Keith Harris, the merchant banker who has presided over the takeovers of five Premier League clubs, said yesterday that he fears for Liverpool in the current econimic climate.
Speaking at the International Football Arena in Zurich, Harris said that Liverpool, who have £350m to repay in January to two banks, Royal Bank of Scotland and Wachovia, could struggle to meet the deadline.
The £350m owed to RBS and Wachovia, which includes £185m borrowed by the club’s owners, Tom Hicks and George Gillett, to buy Liverpool, is due for repayment in January. Liverpool have an option to extend it a further six months, and then, in July next year, must either refinance the loan or find a way to repay it.
Harris questioned whether the two banks, which both came close to going bankrupt in the banking crisis, would want to keep lending Liverpool the money rather than call the loan in.
“The one that worries me is Liverpool,” Harris admitted. “The banks are two of those that have suffered, so whether they want to lend it again or not, they may not be able to. What normally happens in business is, if the banks won’t finance, you have to raise equity.”
However, Harris suggested that even if Liverpool cannot raise significant cash to repay or reduce their borrowings, they would probably find a solution because of the prestige of the Anfield club.
“If they cannot find equity,” Harris said, “well, it’s a brave banker that would repossess Liverpool Football Club.”
Harris also revealed that he has made no progress in finding a buyer for Liverpool’s inter-city rivals Everton. The Everton chairman, Bill Kenwright, has instructed Harris to find new investors after admitting that the club cannot keep borrowing.
Harris explained that buyers of a club would expect to make money because its value should increase by 5% to 10% every year, without them having to spend cash investing in facilities or funding transfers “unless they choose to”.
“The demographics of Liverpool as a city are not hugely compelling,” explained Harris. “It is not a very wealthy city. Everton share the city with another club which arguably has been in the vanguard for the last decade, and they both have a stadium to build. So the economics need a lot of looking at.”
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