Liverpool Farce Illustrates The Many Faces Of Facelessness

I almost feel sorry for Tom Hicks and George Gillett. The events that have unfolded around Liverpool FC these past few days probably would not have happened back in the States.

At the end of a long saga of speculation and a brief High Court hearing, the two co-owners of Liverpool have been ousted. Completely against their will, they have now lost millions of pounds/dollars and have nothing to show from it.

From a pure market perspective, they chose Liverpool as a place to put their investment. They chose very, very badly. They lost money; such is the nature of shares and PLC's and profit margins.

But this is of course a football club we are talking about. A rare business entity in which it is blindingly obvious to the public whenever things go wrong. A football club losing money is, in every sense, a loser. It is manifest in the personel department, when players are sold through necessity, and it shows on the pitch when inferior playing talent fails to meet expectations. Like algae on trees change colour with pollution, so Stephen Gerrard's performance worsening acts as an indicator of ownership crisis.

The problem here is that the macro and micro scales of a football club, i.e. the ownership situation, the sponserships and the revenue, contrasted with the day to day production of the product being sold (the performance of the football team), are intrisically linked and yet completely independent of one another. In the loosest terms, a football club able to break even, creating no profit, will be able to keep up a certain level of spending on players and manager that will ensure relative success but as a business it will be on dubious grounds unless it starts to actually make money.

Too often in the Premier League clubs are bought and investments are made that have no realistic plan to them. In order to please fans, prospective new owners have to emphasise their commitment to winning, to spending money in order to sign and pay the wages of the best players. Eventually though, even the most mental/ committed supporter-investor will let his businessman side tell him that simply throwing money into a football club is unsustainable. Roman Abramovich bought and spent on Chelsea because he wanted to own a successful team on the pitch, but even he now feels the need to ensure they pay back his loans.

Gillett and Hicks were mainly businessmen, and so were out to create money. If they did it over 5-6 months or 5-6 years is irrelevant, the return would be the same. The short-termism of actual football, of 2-0 home wins and Europa League clashes in Turkey, and the bleats of supporters, the cries for investment in the team and for immediate success meant that someone was going to walk away with their hopes dashed.

In the end, the American pair did not have nearly enough money to remain committed to spending on players and new stadiums while at the same time hoping to get any meaningful return out of the club. Their solution, to take out those short term loans from RBS, was in hindsight monumentally misguided. Gillett defaulted on his £75 million loan, Hicks attempted to sell out, both tried to breach contract and replace the board of directors in order to sell the club on more favourable terms. The Court backed the board. And so they are out.

Which brings us to the new owners of the Reds, the NESV consortium fronted by cigar affecionado John W. Henry. Their first statement after buying the club was directed to the fans:

"We are committed first and foremost to winning. We have a history of winning, and today we want Liverpool supporters to know that this approach is what we intend to bring to this great club."

The cycle seems to be starting again. What makes NESV more likely to run the club any better than Hicks and Gillett? What guarantees their medium to long term investment in the club, and what is preventing this entire debacle from occuring again in whatever shape or form one year or two from now?

These investors are as faceless as Hicks and Gillett, and every other apparent tycoon from Hong Kong that was linked with the takeover. Yes, we know their names, and we learn of their appearance once the takeover occurs and they line up holding club scarves on in front of the Kop . But do we know their motives, their committment, their actual wealth?

We will only find out, it seems, after the damage has been done.

GM