The board of Liverpool FC, a founding club of the English Premier League, agreed to accept an offer by John Henry and New England Sports Ventures to purchase the club, according to Rob Harris of the Associated Press. Liverpool is currently facing an October 15th deadline to repay 285 million pounds ($453 million) in accrued debt of which the new ownership group would pay down approximately 200 million pounds upon approval by the EPL.
Standing in the way of NESV are the club's current owners, Tom Hicks and George Gillett, who don't agree on much apart from their reluctance to part with the club for the price Henry and his team are offering. The reported sale price is 300 million pounds, or approximately $477 million. Hicks and Gillett argue that the offer significantly undervalues the club.
Hicks once owned the Texas Rangers, Dallas Stars and half of the English Premier League's Liverpool FC. All summer we've followed the messy sale of the Rangers to a group led by Chuck Greenberg and Nolan Ryan. And like the Rangers, Liverpool FC is heavily in debt, which was incurred on Hick's watch. When Hicks and Gillett purchased Liverpool in 2007, they paid just over 174 million pounds as well as nearly 45 million pounds to repay the outstanding debt at the time of the sale. In the last three and half years, the club's debt has grown to more than six times the figure Hicks and Gillett assumed.
The elimination of the debt is the key to Liverpool's board. The aforementioned 200 million pounds will free the club of the pending deadline imposed by the primary creditor to Hicks and Gillett, the Royal Bank of Scotland. An additional 37 million pounds will remain a liability to the club. According to Bloomberg's Tariq Panja, Hicks and Gillett will be responsible for the penalty fees (totaling 40 million pounds) imposed by RBS.
Liverpool's board was tasked specifically by Hicks this past April to find the best offer from a prospective ownership group. Hicks and Gillett vow to resist the attempt by Henry and NESV to purchase Liverpool, suggesting that another court battle looms. The Rangers sale was complicated by bankruptcy proceedings and a contentious hearing, as reported by BizofBaseball's Maury Brown. Liverpool's sale seems likely to follow that same path.
New ownership is a necessity for the club. Despite promises to build a new stadium, they continue to play in Anfield, despite its age, current state of disrepair and limited seating capacity. Efforts to build a new stadium at Stanley Park have been indefinitely delayed. Hicks and Gillett had promised to get the new stadium built and to keep Liverpool debt-free. Their failure to deliver has soured fans to the ownership group, in particular Hicks.
NESV owns the Boston Red Sox, Fenway Park and the Fenway Sports Group. Fenway Sports Group is the sole owner of the Red Sox Advanced A Carolina League farm team, based in Salem, Virginia, as well as an 80 percent stake in the New England Sports Network and a 50 percent stake in Roush Fenway Racing. Their desire to diversify by adding soccer was foreshadowed by the mid-summer soccer exhibition in Fenway Park between Celtic and Sporting Lisbon, the first such event at Fenway since 1968.
UPDATE: NESV has released a statement regarding the purchase of Liverpool FC. You can read it here.
UPDATE: Red Sox President and CEO Larry Lucchino released a statement. Click here for full text.
NEW ENGLAND SPORTS VENTURES
STATEMENT ON THE PURCHASE OF LIVERPOOL FC
New England Sports Ventures ("NESV") can confirm that their bid for Liverpool FC has been selected by the Club's Board of Directors and agreement has been reached with the Board to purchase the Club. NESV wishes to extend their appreciation to the Board for their diligence and their efforts on behalf of Liverpool FC and its supporters.
NESV wants to create a long-term financially solid foundation for Liverpool FC and is dedicated to ensuring that the Club has the resources to build for the future, including the removal of all acquisition debt. Our objective is to stabilize the Club and ultimately return Liverpool FC to its rightful place in English and European football, successfully competing for and winning trophies.
Since 2001, New England Sports Ventures has made successful investments in sports and entertainment properties. Our portfolio of companies, including the Boston Red Sox and Fenway Park, New England Sports Network, Fenway Sports Group and Roush Fenway Racing are all committed to one common goal: winning. NESV wants to help bring back the culture of winning to Liverpool FC.
We have a proven track record, shown clearly with the Boston Red Sox. The team has won two World Series Championships over the past six years. We will bring the same kind of openness, passion, dedication and professionalism to Liverpool FC.
We are hopeful with regard to the pending legal and English Premier League procedures now underway, however, in light of these issues, we will respectfully refrain from comment or further actions at this time.
Source: New England Sports Ventures
Statement from Larry Lucchino, President/CEO, Boston Red Sox
Today’s announcement that New England Sports Ventures (NESV) has reached an understanding with the Liverpool Football Club Board of Directors to buy that historic Club is a tremendous development for the NESV partners; and, I predict, for the passionate supporters of Liverpool Football Club.
To be clear, while it is exciting for all of us as global sports fans, this is an undertaking of the NESV partnership, which owns the Boston Red Sox, New England Sports Network, Roush Fenway Racing, and Fenway Sports Group. It is not an undertaking of the Boston Red Sox and will not divert our resources or focus on the job at hand – winning a third World Series for the loyal members of Red Sox Nation.
Those of us in the Red Sox front office, starting with me, Theo, and the baseball management team, share a single-minded focus on the baseball team, and we will remain in our roles and committed to extending the extraordinary and winning traditions of the Boston Red Sox. We want to assure our fans that our work and our Red Sox resources will continue to be devoted to fielding excellent teams in 2011 and beyond, teams worthy of our fans' avid support.
Source: Boston Red Sox
Joe Tetreault is Managing Editor of the Business of Sports Network, which includes The Biz of Baseball, The Biz of Football, The Biz of Basketball and The Biz of Hockey. He can be contacted here through The Biz of Baseball
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