Liverpool FC Forum

Liverpool plan to keep star striker Luis Suarez at Anfield despite annual loss of £87.2m

Liverpool insist they are under no financial pressure to sell star assets such as Luis Suarez, despite announcing an increase in club debts to £87.2 million.

By Chris Bascombe
04 Mar 2013

The accounting period from Aug 2011 until May 2012 showed a rise in liabilities of £21.8 million at Anfield, underlining the challenge facing a club desperate to force their way back into the European elite.

Liverpool managing director Ian Ayre said lack of Champions League football, allied to expensive transfers and the cost accrued from high-profile staff departures such as ex-manager Kenny Dalglish, contributed to the losses.

He refuted any suggestion financial pressures would impact on player sales. “We won’t be selling anyone because of the financial position,” Ayre said. “If we’re selling anyone it’ll be because they are deemed by the manager to be surplus to his requirements and obviously if that happens we will be replacing them and bringing new players in as we always do.

“There’s no panic on our part, far from it. We feel we are making progress. Our aspiration for the next couple of years, as the rules will dictate, is to break even and then to make a profit beyond that.

“The recent rules that we’ve adopted at the Premier League will expect people to break even and limit their spending and player wages. We’ve been a big advocate in pushing for that so we’re certainly not going to fall foul of it.”

The accounts revealed how owners Fenway Sports Group secured a £120 million refinancing of credit facilities in September 2011 with the Royal Bank of Scotland, Bank of America and Barclays.

Ayre said this arrangement bore no resemblance to the “crippling” loans and interest fees arranged under previous owners Tom Hicks and George Gillett Jr. Ayre explained £120 million in credit facilities was agreed to ensure finance was available as and when required.

“Just to be clear, it’s not a loan,” Ayre said. “It’s money that’s there if we need to use it, so it’s not debt in the true sense that it’s been spent. It’s not like a loan. It’s a facility like an overdraft. If we are utilising it then we are paying some interest, but if we’re not utilising it or using a small portion then we’re paying little interest.

“The numbers we were facing in terms of interest payments in the past [under Hicks and Gillett] are well documented and this is nothing like that, far from it. It’s not crippling our business like it was at that time.

“We’ve got a really healthy debt structure which is allowing us to continue to invest in the club overall which has been shown by our investment in players, in staff and in infrastructure.”

Despite the debt increase, Liverpool’s annual pre-tax loss fell from £49.3 million to £40.5 million. FSG has also injected £46.8 million into the club via a non-interest loan, which they could turn into equity if necessary. There is no doubt FSG feel they remain in a period of repairing damage they partly inherited, and also accentuated with an initial, unsuccessful spending spree.

It cost £9.5 million to pay off Dalglish, Damien Comolli and various other members of the coaching staff as they paid the price for failing to return on that initial investment. With Liverpool recently shown to be the top of the agents’ fees table, too, cutting down on such wasted expenditure is a priority, as is finding a solution to the long-standing stadium issue.

“We have to manage in a responsible way,” Ayre said. “That doesn’t mean we won’t invest, but we will try to invest carefully and find the right deals. I would draw attention to January when we did some good business for the club and got two great players.”
++

Here's the bit that stands out for me:
FSG has also injected £46.8 million into the club via a non-interest loan, which they could turn into equity if necessary.
It doesn't get much better than that, that's verging on sugar-daddy land - I don't understand why folks continue to moan about our owners.

I'm no accountant mate however I suspect that interest free loan is an internal arrangement to increase shareholder capital to enable them to secure the £120 million refinancing credit facility. With increased nett worth they can raise more working capital lines (cash to run the club) plus the required long term finance to rebuild the stadium. They probably just needed to beef up the numbers.

Well said mate, you're last point about the owners is spot on.