The parlous financial position at Liverpool was underlined today when accounts were released showing the club £350m in debt. The figures covered the year to 30 July 2009, so included Liverpool's relative success last season, yet still the club recorded the biggest loss in its history, £55m, having paid £40m in interest on its loans.
The bulk of the loans, owed to Royal Bank of Scotland and Wachovia, are the borrowings originally made by the two United States owners, Tom Hicks and George Gillett, to buy Liverpool in the first place, which they then imposed on the club to pay off. The accounts detail how impatient the banks have been for the debts to be reduced; Liverpool were formally due to repay the £250m owed on 24 January this year and the banks extended that loan by only six weeks, to 3 March.
Since then, following further negotiations with the banks, Hicks and Gillett agreed to sell the club, and a chairman, Martin Broughton, was appointed to get a sale agreed. The banks extended their loans – which the club says stand now at £237m – until the sale, which Broughton said today will be "a matter of months".
The club's auditors, KPMG, summed up that Liverpool are now "dependent on short-term [bank loan] facility extensions" until investment arrives and for the second year running raised a stark warning about the club's financial health. "This fact indicates the existence of a material uncertainty which may cast significant doubt upon [Liverpool's] ability to continue as a going concern," they said.
It is understood that the Premier League last month sought detailed reassurances from Liverpool that it does have the backing from the banks to fulfil its fixtures next season and not go bust.This debt-laden, loss-making predicament is not what Hicks and Gillett were promising when they bought the club for £174m in February 2007. Hicks promised that work on a 70,000-seat stadium in neighbouring Stanley Park would start within weeks, but the pair made the club responsible for paying their own borrowings, and failed to raise money for the stadium project.
Since July 2009, the date of these accounts, Liverpool's position can be assumed to have worsened, although commercial deals, including sponsorships, have improved. Last season Rafael Benítez's team, featuring Steven Gerrard and Fernando Torres in devastating form, finished second to Manchester United in the Premier League and reached the quarter-finals of the European Champions League, where they were knocked out by Chelsea.
The club's income went up from £162m the previous year to £185m and it said "a large part of this increase" was due to Premier League TV and merit payments for finishing second. Liverpool received £20m from Uefa for their run in the Champions League and made around £7m more from hosting the European matches at Anfield. This season, having been knocked out of the Champions League in the qualifying round and finishing below fourth in the Premier League, Liverpool's income will be significantly reduced. Next season, with no Champions League football Liverpool will again miss out on the £27m made in that competition in 2008-09.
Despite these figures, the worst in Liverpool's history, Broughton said today that he will achieve a sale "in a relatively short period", so the club will not have to sell its star players. "There's absolutely no reason to sell either Torres or Gerrard," he said.
"I don't want to sell either of them; Rafa doesn't want to sell either of them. We don't need to do it to pay off any debt."
