Ring of Fire

by Simon Hughes

  Then came interest from Thaksin Shinawatra, Thailand’s prime minister and a business tycoon who made his wealth in IT and telecommunications. Parry made two trips to Bangkok and Shinawatra invited his entire cabinet for dinner, attempting to reflect the passion for football and Liverpool within the country.

  ‘His strategy was twofold. He wanted to do something for the people of Thailand. He had a concept of public ownership where the country’s lottery fund would fund Liverpool. His advisers argued against that because they realized he would be too far oversubscribed. It could have led to massive disappointment if Liverpool were unsuccessful.

  ‘He also had an economic vision for Thailand. His idea was to acquire a brand and produce shirts themselves rather than a counterfeit economy existing. He saw Thailand as a gateway to China and India. Had he been able to pull it all off, it would have been an interesting proposition.’

  Shinawatra did not prove he had the funds and Liverpool walked away, and though Parry believes Shinawatra’s proposal had some foundation, considering he later bought Manchester City, he was concerned about the perception of a sale considering the stories of human-rights violations in Thailand while Shinawatra was in control.

  There were other groups and people who just wanted to make headlines.

  ‘The main problem with selling a major European football club is that you have every Tom, Dick and Harry who never has any intention of doing it but wants their few minutes of fame and therefore makes an offer that isn’t genuine. Suddenly, they become the person in years to come that “nearly bought Liverpool”. Although in reality, they didn’t. Of course, if you ask a wealthy person whether they want to buy Liverpool, they’re obviously willing to talk about it. But are they really determined to do something?’

  Discussions with Dubai International Capital (DIC), the investment arm of the Dubai royal family, were ongoing and the most interesting to Parry, even though negotiations had been disappointingly slow. But in the summer of 2006, George Gillett made first contact, an American businessman.

  ‘He came along to Merseyside unsolicited and talked with great passion, speaking about values and explaining why he wanted to buy Liverpool for the right reasons. We’d spoken to so many groups by that point that we took it with a pinch of salt and didn’t get too excited.’

  Parry and Moores were invited to Montreal, where Gillett owned the Canadiens ice hockey team.

  ‘George wanted to show David how he ran his businesses. It was a very impressive visit, although David was fairly guarded, having spent time getting close to Robert Kraft before he had a change of heart. George wheeled in his sponsors, key staff and the commissioner of ice hockey – a whole raft of people that would support his credibility. But to be fair to him he also invited us to wander round and speak to anyone we wanted to. He gave us the keys and, universally, everyone said good things about the way he ran the Canadiens and his commitment to Montreal. It all sounded good.’

  While Gillett prepared to make an offer for Liverpool, DIC made contact with Parry again.

  ‘George’s interest was genuine but he was always playing catch-up because we’d known DIC for longer. David felt the weight of responsibility about making the right decision. Yet David had never been to Dubai. I figured that maybe DIC could arrange a visit and show Dubai off to David, make him realize the spectacular things going on there. George had done it with some style and had convinced David to travel even though he doesn’t like long flights because he can’t smoke. The fact that he was able to smoke on George’s private plane was a bonus. We told DIC about the fact George had presented himself well. He had given us the keys to Montreal and had nothing to hide. He even sent us off to a Bob Dylan concert. What could DIC do to show they were serious?’

  DIC could not arrange a private jet for Moores and Parry to travel in.

  ‘So we rented our own and paid for it. That had no bearing whatsoever on the deal but when someone is determined to impress you they do everything they can to blow you away.’

  Moores and Parry were checked into the Burj Al Arab, the world’s only seven-star hotel and the fourth-tallest hotel on the planet.

  ‘But we never got out of the hotel,’ Parry says. ‘We were supposed to meet Sheikh Mohammed but were told that he’d gone horse riding. So we didn’t meet him. In fact, we didn’t meet anyone important, not even the chairman of DIC. I was still really keen on Dubai because of everything else the place represented and delivered. But we had spent two days in a nice hotel without making any progress. The experience was a negative one and it was a fairly depressing journey home because it did not reinforce their credibility at all. We began to ask ourselves whether the people that really mattered in Dubai were serious about Liverpool.’

  Moores and Parry overcame their disappointment. The year was coming to an end and, having had proposals accepted for the new stadium in Stanley Park, just across the way from Anfield, the club required an injection of more than £12 million for the steel to be ordered in January. Without that money, Rafael Benítez’s transfer plans were potentially going to be affected.

  ‘We made it clear to DIC and George that the sale of the club had to be done by the first week of January. George was adamant that his funds were in place and meanwhile we finally received a formal offer from DIC in November. By then, DIC had been considering what to do for eighteen months. We’d negotiated with them on an open-book basis. Steve Morgan’s due diligence had only taken two weeks. What exactly did DIC need to know – or do – throughout that time?’

  Despite the delays, Parry and Moores deemed that DIC’s offer was the safer and wiser option to take.

  ‘I had to phone George and tell him the bad news. I explained that ultimately we were going with a country with more resources rather than one individual. The broader deal was considered better. George must have taken that on board, because a few months later the outlook had changed and he altered his bid.’

  By the end of January, the deal with DIC still hadn’t been concluded.

  ‘It was ridiculous. We then had to introduce DIC to the banks that we’d lined up to fund the stadium in the first place. Surely Dubai was funding this? Surely DIC is awash with money and has connections with their own banks? Why were we setting up meetings involving us, them and the Bank of Ireland? The whole thing was becoming decidedly odd and exasperating.’

  February came and DIC’s exclusivity period expired.

  ‘David had shaken hands with them and, as I’ve said before, the gesture meant a lot to him. So he was insistent that he wouldn’t solicit any other interest, although George [Gillett] hadn’t gone away. To George’s credit, he didn’t make a lot of noise about his disappointment. He didn’t go to the media. Instead, he let it be known that he was still keen on Liverpool if it went awry with DIC.’

  In January, a delegate from DIC had promised to underwrite the cost of the steel needed for the stadium. It was then revealed that the delegate had no authority to sanction such a proposal and Liverpool were left exposed.

  ‘We had £12 million worth of steel that potentially we couldn’t pay for if a takeover wasn’t concluded swiftly.’ It reached the point where Anfield’s board shared reservations about DIC.

  ‘George came back, explaining that he’d listened to our concerns about being a single family and that he’d found a partner to bring in. Did it alter the dynamic? At that point the board was being advised of its responsibilities to the shareholders and that it must accept the best deal. In the final analysis, George’s offer for the shares was better than DIC’s.’

  DIC had also been evasive about how much cash it was prepared to invest in Liverpool’s team.

  ‘The answer always was along the lines of, “Well, we’ll own it and we’ll be fine.” With George, it was all very detailed. He had pots of money allocated for lots of projects, which in fairness was true. The only problem was, it turned out not to be his money. It was the Royal Bank of Scotland’s money.’

  Liverpool were playi
ng West Ham United when a board meeting was hastily arranged in London.

  ‘The view of the board was, DIC have had long enough and we had to go with the solid offer from George and his partner, [Tom] Hicks. But even then, in David’s position as the majority shareholder, he insisted that having given his word to DIC, he was not going to go back on it lightly. He wanted time to reflect on it for a couple of days.’

  Moores made the telephone call to Sameer al-Ansari, DIC’s chief executive, the following morning.

  ‘DIC had been expecting the board to rubber stamp the deal with them and finally get it signed. I went around to David’s house with his adviser Keith Clayton and listened while he called Sameer to tell him the news. David said, “Listen, we’re in a bit of a quandary, we’ve got another offer on the table. The board’s view is we should be accepting the other offer, although I wanted to think about it carefully before I make a momentous decision.”

  ‘If I’d been the chief executive of DIC, I’d have responded to that by saying, “David, I’ll be on the next plane. I’ll come and reassure you.” What Sameer said was, “Unless you accept by 5 p.m. today, we’re walking away.” David’s immediate reaction to that, being strongly principled, was, “Hang on, we’re Liverpool Football Club. You don’t treat us like that.” David didn’t talk about himself, it was “You don’t hold Liverpool Football Club to ransom.” He reminded Sameer that it was the biggest decision that he’d had to make in his life and all he wanted was breathing space to make sure he was doing the right thing. There was no way he was going to be bullied.’

  DIC’s ultimatum failed. At 3 p.m., news arrived from the Middle East that negotiations with Liverpool had ended. This left Liverpool FC in a vulnerable position. It was now obvious to Gillett and Hicks that there was no opposition. If Steve Morgan – a Liverpool supporter – had negotiated on price before, why wouldn’t they do the same? Parry phoned Gillett.

  ‘I told him that our stance had changed and that we were prepared to enter discussions with him again. But I also said we didn’t want any fun and games over the price and that we wanted it done pretty damn quickly. To be fair to George, his reaction to that was, “Listen, you have my word. I’ve agreed a price. We’ll get the due diligence done swiftly.” The deal was completed within a week.’

  Parry accepts that he should have taken more time in getting to know Tom Hicks, a Texan with a track record in leveraged buyouts where he used outside capital to purchase companies.

  ‘He didn’t say much when we met,’ Parry says. ‘He left a lot of the conversation to George, who had spoken well of him. But Tom, he soon started talking.’

  Gillett and Hicks did enough to convince Liverpool’s board their proposal was sound, stressing that the pair of them had worked together successfully before and that their business interests would dovetail to benefit Liverpool.

  Although Hicks and Gillett insisted they would not ‘do a Glazer’ by loading Anfield with debt, as had happened at Manchester United, the Liverpool Echo reported that they proceeded to use loans rather than cash from their own personal fortunes to finance Liverpool. After paying £5,000 a share in a total outlay of £174.1 million, they also borrowed another £11 million to pay banks and advisers and a further £44.8 million to absorb the club’s debt. On top of this, another £70 million was added to the loan for the stadium project and to cover ongoing running costs.

  Within twelve months, the owners took out a £350 million loan with the Royal Bank of Scotland and Wachovia. Of that, £105 million was immediately loaded on to the club’s books, with the remaining £245 million being taken on by Kop Holdings, the holding company set up by Hicks and Gillett when they bought the club.

  A spokesman for Hicks publicly admitted that the club would face interest payments of around £30 million a year on their borrowings. By the end, it was paying around £100,000 per day in interest.

  ‘Our clear understanding was, it was while they reorganized their own finances,’ says Parry. ‘In the offer document, there was no debt on the club. It would not have to bear any costs. That certainly changed.’

  When confirmation of the club’s RBS refinancing arrived, the club statement carried only Hicks’s name. In March 2008, just thirteen months after the takeover, Gillett told a Canadian radio station that the relationship between himself and Hicks had been ‘unworkable for some time’, stating that he was willing to sell his stake in Liverpool to Hicks.

  ‘There is no doubt that you can have a perfectly rational and analytical relationship if you are investing in a meat packing company,’ Parry continues. ‘But when you get involved in sport, it is completely and utterly different. Because we needed to make a decision quickly, partly to meet the club’s needs, I suspect they did not spend a lot of time on the legalities of how their relationship would work. There was a straight assumption that it would all work out fine.’

  Parry is not trying to absolve himself of blame here. He reasons that Liverpool had been backed into a financial corner through the delays with DIC. Circumstance played a big part in the sale to Hicks and Gillett.

  ‘To be fair, they did not attempt to chip away at the price. We could have started all over again but, having ordered the steel and with a huge bill to foot, god knows what would have happened. It sounds ironic now but we were still desperate to be in a new stadium by 2010. We were also desperate to win the league and to do that we needed the kind of investment that Hicks and Gillett were promising.’

  One of Hicks’s first significant public statements came ahead of the 2007 Champions League final with AC Milan, when he compared the purchase of Liverpool to buying Weetabix – another one of his leveraged buy-outs – admitting, ‘It’s just business’ and saying that anyone eating Weetabix was essentially paying for his purchase of the cereal company.

  ‘George, I think, genuinely did want to do things the right way and was trying to understand the club’s values,’ Parry says. ‘I don’t think it ever mattered to Tom. I don’t think it bothered him at all.’

  Under Hicks and Gillett, Parry continued as chief executive, while David Moores remained as a director, though his influence was inconsequential.

  ‘When David was in charge, we scrupulously had a monthly board meeting. That stopped under the new regime. Occasionally, they flew in with an entourage and we’d have an agenda for the day. There were other meetings in New York but they were few and far between. Sometimes there were telephone conversations – occasionally with both but more often with just one. It tended to be more with George.’

  The new owners’ man on the ground in Merseyside was Foster Gillett. Around Liverpool, a perception existed that Foster was simply the son of a billionaire, posted out on secondment to one of his father’s companies for experience. Towards the end of the Hicks and Gillett reign, Foster and his wife Lauren disappeared back to the United States without telling anyone.

  ‘Foster was a decent person,’ Parry says. ‘He was good natured and respectful. He tried to understand the club’s traditions. But then he went back for Christmas and we never saw him again. He left his lease car in the garage. I guess he was caught up in the family squabbles. It was difficult for him in that position.’

  It was never established precisely what led to the decline of Hicks and Gillett’s relationship. Both were contacted in the writing of this book and neither responded. But in one sense, the pattern of life inside Anfield and Melwood became regular thereafter, according to Parry.

  ‘When George was supporting Rafa, Tom wasn’t. And then vice versa. It must have been confusing for Rafa. One thing I passionately believe in is, if you are determined to establish a high-performing winning culture, you need a single philosophy from the top down, which we absolutely didn’t have. There was a complete split at the top. How on earth we maintained a spell of relative success until 2009, I have no idea.

  ‘The ownership issue was totally debilitating and distracting,’ Parry continues. ‘Certainly with David [Moores] we didn’t have to even tal
k about values, because they were simply exercised in everything we tried to do. We lived it; we didn’t have to debate it. Unfortunately, the two owners from America had two very different sets of values and very different mindsets. When you’ve got two owners with different philosophies, you can’t have a single philosophy by definition. That makes life incredibly difficult. For me, Liverpool isn’t just about winning – although that is the most important thing. It’s also about being different and being special. I’m positive it still matters.’

  Sympathizers would argue that Rafael Benítez was caught in the middle of the mess. Critics would say he exacerbated the situation by using the uncertainty to meet his own needs. Parry concedes that he did not share the same ‘intimacy’ with Benítez as he did with Houllier. The manager’s closest relationship had been with assistant Pako Ayestarán, who had followed him from Tenerife to Valencia and then to Liverpool. The 2007–08 season was a few weeks old when an argument led to Benítez’s long-time friend departing Anfield.

  ‘Gérard had the same close relationship with Patrice Bergues before he decided to move back to France to manage Lens,’ Parry says. ‘They had been together long enough for Gérard to accept Patrice challenging him. Any manager needs a strong number two, albeit someone who is different in personality. Management is a very lonely position and you can start to believe the publicity, either good or bad, when you’re stuck there on your own. When Patrice left, Gérard lost something very important.’

  Although Liverpool recorded their best league finish under Benítez the season after Ayestarán’s departure, perhaps he lost something too: a trusted pair of eyes and ears on the training ground but also, deeper than that, someone he could speak to about the challenges of working at a dysfunctional football club owned by Hicks and Gillett. Even before their arrival, though, Parry says he witnessed a swing in the way Benítez operated.