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FootballNewsLiverpool accounts: wages soar past £100m, losses £55m, debt up to £378m (and the bank needed paying in March)

Liverpool accounts: wages soar past £100m, losses £55m, debt up to £378m (and the bank needed paying in March)

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By Nick Harris

7 May 2010

Accounts for Liverpool football club and its parent company, Kop Football (Holdings) Limited, available today from Companies House, show the club’s total wage bill last season rose by £11m in a year to break through the £100m barrier for the first time.

The club’s wage bill was £100.5m, and the holding company’s £2m more than that. This means Liverpool join Chelsea, Manchester United and Arsenal as the only clubs in English football history to have had a total wage bill of more than £100m for a season.

The rising wage costs contributed to the club (on football operations) making an operating loss of £16.1m in the year to 31 July 2009. The club made a £10.2m profit the year before.

The parent company lost £54.9m before tax, a club record,  largely due to spending £40m in interest alone to service debts.

The two sets of accounts show bank debt at the end of the financial year standing at £234m (mainly to principal lender RBS), as well as £144.4m owed to the club’s American owners, Tom Hicks and George Gillett, via their Kop Football (Cayman) Limited company.

The football club’s turnover rose to £177.3m from £159.1m. Group turnover was up to £185m from £162m.

One extraordinary detail in the accounts is that Liverpool’s lending facility with RBS expired on 3 March this year. This date had never been made public before. The urgency for Liverpool’s managing director, Christian Purslow, to find new cash before Easter can now be seen in a fresh light.

The banks needing paying in March, not summer, as previously widely believed. Purslow’s failure to find any suitable finance or new investors led to the hiring of a new chairman Martin Broughton, who will oversee the sale of the club.

Liverpool’s poor finances show why Hicks and Gillett, both hard up and without any new cash to inject, need to get out as soon as possible.

The accounts say: “The current credit facility was extended to 3 March 2010 to enable the directors to secure new equity financing and active negotiations are currently in progress in this regard. based on discussions with the principal lender the directors are confident that further short-term extensions, should they be required, will be granted as appropriate.”

What does that mean? That RBS will extend the repayment date, but sources have made clear they want their money, hence the club being put up for sale. Hicks’ private valuation of £800m for a club with no Champions League football next season and perhaps longer is fanciful. That price will have to come down to sell it.

The lack of fixed lending agreements mean a note has been inserted into the accounts that warns: “Until this replacement finance can be secured the company is dependent on short-term facility extensions . . . These conditions indicate the existence of material uncertainty which may cast significant doubt on the company’s ability to continue as a going concern.”

This is not as alarming as it sounds: RBS won’t pull the plug now the club is up for sale. But it is a message, effectively ‘hurry up and sell, the club is in danger.’

Elsewhere the accounts confirm the new shirt deal with Standard Chartered Bank, which starts in July, will be worth up to £81m, over four years.

On the other hand, the figures show an astonishing £45.5m has already been spend on the proposed new stadium that is still not actually close to construction.

Liverpool also spent £4.3m on pay-offs to staff in severance packages in the period, with an unconfirmed chunk of that to former chief executive Rick Parry.

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2013-05-28 11:34:43