© The Financial Times Ltd 2013 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
Last updated: August 6, 2010 9:25 pm
An Indian conglomerate controlled by a billionaire industrialist has become the latest investor to register an interest in buying Liverpool Football Club. If Liverpudlians never move far from their native city – as The Beatles’ drummer Ringo Starr once had it – then those queuing to dock at Merseyside hail from increasingly distant shores.
A person close to the Sahara Group, owned by Subrata Roy, says it has been trying to negotiate with the club for several months but a final deal is stalling on debt concerns.
“[Liverpool] has a lot of debts, so they need to lower their expectations before we can make a bid,” the person says. The club posted net debt of £351m in its latest annual accounts.
Mr Roy, whose Sahara company sponsors the Indian national cricket team, is the latest in a colourful line of entrepreneurs and businessmen who have expressed an interest in buying the club.
Others come from China, Syria, Kuwait and the US, with some secretly claiming to be at the latter stages of an agreement with either the club’s American owners, Tom Hicks and George Gillett, their main creditors, the Royal Bank of Scotland, or the chairman Martin Broughton.
There is the added symbolism of a majority of potential investors coming from the east’s emergent economies, illustrative of English football’s enduring global appeal and an allegory about shifting geopolitical power.
One possible bidder for the club is Kenny Huang. Widely reported to be a billionaire sports tycoon, his only formal roles are as an investor in a fledgling minor league Chinese basketball team, a Chinese basketball magazine and two sports marketing companies – in Beijing and the US – neither of which has more than 15 employees.
He has also been reported as a 15 per cent owner of the Cleveland Cavaliers basketball team. However, the National Basketball Association told the Financial Times: “Mr Huang has never had an ownership interest in the Cleveland Cavaliers or any other NBA team nor was he ever affiliated with an owner of an interest in an NBA team.”
Mr Huang has been working with Yang Guang, a portfolio manager and research analyst at fund management company Franklin Templeton. The two are partners in QSL, one of Mr Huang’s marketing agencies, and it has been suggested that Mr Guang is involved in securing the funding for Mr Huang’s bid.
But Bill Weeks, a spokesman for Franklin Templeton in New York told the FT: “Franklin Templeton has no involvement in the Liverpool FC bid and Yang Guang has also stated that he has no involvement.”
Mr Huang and Mr Roy are not the only prospective bidders for the club.
Rafed Al-Kharafi, nephew of the Kuwait-based billionaire industrialist Nasser Al-Kharafi, has also been preparing a bid. Rafed has been in talks to buy the club twice in the past two years, but has been unable to complete a deal.
Yahya Kirdi, a Syrian businessman, claims to be in the latter stages of negotiating an equity deal directly with Mr Gillett and Mr Hicks. He has the backing of a consortium of wealthy Gulf businessmen, according to his spokesman Dan Diamond.
Finally, the Rhône private equity group based in the US is reported to be in talks over a deal for the club.
All of these potential bidders have their eyes on an asset with global brand recognition and the potential to increase its fan base, particularly in Asia. And with new manager Roy Hodgson in place the club is hoping for a return to the on the field success that characterised Liverpool FC in the 1970s and 1980s.
Yet turning that sort of success into financial returns is a difficult task.
Only 11 Premier League clubs out of 20 in the world’s wealthiest football league turned a profit in 2009, according to Deloitte. Liverpool made a pre-tax loss of £54.8m for the latest full year – on sales of £184.8m – and failed to qualify for the Champions League this season, denying the club lucrative television screening rights.
“Football clubs are not a moneymaking venture. Very few have made money and far more have lost a great deal,” says Charles Barnett, a partner in PKF UK, which audits a number of Premier League clubs.
“Even with top clubs, most of their revenue streams are fixed – in television, in season tickets and in sponsorship – with the only principal fluctuating income stream being merchandising. It’s the heart that rules, not the business brain.”
So why has the Liverpool sale sparked such global interest?
Julia Clark, head of sports business at PwC in London, says that potential buyers can acquire an asset which resonates far beyond the football.
“Typically purchasers want to raise the profile of a brand – either of themselves or the corporate they represent – and they’re looking to expand their business in the UK or beyond. With a football club they get the whole excitement the Premier League generates across the world,” she says.
For all the speculation, neither Mr Broughton nor Barclays Capital, the investment bank brought in to broker a sale, have yet received proof of funds for any of the bidders. Like the club’s wait for a league championship title, the search for new owners could be a long one.
Reporting by Christopher Thompson, Jamil Anderlini and James Fontanella-Khan
At Anfield on Thursday night, eyes were fixed on new manager Roy Hodgson’s first home game – a Europa League qualifier against Macedonia’s Rabotnicki – but the talk was all about Kenny Huang and speculation over a bid for Liverpool FC, writes Rose Jacobs.
“We would love dearly to talk about the players and the sport, but unfortunately we’ve become well versed in the language of leveraged buy-outs and private equity,” said James McKenna, the 23-year-old spokesman for the Spirit of Shankly supporters’ club.
The overwhelming desire among fans is that Martin Broughton, chairman, not dive into anything blindly. Still, said Max Munton, of the fan club This is Anfield: “He’s had a lot of time already and why it’s taking this long to sell – especially when there are several interested parties – is a mystery”.
One British supporter in the US understood Mr Broughton’s apparent caution. He said of Mr Huang: “He came to New York to do a masters at Columbia University and ended up getting a degree from St John’s [a Catholic university in Queens]. That’s like enrolling at Liverpool University and ending up with a certificate in hairdressing.”
Supporters’ great fear is that promises of new investment and a new stadium could fail to materialise.
David Lane, a fan living in South Africa, explains his concerns over a lack of proper due diligence. He argues that “[previous owners] David Moores and Rick Parry proved to be provincial and pinheaded in the selling of the club [to Gillett and Hicks], with Moores ultimately allowing those two to gazump the Dubai folks”.
The group Spirit Of Shankly-ShareLiverpoolFC said on Friday it had made contact with people involved in the potential transaction to register interest in acquiring a shareholding on behalf of fans. Mr Lane, for one, says he would now only back a solution that had supporters owning part or all of the club. “Until then, my passion for the club will remain subdued.”
But Mr Munton’s stance may better represent most supporters. “What excites me is the potential of the club’s global presence with new investment. Countries like China and India are goldmines waiting to happen for football clubs.”
Copyright The Financial Times Limited 2013. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.