The business end
Martin Broughton comes out roaring after the quiet man saves Liverpool.
Martin Broughton comes out roaring after the quiet man saves Liverpool.
Throughout the grim course since the 1990s of English football clubs being bought by “owners” for personal enrichment, contrary to the game’s timehonoured tradition that directors should be “custodians”, none have been served with the wallop meted out on Wednesday to tom hicks and george gillett.
Beaming on the steps of the high court, Liverpool’s chairman, Martin Broughton, declaring himself “delighted”, said: “Justice has been done.” he repeated what he has said for a week, that the club’s American owners committed “flagrant abuses of undertakings” when they tried to sack Christian Purslow, Liverpool’s managing director, and Ian Ayre, the commercial director, and oppose the board’s agreed sale to New England Sports Ventures.
Broughton said the fact the judge, Mr Justice Floyd, agreed, ruling that hicks and gillett committed “the clearest possible breach” of their agreement with royal Bank of Scotland, had won Broughton, Purslow and Ayre their case. the chairman emphasised again how damaging the Americans’ leveraged (debt-based) buyout had been for the club hicks and gillett bought in February 2007 with £185mil borrowed from royal Bank of Scotland – repayable in only 12 months – then loaded on the club to service. the offers, from NESV, owners of the Boston red Sox, and the Singapore businessman Peter Lim, both proposed repaying rBS that debt, since refinanced for a series of further short periods, now up to £200mil.
“the vital thing is that all the offers have wiped out all the acquisition debt,” Broughton said. “that puts the club on a sound financial footing.”
that, of course, is the burden which dare not speak its name at Manchester united, where Sir Alex Ferguson and the chief executive, David gill, maintain the stance, wholly contradicted by Broughton, that huge debt – £769mil in united’s case – does no damage to a football club.
hicks and gillett, watching Broughton, Purslow and Ayre approve a sale, will lose the money they loaned to Liverpool which, according to the chairman Broughton, amounts to £140mil. that suggests one of the holding companies, Kop Football, which owes the £200mil to rBS, is the company being sold, not solely the football club.
this is not the exit hicks and gillett fore- saw when they bought into Liverpool and the Premier League’s expanding tV revenues which hicks, in particular, spoke of so eagerly at the time. that loss, and the sale of their shares in the club for nothing rather than the fat profit they envisaged, has been wrought by Broughton, the blue-chip chairman who kept his counsel for months, then came out fighting so defiantly last week.
During the quiet time, Broughton’s silence sowed doubt. he is a Chelsea fan, and as the chairman of British Airways and previously British American tobacco (BAt), not the most obviously sympathetic figure to the Anfield faithful. Very little information was released about what he and Barclays Capital, appointed to find a buyer for Liverpool, were actually doing. Fans winced during the embarrassments of the deals that never were, fronted by the hong Kong wheeler-dealer Kenneth huang and the Syrian-Canadian former pizza shop proprietor, Yahya Kirdi.
It was also difficult to understand what boardroom sources meant when they insisted Broughton, Purslow and Ayre had the right to outvote hicks and gillett in a decision over a sale. Sure, they had a board majority, but directors can normally only recommend a deal to shareholders, which, as half-each owners of Liverpool, the American pair could surely reject.
Last tuesday the quiet man finally showed his mettle. Despite worldwide attention and relentless prodding from the media and fans, Broughton and Purslow had managed to negotiate with NESV and Lim without a leak. Purslow observed, as many serious business people do, that the deals which are concluded are usually ones nobody talked publicly about beforehand.
With the NESV deal agreed and hicks and gillett having sought to block it by sacking Purslow and Ayre and replacing them with hicks’s own son, Mack, and Mack’s assistant, Lori Kay McCutcheon, Broughton took the strategic decision to go to court, and go public. Suddenly he was on television, radio, on a conference call with journalists and even giving hicks and gillett a mauling on Liverpool’s official website.
Broughton revealed what we had not been told earlier: he had not taken on the job of becoming Liverpool’s chairman, getting the club sold and relieved of its appalling debt, without having the power he required. he had insisted hicks and gillett give the undertaking to rBS that only Broughton had the right to appoint and remove directors, and that they would not obstruct a “reasonable” sale process.
Saying, straightforwardly, what everybody has known since they breached their promises to build a new stadium and not load debt on Liverpool, that hicks and gillett had “no credibility,” Broughton said: “I was not prepared to be their patsy.” they now know that he meant what he said.
Amid the absorbing drama which erupted this week, it was revelatory to watch a businessman of Broughton’s quality operating in football. this is an emerging change in the Premier League: the presence of business people of a higher calibre than those traditionally involved. Chief executives such as Ivan gazidis, at Arsenal, seem to understand what a football club is, that it is not “just a business like any other”, the spivvy thatcherite philistinism which dominated through the 1990s. Broughton, who has run a company with as dubious a moral purpose as BAt, has stated that a football club is different, and that debt is bad for it.
Purslow is known to have watched approvingly Arsenal’s “fanshare” initiative aimed at giving supporters an ownership stake in the club, and at the weekend he said: “I’ve asked (NESV) to consider a scheme at our club that will give our fans a real sense of ownership, a real sense of inclusion, the kind of voice they deserve and NESV have told us they’ll look at this very seriously if they complete.”
Liverpool’s supporter groups, strangely credulous when hicks and gillett rode into town, before waking up and mounting spirited campaigns, must now show themselves to be partners for peace time, to play a part – perhaps including raising money as ShareLiverpoolFC always promised – in decision-making.
It may be too much to hope that Broughton’s victory might usher in a more enlightened future not just for Liverpool but for football clubs more generally. the culture is surely set: owners will expect to make money for themselves, by seeing the value of their club increase. But this better-educated breed of businessman seems to understand they must do so over the long term, by nurturing their clubs and working with supporters, by cherishing the game’s traditions and heritage, as hicks and gillett promised and spectacularly failed to do at Liverpool.
Many false dawns have cast shadows over optimism, but justice was done this week, so the reformers will allow themselves to dream. – guardian News & Media 2010
A new hero: Martin Broughton is likely to have his name sung by the Kop soon.