Liverpool facing £100m cost of Euro failure
CONCESSION speeches are never easy and, as he explained that the Champions League was now virtually a lost cause, Rafael Benitez's voice was hoarse and cracked. His mood was not made any easier by a Danish journalist's attempts to quiz him on the life and times of Daniel Agger while he was doing it.
In the wake of a strangely low-key goalless draw against Fulham in the Anfield sunshine, the Liverpool manager's thoughts would have turned to the lost glory rather than the lost revenue that failure to qualify for the Champions League entails -- anything up to £45m.
But it will have a significant impact on the sale of the club and in deciding Benitez's own future. Although Liverpool's owners, Tom Hicks and George Gillett, have appointed Barclays Capital and will appoint a new chairman, Martin Broughton from British Airways, to oversee the sale of the club, they have been told that they are now unlikely to get £500m for Liverpool and the eventual figure may be closer to £400m.
"The impact of not being in the Champions League is enormous -- it is around £30m off the bottom line, more if you get to the later stages," said Professor Chris Brady, the dean of the BPP Business School, who specialises in football finance.
"It is absolutely prime non-commercial revenue and you get it in hard cash. I was hearing this morning that they (Hicks and Gillett) were valuing the club at £600m. I would suggest that is unrealistic by £100m and the price could come down further than that.
"If you take over a club not in the Champions League, you might need to spend anything up to £100m to get them back up there. The club still needs a new stadium that would cost around £350m. The total investment needed to take over Liverpool and run it properly would be £900m to £1bn."
At the weekend, Benitez, who was still publicly confident about re-qualification for the Champions League, suggested that Liverpool needed a minimum investment of £60m on at least three players to regain their competitive edge.
The relationship between the size of a club's wage bill and success is a well-known correlation and Liverpool's is only the fifth biggest in the Premier League. Benitez alleged that Peter Crouch was able to substantially increase his salary by moving to Tottenham and any takeover would have to come with an implicit understanding that this wage bill would have to rise.
The club's bankers, the Royal Bank of Scotland and Wachovia, have now all but agreed to give Hicks and Gillett another six months to pay back £100m of the £237m they have borrowed against the club, a sum that was due to be repaid in July. However, although many on the Kop would welcome the departure of the owners, any takeover would put Benitez's job in peril -- and not just because billionaire owners like Roman Abramovich at Chelsea and Abu Dhabi United at Manchester City showed themselves all too ready to dispense with the managers they inherited.
Yesterday, Liverpool's vice-captain, Jamie Carragher, pointed out that if they do fail to qualify for the Champions League, the principal reason would be the club's away form, which he compared to that of Wolves. That is ultimately Benitez's responsibility.
"One of the chief reasons for not getting rid of Benitez is that you would have to pay up the majority of a five-year contract," said Professor Brady. "Giving him and his back-room staff a £10-15m pay-off might be a substantial obstacle to the current owners.
"But if you have paid £500m for Liverpool and may have to invest another £500m, then paying off Rafa Benitez suddenly becomes peanuts."
Three years ago, Hicks and Gillett paid £174m for the Merseyside club, which had a debt of £44m. If they sell for £500m, they will still make a profit of £30m -- not a bad return for three years' work, even with all that bad feeling from the Kop. (© Daily Telegraph, London)