ECHO Comment: "Fears of Witch-hunt Against Liverpool FC" part 3

[catcherintherye]

The Athletic did a good piece on their finances a few months back, which essentially boiled down to if they don’t make the Top 4, they’re in for a grim summer with the way FSG have made the club run

I, for one, hope they go down next term

While I am often happy to be the messenger of bad news, I don't see a financial implosion occurring. FSG have essentially put portions of LFC's debt onto their own balance sheets and covered it via the Red Bird payments. This has been done for all of their portfolio (baseball has been hit much harder). So essentially, the debt of up to the end of this season is now covered by FSG having sold 10% of their company to Red Bird. That is the good news for them.

The bad news, is red Bird are either involved with-or looking to emulate the RB franchise's model. They will expect a certain level of dividend payments etc. If you look at the RB model, it is very much about being a selling club at the right price. FSG have solidified there position and I see that being the way they go now. They may well seek to take some money out of the club, to help repay the money they have fronted indrectly by taking this years debt on board. Unlike what most Kopites think, the £500m they sold for- 1) was not LFC's money, 2) Not just for LFC, 3) Not centrally for LFC, 4) not going to be used for transfers but to help the FSG balance sheet. It's also worth stating if they get pressure to be forced out, that £200m+ debt that is now on FSG's books would likely be put back at the club where it emerged from to go on top of the existing debt levels of £200m their club has (which will go much higher in next years accounts).

The other factor in this, which I stated at the time, was the independent auditors at the time basically said if a particular event occured (so post ponement of this season) they could not guarantee Liverpool could continue "as a going concern" (so as a business) as the owners didn't give them sufficient confidence. To give some perspective on this, Gold and Sullivan at West Ham gave sufficient assurances that West Ham would continue as a going concern.

Whether a spike in numbers in the autumn, and the delay of fans fully going back into stadiums would constitute that would be open to question. However what is very clear, is that the Red Bird capital is essentially just papering over the cracks of FSG's problems, who have taken on board LFC's debt. The wage bill for LFC is too high to be sustainable, and there is not going to be extravgent spending. You don't start getting the "going concern" mentions in your accounts if you're in a healthy state ready for a spending splurge. Those accounts were also signed off when Liverpool were top and CL looked a shoe in.

As I indicated at the top, I don't think we will see a fiscal collapse akin to Leeds (though without the red bird financing and FSG taking on the clubs debts, that would hvae been where they were heading) but probably a move towards the a controlled period of austerity and belt tightening by the American owners. They will need to get that wage bill down probably £50m at least to be in a more viable financial situation. That is 5 Mohammed Salah's without being able to fund a replacement.

 

[catcherintherye]

I agree but you fail to mention that West Ham still have more points than them with only 1 extra game played.

Yes of course, and there is every chance West Ham finish above them, with the run in West Ham have. But I wouldn't make the case it's almost impossible for them to finish above West Ham.

 

[Connor]

While I am often happy to be the messenger of bad news, I don't see a financial implosion occurring. FSG have essentially put portions of LFC's debt onto their own balance sheets and covered it via the Red Bird payments. This has been done for all of their portfolio (baseball has been hit much harder). So essentially, the debt of up to the end of this season is now covered by FSG having sold 10% of their company to Red Bird. That is the good news for them.

The bad news, is red Bird are either involved with-or looking to emulate the RB franchise's model. They will expect a certain level of dividend payments etc. If you look at the RB model, it is very much about being a selling club at the right price. FSG have solidified there position and I see that being the way they go now. They may well seek to take some money out of the club, to help repay the money they have fronted indrectly by taking this years debt on board. Unlike what most Kopites think, the £500m they sold for- 1) was not LFC's money, 2) Not just for LFC, 3) Not centrally for LFC, 4) not going to be used for transfers but to help the FSG balance sheet. It's also worth stating if they get pressure to be forced out, that £200m+ debt that is now on FSG's books would likely be put back at the club where it emerged from to go on top of the existing debt levels of £200m their club has (which will go much higher in next years accounts).

The other factor in this, which I stated at the time, was the independent auditors at the time basically said if a particular event occured (so post ponement of this season) they could not guarantee Liverpool could continue "as a going concern" (so as a business) as the owners didn't give them sufficient confidence. To give some perspective on this, Gold and Sullivan at West Ham gave sufficient assurances that West Ham would continue as a going concern.

Whether a spike in numbers in the autumn, and the delay of fans fully going back into stadiums would constitute that would be open to question. However what is very clear, is that the Red Bird capital is essentially just papering over the cracks of FSG's problems, who have taken on board LFC's debt. The wage bill for LFC is too high to be sustainable, and there is not going to be extravgent spending. You don't start getting the "going concern" mentions in your accounts if you're in a healthy state ready for a spending splurge. Those accounts were also signed off when Liverpool were top and CL looked a shoe in.

As I indicated at the top, I don't think we will see a fiscal collapse akin to Leeds (though without the red bird financing and FSG taking on the clubs debts, that would hvae been where they were heading) but probably a move towards the a controlled period of austerity and belt tightening by the American owners. They will need to get that wage bill down probably £50m at least to be in a more viable financial situation. That is 5 Mohammed Salah's without being able to fund a replacement.

Not so much a financial collapse, but a big big hole without champions league

 

[catcherintherye]

....I thought a summer cash windfall was recently announced for them.

I have covered a lot of the intracacies of that above. TLDR- the money is for FSG not the club, who have suffered a lot through the pandemic. What FSG have done though, is taken a lot of (what I believe) is this years debt onto their own balance sheet. So I don't think their debt will be growing beyond £200m on the balance sheet, but in real terms they will owe FSG maybe 2-300m. The extent to whcih FSG are happy to write that off in exchange for the Red Bird financing is obviously open to debate.

 

[catcherintherye]

Not so much a financial collapse, but a big big hole without champions league

Yes to a degree mate. I would say not so much a financial collapse as a business that is not sustainably ran, and an ownership that will want to remedy that quite quickly, rather than keeping picking up the tab.

 

[Eggs]

I have covered a lot of the intracacies of that above. TLDR- the money is for FSG not the club, who have suffered a lot through the pandemic. What FSG have done though, is taken a lot of (what I believe) is this years debt onto their own balance sheet. So I don't think their debt will be growing beyond £200m on the balance sheet, but in real terms they will owe FSG maybe 2-300m. The extent to whcih FSG are happy to write that off in exchange for the Red Bird financing is obviously open to debate.

...I did see an interview where Klopp said the extra monies available this summer was most welcome, I wouldn’t know how it’s financed but you assessment is interesting.

I actually still believe they are right in the CL mix but if they fail to qualify it must be a huge financial blow. Sounds like Salah might be on his way, I imagine they’ll be looking to recoup as well as spend.

 

[brigadier]

Breaking news on sky van dic head still injured, when did that happen.

 

[4737carlin]

Thing is United could of gone full strength last night and still lost, really it was only a narrow win for Leicester, it's not like UTD were scoring OGs to lose.
While it's funny from the club I dont think there was any naughty agendas

 

[Brisan123]

Thing is United could of gone full strength last night and still lost, really it was only a narrow win for Leicester, it's not like UTD were scoring OGs to lose.
While it's funny from the club I dont think there was any naughty agendas

Don’t spoil our fun

 

[catcherintherye]

...I did see an interview where Klopp said the extra monies available this summer was most welcome, I wouldn’t know how it’s financed but you assessment is interesting.

I actually still believe they are right in the CL mix but if they fail to qualify it must be a huge financial blow. Sounds like Salah might be on his way, I imagine they’ll be looking to recoup as well as spend.

I don't really think Klopp is in the loop, and is probably playing politics.

It has been made very clear that the money is not for transfers. The Athletic's James Pearce who is very close to the club made it clear that it was not for transfers.

I'll be honest, I don't think their transfer policy changes that much in or out of CL. There will not be huge amounts to spend, and they will look to do a rebuild.

 

[MikeH72]

...I did see an interview where Klopp said the extra monies available this summer was most welcome, I wouldn’t know how it’s financed but you assessment is interesting.

I actually still believe they are right in the CL mix but if they fail to qualify it must be a huge financial blow. Sounds like Salah might be on his way, I imagine they’ll be looking to recoup as well as spend.

This would be a massive get out of jail free card for them, I hope he stays.

 

[wandyr79]

Thing is United could of gone full strength last night and still lost, really it was only a narrow win for Leicester, it's not like UTD were scoring OGs to lose.
While it's funny from the club I dont think there was any naughty agendas

I think anybody with a brain can see it as 100% understandable. It was always going to the middle game in the 3 where resting was going to take place. Those players playing are not simply going to down tools as they want to be selected in the 1st choice line up.

It is only them lot that would 'literally' cry over their team selection.

 

[catcherintherye]

This would be a massive get out of jail free card for them, I hope he stays.

The optimum scenario is that MBappe signs a deal with PSG and Real Madrid scramble around for a few pennies on the pound for Salah. Liverpool play silly b****ers about the fee as they have done last summer and don't move him on, and he's into the final 2 years counting down to the exit.

The only disappointment is, Salah is actually world class and is the 1 player who has kept them in the top half this season. Without his goals they are not much better than relegation fodder. Remove his goals for Origi who rarely scores, and see how many points they lose.

 

[GETEM]

They could still catch them if they win their last 3 games and Leicester lose their last 2
Chelsea will probably beat Leicester but I think Leicester will take something from their last game at Spurs if they need to

Liverpool would have to win their remaining games and Leicester would have to lose them. They'd get it on GD

 

[MikeH72]

The optimum scenario is that MBappe signs a deal with PSG and Real Madrid scramble around for a few pennies on the pound for Salah. Liverpool play silly b****ers about the fee as they have done last summer and don't move him on, and he's into the final 2 years counting down to the exit.

The only disappointment is, Salah is actually world class and is the 1 player who has kept them in the top half this season. Without his goals they are not much better than relegation fodder. Remove his goals for Origi who rarely scores, and see how many points they lose.

But if they sell him they’re clearly just going to buy another world class forward and have money left over for another position or two. I’d rather they didn’t get a windfall for any of their ageing players.