialism that the city of Liverpool, and the North of England in general was famous for (I am not alone in thinking this). Leveraged buy-outs and debt transfers had no part in this world.
As a recent blog post by Adam Curtis explains, the availability of cheap credit and changing attitudes towards debt in general characterises the current times that we live in. As Curtis describes, the motives for this were to control the general population who were beginning to get dreams and aspirations above their station and were beginning to threaten the status quo. So the elite made available streams of credit that allowed the working and middle classes to transform their lives by purchasing products they wouldn’t have been able to otherwise. And at the same time created the illusion of real choice and real social mobility. New consumers were less interested in agitating for social change as they could/can fulfil their desires by buying new products. This propagated the current rampant consumerism we currently live with.
Beginning at the start of the 1990′s, right in the heart of this “Age of Debt”, football in England changed irrevocably. New injections of TV money from British Sky Broadcasting, and marketing opportunities first exploited by Manchester United changed the playing field. This is not a criticism of Man Utd. Many of their best players in recent history have been homegrown and they have kept faith with the same manager for nearly 24 years, but they accumulated vast riches before any other English team had realised what was happening. United were the richest team in world football for many years before the Glazers arrived with their own leveraged buyout. In order to generate the necessary funds to compete with United, other teams turned to cheap credit and stock market flotations. This money funded new stadiums, huge transfer fees and grossly inflated wages for players. In June 2003, football changed again. The huge interest in Premier League football around the world led to interest from foreign businessmen. One of the wealthiest of these, Russian oil magnate Roman Abramovich, bought Chelsea FC, a club that was on the verge of bankruptcy. Abramovich began to invest his own money into Chelsea and some of the best players and the best manager in the world arrived at Stamford Bridge. The Premier League’s global reach and audience had the potential to generate more money for anyone able to buy a football club. Any team not set-up to run as an efficient business was always going to to be unable to compete in this new business-oriented environment. Those that wanted to spend like the elite clubs turned to easy credit and spiralling debts.
Which leads me back to Liverpool. Before the economic crisis in 2007/08 credit was still cheap and available. Shortly before this economic crash, in February 2007, Tom Hicks and George Gillett Jnr borrowed as much money as they could get and bought Liverpool from the Moores family who had owned a stake in Liverpool for over 50 years. They had the sole purpose of making as much as they could from their investment. Nothing wrong with that, Liverpool FC is a business now. After the financial crash money dried up, and access to credit became difficult. The new owners faced the prospect of not being able to meet their promises of a new stadium and significant investment in the team as they now couldn’t borrow any more money. Tom and George never wanted to invest their own money in the club, when it became clear that they would have to in order to continue making the kind of profit they wanted, in April this year they decided to get out.
Leaving us here, now. The prospect of new investors with more money to spend on the team and stadium will be welcomed by many LFC fans. However for me the club will still be going in the wrong direction. And to be completely honest, I like the current emphasis on frugal purchases and young players. It may not be successful immediately but it is sustainable.
If the big name players decide they want to go somewhere else in order to win trophies then let them. Will more cheap money being waved under our noses mean that we forget what we wanted in the first place? Are we that easily deflected from what is right by the prospect of more cheap credit?
The ideas of supporters unions and fan ownership of teams has to be promoted if we want any real change. Frankly I would rather be Bayern München than Manchester City, or Barcelona instead of Chelsea. It is the right way to run a football club, and as I wrote here has beneficial effects on the national team. Even if there isn’t enough money to buy LFC outright a significant percentage of the team is possible. This would be enough to stop the kind of leveraged buyouts that got us in the trouble we are in now.
In 1992, BSkyB changed football, in 2003 Abramovich changed it again. How about in 2010 Liverpool FC change it one more time? As much as I wish it would happen, I seriously doubt it will. As always money talks, and those with the most have the biggest say. There is no reason to trust one set of wealthy investors over another. The current ones have proven to be unreliable and acted in their own interests. I would be surprised if the new owners, whoever they may be, were any different.