by Brian Reade
What made English football so attractive to American investors like the Glazer family, Randy Lerner and Gillett was the ease of entry. Investors could execute rapid takeovers through leveraged buyouts, dealing with a few key shareholders, and then take advantage of revenue streams that legislation in North America forbids. Selling club-branded credit cards and having lucrative links with gambling firms are examples. They also saw untapped financial opportunities in stadium management, with seven-day earning potential, and an absence of established naming rights.
America’s population was becoming more Hispanic and thus more football-obsessed. In 2007 there were 42 million Hispanic Americans. By 2020 a quarter of Americans will be of Hispanic origin or ethnicity. Therein lies potential for English clubs to make money in America. Then, of course, there are the phenomenal TV deals falling into the laps of Premier League clubs.
Gillett had been circling the Premier League for a few years, looking for prey. Foster, a passionate sports fan, was a driving force. Gillett’s three other sons, Geordie, Alex and Andrew, became involved in other aspects of the family business.
‘We started looking for clubs that had a very strong fan base that perhaps weren’t as well developed as they might have been,’ says Gillett. He refuses to admit he failed to buy Aston Villa, losing out to another American, and owner of NFL’s Cleveland Browns, Randy Lerner.
But he did. As Villa’s then chairman Doug Ellis explains, he was desperate to buy him out. All that stopped it happening was Ellis realising Gillett wanted to borrow money to buy Villa, thus putting the debt on the club.
‘The Birmingham Evening Mail ran the headline “Doug Will Sell” and this attracted a lot of predators,’ says Ellis. ‘The independent valuation was £115 million. As I thought I was on my death bed, this was reduced by £30 million.
‘Gillett badly wanted the club, and was willing to meet the new asking price. On his second visit, I told him that at a community club such as Aston Villa the owner should live in situ. He said he could not, but that his son would.
‘All but one of the suitors, I was informed by Rothschild’s, were borrowing money to strike the deal. I do not believe in borrowing. It is against my principles. And I do not believe it is the way a football club should be run. The exception was Randy Lerner. When he came over to see me, he was soon followed by his bank manager.
‘I was impressed by Lerner’s demeanour and by his record. On his third visit, he said he would pay £20 million less than the asking price – but in cash. He asked me to trust him when declining to pay £20 million into a fund to spend on players.
‘I could have benefited by £20 million but I did not wish to saddle the club I had run since 1968 with debt. I believed Randy was the right man and so far I have been proved right.
‘As for Liverpool, it is not the way I would have run it. Gillett is a nice enough fellow but he and Hicks were hardly ever there. I never met them in the Anfield boardroom.’
After losing out on Villa, the investment banker Gillett had been working with alerted him to Liverpool and he liked what he saw, particularly as the club was still basking in the afterglow of the 2005 Champions League victory in Istanbul. Here was a fanatical supporter base that would surely fill every seat in a new stadium, a glorious history that had made them one of football’s global brands, a consistent Champions League participant and thus a prime benefactor of the TV billions pouring into the game.
There was only one problem. He didn’t have the £450 million needed to buy out the Liverpool shareholders and build a new stadium. He had several meetings with Rick Parry and David Moores (during which his case wasn’t helped by rumours emerging that he had floated the idea of a groundshare with Everton), but due to his lack of serious wealth was always seen as a non-starter. It came as no surprise in late 2006 when Liverpool announced they were selling to the infinitely-wealthier Dubai Investment Capital, which led to a typical piece of Gillettian wit: ‘I lost to an entire country.’
But he refused to give up. After Parry called, in November, to tell him he was going with DIC, he switched his efforts to finding a wealthy partner to move in for the kill if the Arab bid fell through. What better partner than Tom Hicks, with whom he had worked in 2002 to pull off a series of mergers and form meat-packers Swift & Co., the second largest pork and beef processor in the world?
On the surface, the effervescent, jokey northern boy and the serious, dead-eyed Texan seemed unlikely soulmates. But they had plenty in common, and not just a love of cutting a deal, pocketing a huge profit and getting out.
They shared interests in art: Hicks’s wife, Cinda, was a former New York dealer, while Gillett’s wife, Rose, bought him a set of eighteenth-century landscape paintings one Christmas. They already owned sports clubs and, despite being in their sixties, enjoyed participating: Gillett was an ace skier while Hicks played golf and shot pheasant. Put them together and you’ve got James Bond. Look at them separately and you’ve got Tom and Jerry.
They bumped into each other at the annual convention for ice-hockey owners and Gillett filled Hicks in on Liverpool, telling him there were signs of uncertainty over the Dubai bid. How they’d spent an eternity on due diligence. How David Moores was having sleepless nights worrying about the deal, especially after the Daily Telegraph leaked a report which claimed DIC were planning to sell Liverpool after seven years.
Gillett convinced Hicks this was a once-in-a-lifetime opportunity, the crowning glory of their careers. What they’d ‘always dreamed of.’ By putting together Liverpool with the Dallas Stars, Texas Rangers and Montreal Canadiens they could answer the needs of any potential client, whether in Europe, the States or Far East.
‘We’ll be able to show the world something new and different,’ said Gillett.
Hicks went away and Googled Liverpool and was taken aback by their history. He studied the Premier League’s recent £2.7 billion TV deal, realised its worldwide potential and couldn’t believe the figures that were leaping off the screen: ‘The more I looked,’ said Hicks, ‘the more I became convinced it was an opportunity to buy a crown jewel of sports at a modest price.’
Within forty-eight hours their shotgun wedding was mutually blessed. They went back to Liverpool, armed with Hicks’s billionaire ranking on the Forbes List, and piled on the promises to buy the shares at £500 more than the Arabs were offering, build the stadium, provide money for players, safeguard the club’s traditions and generally make Anfield heaven on earth.
By the time they were having dinner with Moores and his wife Marge, and laying on the charm with a Texan-sized trowel, it was already game over.
Now, unless your name is Wayne Rooney, and the print is too small for you, it’s probably taken you less than thirty minutes to read this chapter. Half an hour, at most, to discover that Tom Hicks was a serial asset-stripper and a failed sports entrepreneur whose game plan wherever he went was to make huge profits leveraging the price of a failing institution, using someone else’s money to do it. George Gillett was a bankrupt who did have a pot to urinate in, but it was so small it could be filled by a Lilliputian after a vicar’s tea party.
If it took you thirty minutes to discover that about the people Liverpool FC were selling the family silver to, where were the eyes, the ears and the brains of the directors and shareholders who had been entrusted with that precious cargo?
Why did they, after years of searching for and rejecting potential suitors, decide at the eleventh hour to ditch Sheikh Mohammed’s Dubai Investment Capital, whose accountants had spent more than a year doing due diligence, in favour of a couple of Americans, one completely unknown to them, who didn’t even ask to see the books?
As the Guardian’s Paul Hayward wrote at the time: ‘A club synonymous with the earthy virtues of Shankly, Paisley and Dalglish rebuffed a suitor wealthier than Roman Abramovich to foxtrot with George Gillett and a partner who showed up later than a mystery man in a Hollywood thriller.
‘Picture the scene in a secret location
.
‘“Who’s your friend?” the Anfield money men ask Gillett as an exuberant cap-wearing Texan called Tom Hicks joins the negotiations.
“‘Don’t worry. This guy’s for real. He’s George Dubya’s buddy.”
‘And before you know it, Sheik Mohammed suddenly knows what it’s like to make a generous offer for a house in Fulham only to be told by an eighteen-year-old estate agent that a City boy with a bonus has just blown him out of the water.’
CHAPTER THREE
‘I’m handing it over to safe hands. This is not someone coming over just to make a quick buck. They are in it for the long term’
– David Moores
The coaches from Krakow, Warsaw, Lodz and Wroclaw had been pulling up all morning in the car parks around Old Traf-ford. It was October 2005, and eight thousand Poles had passed over land and sea in the hope of seeing their country knock England off the top of their World Cup qualifying group. After mooching around the ground in the rain, and staring at Ryan Giggs bedside lamps in the United megastore for shelter, hundreds drifted back to the coaches, woke the drivers from their back-seat kip and asked a favour.
How would they fancy, in return for a fistful of Zlotys, taking them down the road to a real footballing shrine? How about an afternoon at Anfield?
To work out how hot Liverpool were around this time think of a nude Heidi Klum sitting in a sauna after a gallon of water has been lashed on the coals. That stunning, emotional Champions League triumph five months earlier in Istanbul had inspired a tidal wave of support. Indeed an official Europe-wide survey of fans that summer named Liverpool the continent’s most popular second team.
Three countries in particular had been bitten by the bug. Spain, because of Rafa Benitez, Xabi Alonso and Luis Garcia; Italy, because most of the nation were grateful for Liverpool breaking the hearts of Silvio Berlusconi’s AC Milan; and Poland, because of Jerzy Dudek, the boy from the small Sile-sian city of Rybnik, whose goalkeeping heroics during extra time and the penalty shoot-out had made him a national sporting legend.
Make that a saint, after he dedicated his Istanbul performance to the former goalkeeper, Polish Pope John Paul II, who had died a month before the final.
That’s why the boys from Warsaw and Lodz didn’t want to stare at Wayne Rooney bedspreads, the Matt Busby statue or the Munich clock. They wanted to see Anfield, home of the famous Kop, and its trophy room, home to the European Cup, which had become theirs to keep after winning it for the fifth time.
How could the drivers refuse, especially if there was a chance of getting their photo taken in the Kop goal doing the Dudek?
And so to Anfield.
‘Sorry, lads. The only way you can get inside the ground is on a stadium tour and they’re fully booked.’
‘But we’ve come all the way from Poland.’
‘As I say. Nothing I can do.’
‘Can’t we just go into the museum?’
‘You’ve got to have a ticket for the stadium tour to get in, and we’re fully booked.’
‘But there are lots of us and we just want to have a look inside the ground.’
‘As I say …’
‘But what if’ – pulls out a tenner – ‘we all pay you, just to let us in and take photographs standing in front of the Kop. It won’t take long, then we will go.’
‘As I say, the stadium tours are fully booked today. The club shop’s open, though.’
‘Can we get a drink and a meal?’
‘Er’ – stares at watch – ‘the cafe down the road might be open.’
Welcome to the European Capital of Football, folks. Not so much the Nou Camp as the No Chance.
The Polish hordes drifted off disappointed and bemused into the club store to grab the last few remaining Dudek mugs, before strolling around the outside of the ground. The only surface on which to sit and view one of the most iconic football stadiums in the world was a small stretch of wall facing the Kop.
The only place to take photographs was standing on the other side of Walton Breck Road, hoping a 26 bus didn’t fly past, spraying your Kodak with gutter-rain and blocking out your smiling pal under the Paisley Gates.
Back to Manchester they travelled, without getting a glimpse of the European Cup or the Kop, wondering where all that garbage came from about Anfield being a warm and special place, the proud heartbeat of the world’s most popular club. Outside and inside Old Trafford was where they spent their money and took home presents and memories. Never mind, lads. If you bought a Wayne Rooney bedspread and managed to keep it stainless, you’ve probably got a collectors’ item.
This is just one of countless examples of how Liverpool’s commercial department has been a laughing stock for years when compared to the smooth-running, big-hitting, all-singing, all-dancing operation down the M62. Throughout the 1990s, Old Trafford was Harrods, while Anfield was a corner shop. As this century progressed, United’s brand, fired by repeated Premier League wins and Champions League successes, grew even stronger. While Liverpool’s flat-lined.
As screenwriter and Kop season-ticket holder Roy Boulter put it: ‘We weren’t even a corner shop by comparison. We were the greasy-haired hot-dog seller who used to stand outside the Arkles pub, a wheel missing from his stand, flicking ash into his watery onions. Doing trade only when he felt like and only with the desperate.’
All you need to know about Liverpool’s non-ability to cash in on its global brand is contained in the following sentence. On 26 May 2005, when all of Europe woke up with the previous night’s Istanbul images imprinted on their minds, Liverpool’s club shop remained shut all day. Clearly the hot-dog man had a hangover.
For years Liverpool’s commercial and marketing operation had been derided by fans, rival teams and suppliers. But the feeling was, after Istanbul, Liverpool were looking at a huge open-goal even they could not miss. It turned out they had more misses in them than Emile Heskey.
The problems were they had few staff, most of whom were overworked and demotivated. There was no proper management structure and they outsourced most of their operations, meaning other businesses were left to exploit the Liverpool brand and cream off a nice profit. George Davies did the merchandising, Paul Heathcote the catering, Granada the TV, etc.
Fans abroad (remember that global fan base Liverpool smugly refer to) would complain about a baffling inability to buy products online, due to the store nearly always being out of stock. It wasn’t that baffling when you saw how the system worked. Online ordering was done via virtual buckets. For example, there would be a bucket containing large-sized home shirts. Whenever the bucket emptied someone had to spot it and manually transfer new shirts over from stock.
No one had bothered to work out, or maybe chose to ignore, that when staff went home at five thirty p.m. and the other side of the world was waking up, if the bucket was empty, regardless of whether large-sized home shirts were stacked to the warehouse ceiling, customers were told there were none left. And, even more criminal from a business perspective, the system wasn’t asking for details so they could get back and sell it to them when it arrived in stock.
The logic behind this award-winning customer care campaign was that Liverpool didn’t really want you to shop online. Due to outsourcing, it was more lucrative to sell through the official club shop because Liverpool kept 100 per cent of the profit. Anything sold online went through Granada, who took 33 per cent.
No one had stopped to think that if you live on the other side of the world the chances are you won’t get to the club shop, or be near a computer between nine a.m. and five thirty p.m. GMT, and therefore 66 per cent of profit on a shirt was better than no profit at all.
The amateurish approach to sponsorship was even worse. Back in 1979, under the stewardship of Peter Robinson and John Smith, Liverpool became the first English club to have sponsors’ names on their shirts, after a deal was sealed with Hitachi.
At the time of Istanbul they were getting £3 million a year from Carlsberg, which event
ually went up to £7 million in 2007. Manchester United were getting £15 million, and were about to trade up to £20 million. I have heard both former sponsors and managers of radio stations who cut deals with Liverpool brag how they knew all along that they were paying vastly under the odds for their access.
It was small wonder some sponsors left. An executive at one former sponsor found after the deal was over that his firm had been entitled to have an end-of-season game on the Anfield pitch. When he asked the club why he hadn’t been told about the perk, the answer was: ‘Well, you never asked us.’
There were few management meetings, but then there were few staff. Or if we’re being generous, there were roughly as many staff as Wigan Athletic employed, but with no structure. Just everything going through an over-burdened chief executive, Rick Parry, whose chairman, David Moores, let him get on with it.
As a senior Anfield source put it: ‘With David it was all about having an easy life. Not because he was a bad person, and certainly not because he didn’t care about Liverpool. But because all he wanted to do was turn up, park his car, have a smoke in the boardroom, go to the match, be around the players and the club, and go back home. If you confronted him with a problem he’d wave you away with the words ‘see Rick’. As for Rick, he just took on far too much. Any commercial prowess he’d had when he joined Liverpool had probably been beaten out of him during his time there.’
And it wasn’t just on the commercial side where the club bumbled along in an amateurish way. It extended to the dealings with the manager, staff and players. Take the dismissal of manager Gerard Houllier in the summer of 2004. As early as the Marseille game in March, journalists were talking about Houllier being finished and Valencia’s Rafa Benitez, who had been approached behind-the-scenes by Liverpool, as the next manager.
A few days after the final game of the season, a board meeting was held during which David Moores reluctantly proposed parting company with Houllier. Within forty-five seconds he was unanimously backed by the board. The next item on the agenda was Houllier’s review of the season and his plans for the next one. Not only did they usher the Frenchman in and allow him to spend the next two hours detailing where things had gone wrong and how he would put them right, he was grilled by board members on his assessments and proposals. Despite knowing they’d just decided to bid him au revoir.