Telegraph: Buyers plan to sell Liverpool in seven years

Interesting read, if a little dubious.

http://www.telegraph.co.uk/sport/main.jhtml?xml=/sport/2006/12/27/sfnliv27.xml

Liverpool, who are being bought by an investment company effectively owned by the Dubai government, could be sold again in seven years' time, according to a confidential document seen by The Daily Telegraph.

The document also reveals that Dubai International Capital are planning to borrow up to £300 million to finance their £450m purchase of the club.

DIC see their investment in Liverpool as purely a business deal built round the new stadium Liverpool are planning at Stanley Park. When they sell in seven years' time they are hoping to make a huge profit, providing a return of around 25 per cent on their investment for every year of ownership. There appear to be no plans to invest in new players.

Furthermore, DIC will not be the sole owners of Liverpool, unlike Roman Abramovich at Chelsea, the Glazers at Manchester United and Randy Lerner at Aston Villa. Although their deal to buy Liverpool is not yet signed and sealed, they are already looking for other investors to join them in a partnership. I understand that 30 per cent of the 90 per cent stake DIC are bidding for is being offered to City investors.

The seven-page document, which outlines the investment rationale, has been circulated to major City investors to attract them to join the consortium.

DIC have said little about why they want to buy Liverpool, but with the company ultimately owned by the fabulously wealthy Al Maktoum family, who are the ruling family of Dubai, the purchase has been seen as Liverpool's equivalent of Abramovich arriving at Chelsea, the investor with deep pockets that all football clubs crave.

Indeed, that is the reason David Moores, the chairman of Liverpool, gave for choosing DIC over George Gillett, the American who owns the Montreal Canadiens ice hockey team and is very keen to buy Liverpool.

However, anyone reading the document can have no doubt that this is purely an investment decision. And with DIC seeking partners, there is also no knowing who else will be in the Liverpool boardroom.

The great investment opportunities that Liverpool provide, as DIC see it, are set out in a section entitled "The Opportunity". The document says: "Opportunities exist to boost returns by unlocking 'hidden' value. We believe there is potential for multiple arbitrage if real estate/leisure is developed on the current Anfield site. Such an investment would allow the Middle East region to leverage on a strong brand with an equally strong international fan base."

The document tells potential investors that over the next five years a return starting at 19.3 per cent could rise to 29 per cent in year five.

One of the most revealing insights is when the document talks of how the financing will be done. A whole page is devoted to it and shows that three banks – Bank of Ireland, RBS and Bank of America – have been approached, with Bank of America the favourite.

It is clear that the new stadium is at the heart of this deal. The budget for the stadium is £240m; Liverpool want a fixed-price contract like Wembley and want penalties of £950,000 per week if the contractor is late.

The DIC document notes that the stadium, which will seat 61,000, will cost less per seat than Arsenal's Emirates Stadium. The document also provides a wonderful insight into DIC's thinking but is very different from the fans' expectations about this purchase – and would have been very different from the purchase of the club by Gillett.
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My first reaction is that it's scare-mongering, the sort you get around most major takeovers. Thoughts?

My first thoughts are 'not another liverpool related investment thread'

followed by 'I'm now going to stop typing'

Ouch. Sounds like another Glazer?

Tweedle wrote:My first thoughts are 'not another liverpool related investment thread'

followed by 'I'm now going to stop typing'

Fuck me, you've got a nerve! You're top-fourist of the highest order!!!

Krimbo wrote:

Tweedle wrote:My first thoughts are 'not another liverpool related investment thread'

followed by 'I'm now going to stop typing'

Fuck me, you've got a nerve! You're top-fourist of the highest order!!!

What? I'm on the euro leagues board pretty often, post about teams like spurs, yourselves, west Ham and charlton all the frigging time!

Krimbo wrote:Interesting read, if a little dubious.

http://www.telegraph.co.uk/sport/main.jhtml?xml=/sport/2006/12/27/sfnliv27.xml

Liverpool, who are being bought by an investment company effectively owned by the Dubai government, could be sold again in seven years' time, according to a confidential document seen by The Daily Telegraph.

The document also reveals that Dubai International Capital are planning to borrow up to £300 million to finance their £450m purchase of the club.

DIC see their investment in Liverpool as purely a business deal built round the new stadium Liverpool are planning at Stanley Park. When they sell in seven years' time they are hoping to make a huge profit, providing a return of around 25 per cent on their investment for every year of ownership. There appear to be no plans to invest in new players.

Furthermore, DIC will not be the sole owners of Liverpool, unlike Roman Abramovich at Chelsea, the Glazers at Manchester United and Randy Lerner at Aston Villa. Although their deal to buy Liverpool is not yet signed and sealed, they are already looking for other investors to join them in a partnership. I understand that 30 per cent of the 90 per cent stake DIC are bidding for is being offered to City investors.

The seven-page document, which outlines the investment rationale, has been circulated to major City investors to attract them to join the consortium.

DIC have said little about why they want to buy Liverpool, but with the company ultimately owned by the fabulously wealthy Al Maktoum family, who are the ruling family of Dubai, the purchase has been seen as Liverpool's equivalent of Abramovich arriving at Chelsea, the investor with deep pockets that all football clubs crave.

Indeed, that is the reason David Moores, the chairman of Liverpool, gave for choosing DIC over George Gillett, the American who owns the Montreal Canadiens ice hockey team and is very keen to buy Liverpool.

However, anyone reading the document can have no doubt that this is purely an investment decision. And with DIC seeking partners, there is also no knowing who else will be in the Liverpool boardroom.

The great investment opportunities that Liverpool provide, as DIC see it, are set out in a section entitled "The Opportunity". The document says: "Opportunities exist to boost returns by unlocking 'hidden' value. We believe there is potential for multiple arbitrage if real estate/leisure is developed on the current Anfield site. Such an investment would allow the Middle East region to leverage on a strong brand with an equally strong international fan base."

The document tells potential investors that over the next five years a return starting at 19.3 per cent could rise to 29 per cent in year five.

One of the most revealing insights is when the document talks of how the financing will be done. A whole page is devoted to it and shows that three banks – Bank of Ireland, RBS and Bank of America – have been approached, with Bank of America the favourite.

It is clear that the new stadium is at the heart of this deal. The budget for the stadium is £240m; Liverpool want a fixed-price contract like Wembley and want penalties of £950,000 per week if the contractor is late.

The DIC document notes that the stadium, which will seat 61,000, will cost less per seat than Arsenal's Emirates Stadium. The document also provides a wonderful insight into DIC's thinking but is very different from the fans' expectations about this purchase – and would have been very different from the purchase of the club by Gillett.
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My first reaction is that it's scare-mongering, the sort you get around most major takeovers. Thoughts?

Given that it's taken us a good 3-4 years to get to this point in any of the investment deals, I'm inclined to back Moores and Parry's judgement on this.

We'll see, I guess, though until anything they've written is actually proven, I'll believe it to be scare-mongering bollocks.

The following post is off RAWK and pretty much sums up my feeling on it:

I've got a feeling that this whole article's been written with the sole purpose of getting at the fans, trying to get us worried and hence provoking a reaction to the proposed deal. Or maybe trying to scupper the deal completely.

You only have to look at the recent takeovers. The Glazers' takeover provoked outcry from the fans. Demo's and other extreme attempts like running in front of horses at race meetings. Even the setting up of a breakaway club. West Ham were in turmoil for weeks after the mysterious arrival of the Argentinians, and who was taking over the club. In fact they're still suffering. Chelsea, they may have done well from the deal with Roman, but the fans were on about selling the soul of the club, and that it's just a play thing for the investor.

Then you look at our proposed deal, and how it's come about. We've been seeking suitable investors not in the past couple of months, but over a few years as far as we're aware. They make the announcement that DIC have been given the rights to take a look at the books. There was a wee bit of media frenzy at the time, but you had Moores and Parry reiterating that they had the future of the club at heart, and would be in it for the long haul. Then DIC saying that they want to invest in the club on and off the pitch and that they see it as a long term investment. Stevie and Rafa mentioning their meetings and discussions with the potential investors, and yet again the long term factor was mentioned. Since then, we've not heard a dicky bird from the club or DIC.

90% or more of the articles written about the takeover have been extremely positive. The fans reaction to the idea of the takeover has been pretty laid back, as we know that Parry and Moores will only do what's right for the club, and we can fully trust them to do that.

Then suddenly this article from Bose appears from left field. Strangely, at about the time it was thought the deal would be concluded. It seems to be a bit of a rushed job from Bose. You'd have thought he would've dug deeper into his acquisition of this "secret" document, and put a bit of meat to the bones. Trying to get quotes from the club and DIC with regard to what it meant. Quotes from the council about what appear to be planning changes to the old Anfield site. Maybe he could have tried to get information from the supposed list of investors that were apparently in the document. Or even got in contact with a financial analyst to see if the quoted profit margins can be achieved or not.

The whole article stinks of being thrown together at a whim. Probably finished it off just before rushing off to the office Christmas party.

I'm sure hopefully, over the next few days we'll see some comments from relevant sources regarding this. You can guarantee Rafa will be given a hard time about it at the Spurs press conference.


As for the Bank of America thing, then perhaps someone with a better buisness head than me can read into that but surely it's just spreading the risk of any potential investment?

Obi wrote: As for the Bank of America thing, then perhaps someone with a better buisness head than me can read into that but surely it's just spreading the risk of any potential investment?

Ahem-hem

High gearing of investments (i.e. borrowing heavily to finance rather than relying on investors own money) is typical of private equity houses like DIC. Effectively this is like double or quits on your investment doing well. If returns are as good as or better than expected you make a lot more money (like taking out a big mortgage on a house - if house prices go up you're better off than if you'd bought a smaller house with a smaller mortgage).

There is a risk associated of course!

No question that any move like this (by anyone, basically) is likely to see increases in ticket prices and other efforts to increase income. The balance for us fans is whether the resulting increased budget for players will lead to improved performance on the pitch.

My view is simple - the alternative is to accept chronic underfunding and the resulting inability to compete at the top level. Let's just hope that the time and effort the board have put into finding the right investor pays off.

How timely

http://news.bbc.co.uk/1/hi/business/6212883.stm