Henry, Hicks & Gillett | Liverpool’s Finances

Henry, Hicks & Gillett | Liverpool’s Finances

Traditionally football clubs weren’t
renowned for making money, but with the influx of additional commercial and
broadcasting revenues, Premier League clubs are now largely recording profits.
This has attracted interest from overseas investors and, very recently,
this interest has often come from China. Reports have linked one such Chinese
conglomerate, Everbright, with the potential takeover of Liverpool Football
Club. Liverpool’s Chief Executive, Ian Ayre, has repeatedly stated that the club is
‘not for sale’, but to assess whether Liverpool could benefit from a takeover
we need to examine their recent and current ownership. The club are currently
owned by John W Henry’s American company, Fenway Sports Group, but to put his
tenure in context, here’s a brief history of their previous owners, the Americans, Tom Hicks and George Gillett. Hicks and Gillette bought Liverpool in 2007 for £218,9
million pounds. They paid £5,000 pound per share, a Hundred and Seventy
4.1 million in total and 44.8 million to assume the club’s debts. Throughout the
process the pair reassured fans that there was no debt involved in their takeover
and that they weren’t doing a ‘Glazer’. This was untrue. Their leveraged buyouts saw them borrow a hundred and seventy 4.1 million pound to buy the shares. 11 million to
pay the banks and advisors. 44.8 million to absorb the club’s pre-existing debts
and 70 million with a view to building a new stadium and to cover the general
running costs of the club. They bought the club without spending any of their
own money and despite paying a further 35 million pound in design and
administrative fees on their stadium plans, it was never built. In 2010 it was revealed that the holding company,
Kop Holdings Limited, that Hicks and Gillett set up to buy the club, was 350
million pound in debt. By the end of their tenure it was reported that they
were paying 30 million pound in interest fees alone on their debts a year, close
to a hundred thousand pound a day. For this reason, their average net spend on
transfers in those three years was only 10 million pound per season. They took
the club to the brink of administration and were taken to the High Court by
their main financiers the Royal Bank of Scotland and forced to sell the club. In
2010, John W Henry and FSG paid 300 million pound to become total
shareholders of the club, pledging to operate in a sustainable manner.
Throughout their tenure all borrowing has come in the form of interest-free
loans directly from the owners. In this period they also converted 69 million pound of
that debt into equity, money that the club will never have to pay back. Unlike
Hicks and Gillett, FSG has injected large amounts of its own money into Liverpool. In May 2015 the club recorded a 297.9 million pound turnover for the 2014-15
year. 16.5 percent up on the previous year and 61 percent up since their
takeover. A Hundred and 22.6 million of this
was broadcast revenue, 21.5 percent up on the previous year and fifty-four percent
up since their take-over. A Hundred and 16.3 million was commercial income, 12 percent up on 2014 and eighty-seven percent up on
2010; and finally Matchday income was 59 million pounds, 15.9
percent up on 2014 and thirty-eight percent up since 2010. They
also recorded a 60 million pound profit for the year, the highest of any Premier
League club, and it was only the third time the club had done so since 2004,
although it should be pointed out that this was largely to do with the sale of
Luis Suarez. They have the fifth highest turnover in the league, only behind
Chelsea, Arsenal, Manchester City and Manchester United, and they are over a
hundred million pound ahead of Tottenham. In 2014 Liverpool recorded their net debt at 57
million pound, down from 237 million pounds in 2010. The club are in a
significantly healthier financial position under FSG’s ownership. Admittedly to achieve this position the club have had to endure the sales of their best players.
Incoming transfer fees for Luis Suarez, Fernando Torres and prospectively for
Raheem Sterling and Christian Benteke have inflated the club’s overall profits. Although their average net transfer
spend throughout FSG tenure is actually 30 million pound a season. Ayre has
admitted that without those funds the club would be closer to breaking even rather than in profit, yet suggests
that breaking even reflects the underlying growth of their commercial
income, the best way of sustaining the club long-term. They’ve increased their commercial
revenue through sponsorship deals with Subway and Dunkin Donuts, using their
American connection and through their 25 million pound per season kit deal with
New Balance, their shirt sponsorship with Standard Charter is up for renegotiation
in 2019, at which point the club will likely sign an improved deal. In 2015
FSG also invested 49 million pound in stadium expansion. Andfield’s new
capacity will be fifty-four thousand, up eight and a half thousand. This is
projected to increase matchday revenue by 20 million pound per season and
increase commercial revenue five million through additional sponsorship. Where
they fall short is in their failure to continue qualifying for the Champions
League. Liverpool have earned from 85 to 155 million less than the four bigger clubs
in this period,a huge potential source of income. So amidst the rumours of a takeover bid,
FSG have again stated that the club is not for sale. More importantly, their actions by way of
investment, have illustrated this long-term commitment. Yet Ayre had admitted
that for the right investment, they would be open to a partner in the form of a
minority stake holder. If Everbright or a similar chinese conglomerate would
consider this, it could help Liverpool further increase their commercial
revenue through Far Eastern channels such a partnership would open, but at this
point a takeover bid is unlikely.

100 thoughts on “Henry, Hicks & Gillett | Liverpool’s Finances

  1. April 2019 and continued development and improvements all round from the disastrous Hicks & Gillette deal.

    An excellent, balanced piece as ever.

  2. Today Liverpool are profitable club that they can even pay for the most expensive defender on virgil van dijk and most expensive goalkeeper in Alisson becker before chelsea bought kepa arrizabalaga.
    Also another expensive transfers like Mohammed Salah, sadio mane, naby keita and fabinho that is prooving to be succeses with they are now are through the UCL final 2019 in madrid and EPL tittle contender with manchester city in the same year.
    They are one of the most powerful footbal club in europe now.

  3. 2016: LFC fail to consistently qualify for the Champions League
    2019: LFC make it to a second straight Champions League final

  4. liverpool just show that good ownership can make team great again except for city because their owner from the start are bring so much money so they get ahead like chelsea

  5. Hicks and Gillette were horrific, John Henry has given the club room to improve and they’re reaping the benefits now

  6. Look at it now! Never mind ‘can’t get into the the CL’ it seems like we can’t stay away from the final!!! £250m in TV revenue alone…

  7. Great video but one inaccuracy – Benteke was not one of the best players, he was a major flop 🙂 But luckily we sold him and got most of our money back.

  8. From finishing 8th and struggling against Cardiff City to winning UEFA Champions League, without breaching FFP

    Meanwhile PSG is busy with their creative accounting to fool UEFA once again, only to reach Quarter Final at best

  9. Now it is an absolute money maker. Don't get me wrong it took heavy investment and good business to get the club back where it is but you have to argue it the biggest club in England after 2 champions league finals in a row and all the good results in the league in recent years. Liverpool made more money than any other club in the epl despite finishing 2nd. They are the club everyone wants to see and talk about. They have the biggest transfer in the leagues history with the coutinho sale. The biggest rstings and most televised games in England and biggest ratings in America as NBCsn has multiple Liverpool games at the top. A billion pound kit deal in the works and a billion is a steal of a deal for Liverpools kit. This club looks destine to get bigger

  10. Interesting video, and LFC has now well and truly smashed that shortfall of not qualifying for the Champions League.

    I hope FSG and Jurgen Klopp stick around for a long time.

  11. Hey Tito Football, I am a devoted fan but have one small bugbear, at 02:51 you mention debt of £69 000 000.00 but do not explain what that means. Any chance you can explain converting debt to equity? It might help smaller clubs and simpletons like me understand your brief well researched infographic narration. Please help a nerd out.

  12. Not only were Hicks and Gillette a disaster for LFC but Hicks other sports teams, The Dallas Stars (hockey) and Texas Rangers (baseball) both went into bankruptcy protection here in the U.S. and control over the teams were turned over to the NHL and MLB.

  13. Great video Joe….A 4yr update in2020 would show how much of a healthy place Liverpool are in and with back to back CL finals and huge sponsorship next season it's looking good at L4

  14. Im subscribing now, all videos are interesting. I can see you put in work, hope you get lots of rewards. Thanks

  15. What incredible management of a club that was in administration. Brilliant
    Fans should give their admiration for this , as it's not just the people on the pitch that count !!!

  16. Shutouts to all the Labour supporting anti-capitalist hypocrites who spend their $$$$ on tickets and shirts! You're all getting mugged off haha 🖕🖕

  17. This year Liverpool will have 250m broadcast revenue and total revenues of ~550m.
    Club kit deal is up next season and apparently Nike willing to pay 80m/yr.
    They have done incredible work

  18. Fenway haven't invested their own money, but the money is from selling players, sponsorships, gate money, merchandising and television contracts. The net spend per year is very low compared to other Premier League Clubs and the success of Jürgen Klopp and the back room staff is the reason for Liverpool Football Club on an upward curve and current European Champions. YNWA

  19. Takeover is impossible now. They have grown so much. John Henry and Michael Edwards are the real masterminds behind Liverpool’s incredible growth and success these past few years. They both deserve statues next to Klopp in their own right.

  20. Small point but…(2:34) in 2010, FSG did not pay anything to become total shareholders of the club. John Henry's group was known as NESV (New England Sports Ventures) until March 2011. Then it changed to Fenway Sports Group.

  21. Outstanding presentation! I can only imagine what the 2019 sequel would be like, especially after their next shirt sponsorship deal gets worked out. Under FSG, Liverpool will be the model all clubs not swimming in oil money will look to emulate.

  22. I believe Fenway Group has the financial arsenal way more and even better than George Gillette/Tom Hicks combined! 💲💲

  23. I know it's hard to stay away from red ink when creating a graphic about Liverpool, but as an accounting man I can't reconcile so much red ink in a positive way!

  24. Wow..Look at what KLOPP has done in 3/4 years he's been at LIVERPOOL FC..The man has totally transformed them from a team that couldn't even qualify for the EUROPA CUP and FINISHED 8TH .And now got them to 2 CONSECUTIVE CL FINAL'S FINALLY WINNING ONE.Without spending multimillions and turning average players into world class players.And that's with losing his best player in COUTINHO..So.Well done klopp you deserve it mate your a top manager and your so lucky to Ave him.Bu damn i wish we had him at MAN UTD and I've got a lot of respect for. But I'm calling this now even though I hope you don't.But KLOPP will win more trophies jwith LIVERPOOL just watch and I'm not even bitter or salty either which I thought I would of.But I can't hate him because hes got hiz team playong beautiful football which is a real joy to watch..GGMU

  25. Hey Liverpool fans, be happy, because Henry spent so much that he told the Red Sox general manager that he didn't want to pay the luxury tax again so that ended our season

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