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Liverpool Financial Doping

By: Ted Fred Franky, Refuting misinformation, June 8, 2023  1 year ago

How Liverpool have cheated FFP but have not been punished

It is worth point out that Liverpool FC no longer own Anfield. It is listed by Fenway Sports Group (FSG) as a separate asset to Liverpool FC. This is a very serious issue for the longevity of Liverpool FC.

Liverpool also owe their owners FSG a large amount of money. So presumably the stadium has been taken as security as part of the financing of the purchase of Liverpool by FSG. The club seems to be in exactly the same position it was under Hicks and Gillette. Leeds United got into a financial mess, and part of the problem was that they had sold Elland Road to a finance company, spent the money they recieved and then couldn’t afford to pay for the rent on it. this situation should really worry every Liverpool supporter.

Man City Nero Scarf - Sky/Navy - One Size
Man City Nero Scarf - Sky/Navy - One Size

The financial doping at Liverpool is two fold. After Hicks and Gillette were forced out by Royal Bank of Scotland subsiduary Nat West, and FSG took over, two things happened:

  1. FSG cleared Liverpool’s debt with Nat West (circa £240m).
  2. FSG cleered Liverpool’s debt with Kop Caymen (circa £240m), a company owned by Hicks and Gillette.

Depsite owning the club Hicks and Gillette received no money for their shares, ie the club was worthless.

Both of the above payments by FSG are there owner investment in the club, ie equity finance. The first was a straighforward injection fo cash, and the second in the form of a heavily loan.

Manchester City MCFC Scarf
Manchester City MCFC Scarf

Ordinarily, a loan would not be equity finance, provided the loan is repaid at a commercial rate which would be around 6-8% a year. However, since the rate of interest charged by FSG for this loan is 0.5% per annum, and FSG have borrowed this money themselves likely at a rate of 8% per annum or above. So FSG are paying the difference (at least 7.5%) on the loan. This is disguised equity finance, precisely what Manchester City re being accused of. 7.5% of £240m is £18m a year, and this has been going on since the FSG takeover, 12 years ago, 12 x £18m = £216m.

However this is Liverpool FC, and FFP wasn’t introduced to punish them.

The effect of this disguised equity finance over any 3 year cycle is £54m, a sum which would take Liverpool over the FFP limit every single season since FSG took over.

Additionally in 2015 Liverpool were cleared by UEFA of breaking FFP rules. Liverpool lost around £50m in the 2012/13 season, a sum which put Liverpool in breach of the break even figure. However, they spent most of the money they lost on infrastructure, their stadium and training ground, so UEFA changed the rules and allowed them to get away with it.