Liverpool FC - what next?
Published 11/10/2010 | 16:19
Liverpool face a crucial week in their long and distinguished history with the ownership issue set to be decided in the High Court.
With Friday's deadline for owners Tom Hicks and George Gillett to repay their £237m (€271m) loan to Royal Bank of Scotland looming should the club lose their legal battle there is a risk the bank could call in their debt, resulting in administration.
That would run the real risk of a nine-point deduction being imposed by the Premier League, leaving the Reds on minus three points heading into Sunday's Merseyside derby.
Here we look at what the outcome of the court case could mean for the club.
Should the High Court side with chairman Martin Broughton's view that he and the England-based members of the board have acted in the best interests of the club in agreeing a £300m (€343m) deal with New England Sports Ventures then, assuming an appeal is also unsuccessful, the sale will go ahead and Liverpool will avoid any points deduction.
Were Hicks and Gillett to triumph, an outcome which most observers believe is unlikely, it would trigger a number of side issues.
a) RBS - The bank would have to make a decision on whether to call in their loan on Liverpool's parent company Kop Holdings when it is due on Friday or extend the deadline. If they opt for the former and the owners do not have the finance to repay - which apparently they do not despite attempts to try to raise cash through deals elsewhere - the Premier League would then be required to rule on whether the club itself was in administration. Although RBS are keen to recover their money they could hold off going down the route of administration as if there was a nine-point deduction it would lessen the value of the asset in which their cash is tied up.
b) Premier League - Guidelines state insolvency at a holding company will incur a points deduction unless the club themselves are solvent and can demonstrate the insolvency is not caused by matters "relating to the management of the football club". However, as the holding company was set up by Hicks and Gillett solely to buy the club it may be difficult to argue insolvency is not related to football matters. To highlight the different situations, West Ham escaped punishment as their holding company's insolvency was caused by the Icelandic financial crisis but Southampton were docked points by the Football League as their holding company had the club - which was insolvent - as its only asset.
c) NESV - Sources close to the potential new owners suggested over the weekend a nine-point deduction would be a deal-breaker but it remains to be seen whether that would be the case or whether they would try to renegotiate a deal on better terms.
d) Other bids - Although NESV are the preferred option Broughton has admitted there is another interested party based in Asia, believed to be Singapore, who could be prepared to take advantage of any withdrawal from the American group.
e) Hicks, who is now the major opponent to Broughton's boardroom decision-making with Gillett having reportedly already defaulted on a loan, could continue to pursue avenues for refinancing but this would be even more difficult if there is a nine-point deduction to contend with. His hope of finding a bidder willing to pay an asking price which will prevent him and Gillett losing £144m (€165m) in the NESV deal seems even more fanciful.