Credit crunch hits value of Premier clubs

'Twenty per cent' drop likely to harm Liverpool most in search for buyer

Football's leading deal-broker yesterday declared that the global credit crunch means Premier League clubs seeking a buyer must expect a reduction of up to 20 per cent in price, a figure which would mean Liverpool's American owners barely covering the value of the bank loans they have taken out to finance their acquisition.

Tom Hicks and George Gillett are believed to have turned down an offer of around £500m for Liverpool, tabled by Dubai International Capital in February 2008 and the assessment of Keith Harris, who attempted to secure a Kuwaiti takeover of the club last July, would radically reduce that. Proprietors could expect "10 to 20 per cent" less for clubs they were trying to sell, Harris said. "The equity value of football clubs has declined over the last six to nine months. The run up to the end of the calendar year was appalling." His prognosis would mean the Americans securing barely £400m for Liverpool. The co-owners are currently assessing their entire range of global assets.

Harris, chairman of investment bank Seymour Pierce, also believes that there is far greater chance of Royal Bank of Scotland (RBS) and Wachovia – with whom Hicks and Gillett rescheduled their loans in January – agreeing to a further rescheduling in July. The awaited decision of the banks is a source of profound uncertainty at Anfield but Harris suggested that Stephen Hester, RBS's new chief executive, may not wish to put himself "out on the left wing" by generating a crisis at Liverpool. A negotiated settlement of the debt is a more likely outcome, Harris believes, though he also declared that the financial crisis means the age of the leveraged buy-out of football clubs is in the past. "It is over," he said.

Harris believes the prospect of Premier League clubs finding a buyer - Everton are another he has been engaged by in the last year – has brightened after a three-month period at the end of 2008 in which the business environment was "a disaster." In place of bank loans against the value of clubs, clubs must now seek institutions and corporations who have disposable cash.

Speaking on the sidelines at the Soccerex London Forum, Harris said: "There's a better feeling, a more encouraging environment to think about investment. The phone could not have been quieter than the last three months of last year. There's been a shocking fallow period, but just like you are seeking investors putting money into property companies and banks, people are investing again in football clubs."

That appears to offer some hope for Everton and perhaps Newcastle United owner Mike Ashley, for whom Harris has also sought new investment. Harris indicated that Newcastle was "not for sale at the moment" and suggested that Ashley was awaiting the outcome of the club's struggle against relegation. "They're just assessing what happens. Nobody can predict whether or not they will be in the Premier League. I don't think it's necessarily more difficult to sell a club that is in the Championship though inevitably there would be discussion on price because the revenues are so different on the two."

Harris is the financier who brought Thaksin Shinawatra to Manchester City in the summer of 2007, though he stressed that the size of investment did not guarantee immediate success – a fact which Thaksin did not seem to grasp. "I suspect City could spend a billion pounds and it would still take a while [to reach the Champions League]," he said. " Sven [Goran Eriksson] was famously asked by Thaksin: how far are you from a championship winning team – and he said 'four and half miles'. You have to work the asset with a good manager and good players, so that over seven or eight years you can have a good return." If clubs are treated "as empty tubes, with money coming in going out on transfer and wages, sooner or later they are going to go bust."

In the eye of the financial crash last November, Harris said he feared for Liverpool who might be forced to sell players without fresh investment. Liverpool's profit barely covers the huge interest payments with which Hicks and Gillett have saddled the club. Rafael Benitez has said he must sell to buy this summer.

News
Russell Brand was in typically combative form during his promotional interview with Newsnight's Evan Davis
peopleReports that Brand could stand for Mayor on an 'anti-politics' ticket
News
The clocks go forward an hour at 1am on Sunday 30 March
news
Arts and Entertainment
The Doctor finds himself in a forest version of London in Doctor Who episode 'In the Forest of the Night'
TVReview: Is the Doctor ever going stop frowning? Apparently not.
News
Voluminous silk drawers were worn by Queen Victoria
newsThe silk underwear is part of a growing trade in celebrity smalls
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Sport
footballMatch report: Real fight back to ruin Argentinian's debut
News
Candidates with surnames that start with an A have an electoral advantage
newsVoters are biased towards names with letters near start of alphabet
Arts and Entertainment
Isis with Lord Grantham (Hugh Bonneville)
TV
Arts and Entertainment
Jay James
TVReview: Performances were stale and cheesier than a chunk of Blue Stilton left out for a month
Caption competition
Caption competition
Latest stories from i100
Have you tried new the Independent Digital Edition apps?

Bleacher Report

Daily Quiz
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

Day In a Page

Wilko Johnson, now the bad news: musician splits with manager after police investigate assault claims

Wilko Johnson, now the bad news

Former Dr Feelgood splits with manager after police investigate assault claims
Mark Udall: The Democrat Senator with a fight on his hands ahead of the US midterm elections

Mark Udall: The Democrat Senator with a fight on his hands

The Senator for Colorado is for gay rights, for abortion rights – and in the Republicans’ sights as they threaten to take control of the Senate next month
New discoveries show more contact between far-flung prehistoric humans than had been thought

New discoveries show more contact between far-flung prehistoric humans than had been thought

Evidence found of contact between Easter Islanders and South America
Cerys Matthews reveals how her uncle taped 150 interviews for a biography of Dylan Thomas

Cerys Matthews on Dylan Thomas

The singer reveals how her uncle taped 150 interviews for a biography of the famous Welsh poet
DIY is not fun and we've finally realised this as a nation

Homebase closures: 'DIY is not fun'

Homebase has announced the closure of one in four of its stores. Nick Harding, who never did know his awl from his elbow, is glad to see the back of DIY
The Battle of the Five Armies: Air New Zealand releases new Hobbit-inspired in-flight video

Air New Zealand's wizard in-flight video

The airline has released a new Hobbit-inspired clip dubbed "The most epic safety video ever made"
Pumpkin spice is the flavour of the month - but can you stomach the sweetness?

Pumpkin spice is the flavour of the month

The combination of cinnamon, clove, nutmeg (and no actual pumpkin), now flavours everything from lattes to cream cheese in the US
11 best sonic skincare brushes

11 best sonic skincare brushes

Forget the flannel - take skincare to the next level by using your favourite cleanser with a sonic facial brush
Paul Scholes column: I'm not worried about Manchester United's defence - Chelsea test can be the making of Phil Jones and Marcos Rojo

Paul Scholes column

I'm not worried about Manchester United's defence - Chelsea test can be the making of Jones and Rojo
Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

While other sports are stalked by corruption, we are an easy target for the critics
Jamie Roberts exclusive interview: 'I'm a man of my word – I'll stay in Paris'

Jamie Roberts: 'I'm a man of my word – I'll stay in Paris'

Wales centre says he’s not coming home but is looking to establish himself at Racing Métro
How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

A crime that reveals London's dark heart

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?