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They are English football’s most decorated clubs but events this week suggest their futures are far from secure

Timing is everything, the sages say, and today’s release by Manchester United of their latest hideous financial figures, in the same week Liverpool were convulsed by their Hicks and Gillett breakdown, hammered home the horror of takeovers based on debt. There went United, the glory, glory club that should be England’s richest, announcing enormous earnings of £286m from 76,000-seat Old Trafford, television and the other commercial wringing, but a loss of £84m. That was suffered largely because £81m was paid in interest and in the cost of servicing the Glazer family’s borrowings to buy the club in the first place.

That is the exact same figure United received for selling Cristiano Ronaldo, one of the world’s most glittering footballers, gone in £40m interest, on the £500m bond the Glazers borrowed in January, and £41m for early repayment of an interest rate agreement United’s financial wizards had entered into only a year earlier. The same huge money earned for trading a great and thrilling player, spent in useless payments to financial institutions who, in a recession, can surely hardly believe their luck.

And there they were again, the same justifications rolled out by David Gill, United’s chief executive, as if he, a United fan and football lover, really believes them: that the mountain of debt, now up to £769m, has no effect on United whatever, that the club is not burdened in any damaging way by money going out on that scale. With the interest payments, plus interest at 14.25% on the £202m “payment in kind” hedge fund debt, and the £13m paid to banks for United to issue that bond, the cost of the Glazers’ financial chicanery last year alone was £123m. The total cost of the Florida-based family’s takeover of United, done with mostly borrowed money in 2005, which was then loaded on to the club to repay, has since been £583m, in interest, bank fees and other charges.

Gill, talking up the income figure and £101m operating profit, rather than the debt or interest mountain, pointed out that United have £163m cash in the bank, which Sir Alex Ferguson could

• Chairman Broughton to seek court backing for sale
• Tom Hicks and George Gillett tried to replace fellow directors

The fight to control Liverpool’s future is heading for the high court next week, after the chairman, Martin Broughton, insisted he has the legal right to sell the club despite the opposition of Tom Hicks and George Gillett, the American

• Gillett and Hicks stand to lose £144m from the sale
• Liverpool ‘won’t lose points under administration’

Why is the board attempting to sell the club against the wishes of the owners?

Because under the terms of a refinancing agreement in April with the Royal Bank of Scotland, which is owed the majority of £237m, the club were put up for sale and Martin Broughton installed as independent chairman. But Tom Hicks and George Gillett have consistently sought to frustrate his efforts.

Why are Hicks and Gillett resisting the takeover?

Because the co-owners believe the £300m offered by New England Sports Ventures (NESV) and accepted by Broughton undervalues the club and will not give them a profit. In fact, they will be staring at a £144.4m loss in the form of the loans that they extended to the club’s holding company via a company registered in the Cayman Islands.

What can they do?

Hicks has failed in a last-ditch bid to refinance the £237m loan and Tuesday night’s move to oust two members of the board – the managing director, Christian Purslow, and the commercial director, Ian Ayre – and replace them with their own directors was an attempt to regain control. It was resisted by Broughton, secure in the knowledge that the pair signed an agreement that gave him final say on the make-up of the board and promised not to interfere in the sale process. The only avenue left is next week’s court challenge on the legality of the move to sell the club against the wishes of the shareholders.

Why is Broughton convinced that he will be able to complete the sale?

He believes he has shown that the club have been extensively marketed and that the NESV offer is the best one on the table. He has taken extensive legal advice and believes the agreements signed by Hicks and Gillett are binding. Today’s tour of the TV studios and the public statements were also partly an aggressive attempt to outflank the co-owners.

What if Hicks and Gillett win?

Even if they win next week’s legal challenge – which most experts consider a remote possibility – RBS will still be able to put the club into administration on 15 October, the refinancing deadline. The bank could then take control of the club and immediately sell it – quite possibly to NESV. The co-owners are effectively caught in a pincer movement between the RBS deadline and the sale process.

Will the deal leave Liverpool debt-free?

Essentially, yes. The deal will involve the banks being repaid £200m, £40m going to cover other liabilities and £60m clearing debt relating to the proposed new ground in Stanley Park. That will leave a £37m working overdraft with RBS and a facility related to the new stadium. But although it is understood that NESV will pay for the acquisition with cash raised from its own shareholders, Broughton could not confirm whether it would also take on additional debt to do so.

Liverpoolguardian.co.uk