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Page last updated at 07:35 GMT, Saturday, 8 May 2010 08:35 UK

Liverpool post 54.9m loss as debts continue to rise

By Matt Slater

Liverpool

Liverpool's parent company posted a loss of £54.9m for the year ended on 31 July 2009 as debt interest payments and severance costs hit hard.

The loss was 34% worse than 2008's figure as £40.1m went on servicing the club's £351.4m debt to Royal Bank of Scotland (RBS) and US firm Wachovia.

Pay-offs to senior staff, including former chief executive Rick Parry, accounted for a further £4.3m.

BBC Sport understands that Parry's severance package was £3m.

This sum - twice what Keith Edelman received when he left the chief executive job at Arsenal - will raise eyebrows on Merseyside as it was Parry who introduced Tom Hicks and George Gillett Jnr to the club and pushed for their eventual takeover in 2007.

He would come to regret this decision as the American duo's ownership has proved to be deeply unpopular with fans and Parry was ultimately forced out of the club in February 2009. He had been in charge for over 10 years.

These conditions indicate the existence of a material uncertainty which may cast doubt on the parent company's ability to continue as a going concern

Independent auditors' report

Hicks and Gillett may soon be following him out of Anfield as they have put the club up for sale: an apparent admission that their regime has been a failure on and off the pitch.

Of particular concern to the fans (and any potential buyer of the club) will be a warning in the parent company's accounts from the auditors.

For the second year in succession, KPMG has flagged up its fears about Liverpool's precarious debt position. This relates to the loans Hicks and Gillett took out to finance their purchase of the Premier League outfit.

Last year the pair were forced to pay off a £60m chunk of their debt to the state-owned RBS in return for a one-year extension of their "credit facilities". That extension expired in March but it is believed they have been given six months' grace to find a buyer.

British Airways chief Martin Broughton arrived in April to oversee the club's sale.

"Success for me is completing a sale within a relatively short period - a matter of months - to someone who, hindsight says, was a very good owner for Liverpool", says the Reds' new chairman.

But until that happens the club is dependent on what KPMG calls "short-term facility extensions".

"These conditions indicate the existence of a material uncertainty which may cast doubt on the parent company's ability to continue as a going concern," it said.

As well as the bank loans, Liverpool's parent company also owes £144.4m to its parent company, the Hicks and Gillett-controlled Kop Football (Cayman) Limited. The interest on this was £8.1m, although it has not been paid.

Other items of note in the accounts are the expenses bills from Hicks and Gillett of £158,000 and £118,000 respectively. There is also a charge of £22.3m for work done on the much-delayed new stadium project.

It was not all red ink in Kop Football (Holdings) Ltd's accounts, though. Manager Rafa Benitez managed to make £3.4m in the transfer market, following 2008's £14.3m net profit.

And the club's second-place finish in the Premier League brought in record TV revenues of £74.6m.

Mention was also made of the bumper shirt sponsorship deal the club signed with Standard Chartered in September 2009. Worth £80m over four years, the first benefits of that tie-up will come in next year's accounts.

But with no Champions League football to look forward to next year, a squad in need of urgent overhaul and uncertainty surrounding Benitez's position, the shirt deal will be scant consolation to Liverpool's frustrated following.



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see also
Benitez opens talks over future
06 May 10 |  Liverpool
Liverpool 'must improve academy'
30 Apr 10 |  Liverpool
Owners put Liverpool up for sale
16 Apr 10 |  Liverpool
Liverpool step up investor search
11 Apr 10 |  Liverpool
Liverpool stadium 'will be built'
17 Sep 09 |  Liverpool
Liverpool agrees bank debt deal
27 Jul 09 |  Business
Liverpool FC owners lose 42.6m
04 Jun 09 |  Business
Reds owners suspend stadium work
14 Mar 07 |  Liverpool


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