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Posts Tagged ‘dallas’

• Former Liverpool owner has ‘failed to honour obligations’
• Lawsuit filed in New York seeks repayment plus interest

A US hedge fund is suing the former Liverpool co-owner George Gillett over what the firm says is a $117m (£73m) debt he racked up investing in the Premier League club.

Gillett did not immediately return a phone call to his office in Vail, Colorado, about Mill Financial’s lawsuit.

It is alleged Gillett borrowed $70m from Mill Financial in 2008 and agreed to pay 19%-a-year interest. He later agreed to pay millions of dollars in fees to extend the repayment date.

Gillett and his companies have failed “to honour their obligations,” Mill Financial says in the lawsuit filed in New York. The Springfield, Virginia-based firm says Gillett has repaid only about $430,000. The lawsuit seeks $117.2m in alleged debt, plus legal fees.

The Boston Red Sox owners, John Henry and Tom Werner, bought Liverpool last month through their New England Sports Ventures. The Royal Bank of Scotland engineered the $476m deal after Gillett and his co-owner, Tom Hicks, could not make debt payments.

Gillett and Hicks called the sale an “extraordinary swindle”. They said the price vastly undervalued the club and alleged that the bank had rebuffed their efforts to repay Liverpool’s debts and stop the sale. Hicks was not involved in the Mill Financial loan and is not named in the lawsuit.

Gillett, a former owner of the NHL’s Montreal Canadiens, and Hicks, a Dallas businessman, took over Liverpool in a 2007 deal that valued the club and its debt at £218.9m. They financed their purchase by borrowing, with the club as collateral.

LiverpoolBusinessguardian.co.uk

Thousands of miles from Anfield fans of Texas Rangers have contended with a familiar tale of debt and financial crisis

Ugly scenes of jeering fans at the stadium. A team bought with a mountain of debt, with creditors at the door. A messy sale with legal wrangling and an indebted owner clinging on. If that sounds familiar to Liverpool supporters then it should.

This is not the sad tale of Liverpool’s ownership woes. Five thousand miles across the Atlantic, it’s the recent history of the Texas Rangers baseball team. What the two teams also have in common is the man at the centre of both controversies: Tom Hicks.

In an uncanny parallel, the events at Anfield have been closely mirrored in the boardroom at Rangers Ballpark in Arlington, near Dallas, where Hicks’s ambitions to build an international sporting empire began to crumble, while bloggers in Texas labelled him “enemy No1 in the Dallas and Fort Worth metroplex”.

Hicks had made his fortune with a venture capital fund – buying or investing in companies and then selling them off at a profit – and was collecting a string of sports teams, including the Dallas Stars ice hockey franchise, the Texas Rangers, Liverpool and a professional rodeo circuit.

It was the Texas Rangers that first pushed George W Bush to public prominence when he led a consortium that purchased the team in 1989. While Bush went on to bigger things, the Rangers failed to perform and in 1998 the club was sold by Bush’s group to Hicks for $250m.

In the easy-money era of the 1990s and 2000s, financing such deals was no trouble for a successful businessman such as Hicks. But the collapse of Wall Street in late 2008 saw a credit squeeze that stopped banks refinancing the huge loans they had once been so eager to offer.

By early 2009 the Hicks Sports Group (HSG), the holding company for Hicks’s empire, had defaulted on repayments for $525m worth of loans. Soon after, Hicks placed the Rangers into administrative bankruptcy known as Chapter 11, to fend off creditors while he attempted to sell the club in a deal that would have allowed him to stay on as a shareholder.

But – in a pattern Liverpool fans will recognise – other parties took legal action to halt what they saw as a sweetheart deal, and baseball’s governing body, Major League Baseball, had to move in as the team’s administrator, making $40m in loans to keep the team going as the squabbling dragged on. More than a year later, in August this year, a court ruled that the team had to be sold by auction, and Hicks’s role was removed. The new owners are a group headed by the baseball superstar Nolan Ryan but paid $80m more than Hicks had first proposed.

Before the sale of the Rangers, HSG was estimated to owe 40 lenders approximately $600m in loans, unpaid interest and fees. Hicks is also trying to sell the Dallas Stars ice hockey team. A similar saga is unfolding, with Hicks holding out for a better price. A local sports blogger, Brandon Bibb, says he thought Hicks had learned his lesson from the Rangers debacle. “Well, I was wrong,” Bibb says. “Instead, it’s become clear that Hicks’s objective is to try and squeeze every last nickle he can out of these investments, the Stars, Rangers and Liverpool be damned.”

And that’s not all: the Wall Street Journal reported earlier this year that Hicks sold his luxury chalet in Aspen for $18.5m, saying his family preferred to go on holiday elsewhere. Has a man estimated to be a billionaire in 2009 found himself in financial difficulty? It is impossible to say, since Hicks’s holdings are privately owned and so not available for public scrutiny. But for some among America’s wealthy the Wall Street meltdown and property market collapse has slashed their net worth.

George Gillett, Hicks’s co-owner at Liverpool, is an even more reticent figure. Gillett was the majority owner of the Montreal Canadiens ice hockey team, the Liverpool of the NHL that once dominated the league but with little success in recent seasons. Gillett sold the team and their arena last year for an estimated $550m.

There may be a silver lining for Liverpool fans, if the Texas Rangers’ experience is anything to go by. Despite the months of uncertainty, the Rangers had their best season in years in 2010, winning their division.

The other good news is that the first thing the Rangers’s new owners did was cut the price of beer at the stadium. No chance of that at Anfield, sadly.

LiverpoolUS sportRichard Adamsguardian.co.uk

• Klein group set to earn up to £260,000 in fees
• Fans worried by proximity of Klein to Tom Hicks

Michael Klein seems to have re-emerged as a key figure behind the scenes at Liverpool. The former Citibank grandee was instrumental in BarCap’s acquisition of Lehman Bros two years ago and was the man who recommended the appointment of Martin Broughton as the Anfield chairman in April.

Klein and Broughton were, until 2008, co-chairmen of the Transatlantic Business Dialogue lobby and it was Broughton who confirmed that Liverpool’s co-owners, Tom Hicks and George Gillett, “knew [Klein] from old”.

Now Digger can reveal that a certain Klein Group – whose backer is unknown, but is more likely to be Michael Klein than the WalMart builder or the Dallas kids’ clothing retailer by the same name – will earn up to $400,000 (£260,000) in fees from the setting up of the Hicks Acquisition Co II this column exposed yesterday.

That was set up at the time when BarCap drew up a refinancing proposal for Hicks and Gillett, and fans are worried the proximity of Klein both to Hicks and to BarCap will lead to Barclays assisting the Americans in retaining control of the club beyond Royal Bank of Scotland’s 6 October refinancing deadline. The Kop Faithful pressure group yesterday sent an open letter to 40 BarCap staff demanding that they do not proceed with the refinancing plans. But it may never get that far in any case.

Although Broughton knows Klein well, he did oppose the refinancing scheme when it was presented to the board. And RBS, which as primary lender stands to lose most if BarCap were to deliver Liverpool to Hicks with reduced debt, told Digger: “We have full confidence in Barclays and the chairman to complete a sale.”

Bellamy transfer scrutiny

Championship clubs are expected to challenge the Football League board to introduce measures against a repeat of the kind of player-loans characterised by the move of Craig Bellamy, below, to Cardiff City. The League’s board meets on 9 September and is expected to discuss the effect of the loan transfer from Manchester City.

The view that Doncaster Rovers’ chairman, John Ryan, expressed yesterday, that the deal “will distort the integrity of the Championship”, is shared by several clubs in the division.

Rules state that loanee clubs must pay the wages of borrowed players in their entirety. It would not be difficult to return the regulations to their previous form, but it will need much debate: several other clubs now host Premier League players and would not wish to relinquish that lightly.

2018 team says no to logo

Fifa demands stringent brand protection by World Cup organising committees, and even in the bid phase England 2018 has taken action against unauthorised marketing. Such strong action, in fact, that the cease-and-desist order it issued involved one of its proposed host cities. Douglas Fletcher, chairman of the Plymouth World Cup Bid 2018 group, sent an email to local businesses asking for a contribution of £1,000 towards marketing costs. Fletcher said: “In return you’ll get [inter alia] the chance to use the Official World Cup Bid logo when we reach £250,000 in donations.” No you won’t. England 2018 informed Plymouth that use of official World Cup Bid marques is not permitted without prior authorisation from England 2018, which itself must gain Fifa approval.

Taking the Michael

Michael O’Rourke, founder of the failed sports broadcaster Setanta, has re-entered the UK pay-tv market with the resale of Celtic’s Europa League play-off match against Utrecht on his new Premier Sports channel. You have to admire the man’s entrepreneurial spirit, but Celtic fans are quite reasonably questioning his gall after the Setanta collapse cost their club, along with the rest of the Scottish Premier League, millions in lost revenue.

LiverpoolMatt Scottguardian.co.uk