Tuesday 25 June 2019

Declan Lynch: The game is up for players of vulture capitalism

The case of Liverpool FC illustrates what has happened to the world on a grand scale, writes Declan Lynch

Liverpool is an Irish city, perhaps more like the Ireland of 20 years ago than the Ireland of today. Liverpool didn't really have a boom, or "the thing" as I recently heard a weary Dubliner describe it. So that's how Liverpool feels to me, like Dublin before "the thing".

But even in this place where any Irish person can feel completely at ease, it seems that there is no refuge from the moneyed classes. The predators have been gnawing at the bones of Paddy here too, feasting on the glorious institution that was Liverpool FC, just as they have devoured the mother country.

As a result, there are lads sitting all day in the pub in their Liverpool replica shirts, who now have a deep understanding of this deranged ideology of vulture capitalism, who could get their heads around it while Bloomberg and the Wall Street Journal were still in denial.

Men who had once spoken of football and nothing else were now, through no fault of their own, becoming experts in company law.

Lord Grabiner QC has become their champion. It was Grabiner who represented the club against its owners, Tom Hicks and George Gillett, last week at the Old Bailey, finally releasing Liverpool from the sick embrace of the leverage kings.

Like Paddy back home, the football men of Liverpool never wanted to have anything to do with high finance, but as they watched their world being consumed by it, they were left with no choice. And, like all of us, once they realised how it worked, they were in awe.

"Leverage" was the word. Leverage apparently allowed you to borrow, say, £300m to buy a grand old football club, money which the club itself would largely be expected to pay back.

In 20 years' time they may laugh at these times, in which such astonishingly destructive things were allowed, in which "leverage" was legal. But the lads sitting in the pub in their Liverpool shirts didn't need 20 years to figure that one out.

About 20 seconds was all it took for them to realise the enormity of the situation. About 20 seconds was all it took for them to get their heads around it, to figure out that "leverage" would suck the life out of Liverpool FC. And about 20 seconds was all it took for them to realise that the global financial system was a world of bullshitters, and rich guys with no money -- the worst type.

Yet for the most enlightened commentators on business and finance, it took several years to see through this catastrophic ideology.

Even as it was happening to Liverpool, and indeed to Manchester United, they couldn't see it and they didn't call it. Here we have these graphic case studies which illustrate what has happened to the Western world on a grand scale, and these case studies are not hard to understand -- they are easy, and terrifyingly so.

But all who had bought into the ideology from way back were incapable of seeing it, or just didn't want to see it.

They thought that it could work. They thought that -- to take just one random example -- a couple of punters could become the owners of a venerable sporting and cultural institution, which would effectively pay these punters for the privilege of having them as owners, from profits that would otherwise go towards the maintenance and improvement of that institution.

Yes, they actually thought that could work.

Some of them still seem to think it will work at Manchester United, which recently announced a profit of roughly £100m, which unfortunately was turned into a loss of roughly £100m, thanks to the joys of leverage.

George Orwell, in his works on the deep insanity of the totalitarian mind, could not have constructed a better image of systemic degeneracy. You make a hundred million, you lose a hundred million. Profit is loss, good is bad.

A vast money machine such as Man Utd now can't afford to buy the players it needs, pretending that there's no value out there. Success is failure, winning is losing.

The annual statements of football clubs have become these Orwellian documents in which all common sense has been overthrown, the efforts of the best of men reduced to nought, the machinations of the hollow men lavishly rewarded.

But this is not a football story, it's just that the football clubs which have been eaten up by vulture capitalism make it all so concise and so clear.

Anything that is any good is at the mercy of these shitehawks, with their neo-con smartness, their zealotry in the pursuit of a quick buck in defiance of these ancient concepts which to them are so naive -- how they must laugh at the sentimentalists who claim that a football club is not just a business, not just as asset to be sweated, it has other intangible meanings which do not have a market value, which cannot be leveraged.

But the game is up now for a lot of these smart boys. Unfortunately, they have taken a lot of the civilised world down with them, and some of them are still out there, still believing.

They are still having their way with poor Paddy, for example, who insists on paying back every dollar that these punters lost, who endorses the lunatic creed that, for them, there can be no downside.

Yes, Paddy in Ireland is still prostrate on the altar of vulture capitalism.

In Liverpool, inasmuch as he can ever be -- and however briefly -- he is free.

Sunday Independent

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