Premier League side Liverpool report losses of £50m
Thursday 03 May 2012
Managing director Ian Ayre insists it was essential for Liverpool to clean up their accounts in order to be able to move forward - even if it did mean making a near-£50million loss.
Documents filed to Companies House have revealed in the year up to July 2011 the club's accounts were £49.4m in the red before tax.
That was primarily the result of an incredible £35million of wasted money from previous owners Tim Hicks and George Gillett's ambitious Stanley Park stadium plans being written off in a single stroke.
The departure of former manager Roy Hodgson, managing director Christian Purslow and other staff cost a further £4.8m.
Owners Fenway Sports Group decided to settle up all the costs - which includes design, legal, planning and other associated fees related to the stadium project - in order to get the balance sheet back in order having inherited a difficult financial position from Hicks and Gillett despite eradicating almost £200million of debt when they took over in October 2011.
"I think what today's accounts show is that we have gone through a phase in the last year which has involved a cleaning up of our accounts and our business," said Ayre. "There was much talk and conjecture around the debt that the club was with under previous ownership.
"There has been over £200m of that debt paid down and that's very important for the club moving forward because at the height of it debt service was around £18m and that has been reduced to somewhere around £3m, now which is obviously a much more palatable and manageable position for the club to be in.
"It creates a very stable platform for us to move forward from, it creates a situation where most of those things are now off the books and we move forward in a positive sense in a sustainable business and with the ability to grow on that basis.
"Finance director Philip Nash and the finance team and the FSG finance team have created a great foundation in terms of bank facilities that give us a long-term view in that area.
"What has been demonstrated since their (FSG) period of arriving is that they want to create a stable foundation with a platform to build on.
"There has been a clearing out of debt, a clearing out of money that's been expended on stadium that just isn't going to achieve much going forward.
"We've made a significant investment in the playing squad and will continue to do so.
"It's a new start in many ways."
While FSG could do little about Hicks and Gillette's ill-fated stadium proposal - the 70,000-seater glass and steel project designed by Dallas-based HKS architects has now been scrapped due to it being unviable for the club - the money spent on pay-offs for former staff falls under their remit.
Purslow's departure was inevitable once the Americans had taken over but Hodgson was dispensed with after just 191 days in charge after a run of disappointing results.
"It's nothing untypical of anything in football. Contracts are typically fixed term," said Ayre of the pay-offs.
"When you make a decision to terminate somebody, the right and proper thing to do is honour the pay-out of that contract.
"This relates to Roy and to some of his backroom staff and also to Christian Purslow leaving. It's standard across football.
"It's unfortunate to have to have them - nobody wants to see anybody go - but in certain circumstances it's right to make a change and that's what that relates to."
On the accounts as a whole he told the Liverpool Echo: "I guess people will focus on the loss of £49.4m and there's no business - or people running any business - who are going to be pleased with any loss.
"But I think the important indicator here is this £59m charge for exceptional items and as a business that's been in a transition, it's about moving from where we were to where we want to be."
The figures, which have yet to be made available for public inspection, do not include the kit deal signed with American company Warrior Sports which is worth at least £25million a year.
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