Tom Hicks + Last Ditch Attempt = ???

Posted: September 17, 2010 by mcdonaldtaf in Business, Liverpool FC
Tags: , , , ,

As the RBS imposed October deadline approaches for Liverpool Football Club, the news of Tom Hicks’ latest attempt to retain control of the club is unwelcome to many. The many include the majority of our fan base and according to the latest stories the club’s board. It would seem a battle is continuing to rage within the board room. Although it may well be a battle the board are ill-equipped to win.

You may wonder why, if the board have control of the club (a majority of the board members can outvote the owners), they are unable to sell the club for (say) £150m? Well the club’s directors have fiduciary responsibilities to the company (which is an entity in its own right) but also the club’s shareholders. So doing something which is not in the best interests of the shareholders leaves a very large door open for the owners to take legal action against the directors. I say a ‘very large door’ as it would be needed for the owners to get their damages out of the court room.

So although a majority of the power is currently held by the non-owning directors, it is a situation which is neither black and white or set in perpetuity. This, together with our high debts and fan unrest, leaves us with a situation which is unstable – to say the least!

At the moment it is very difficult to say whether Hicks, should he raise the money required to pay off RBS, can actually be blocked from retaining control. Indeed it could be argued that RBS may welcome such a move as they can then disappear into the background. Allowing them to avoid the increasing resentment and resulting bad press the bank is attracting, having pocketed tens of millions in interest payments. This would leave the board the impossible task of battling against Hicks, company law and RBS.

Many have commented on the perceived incompetence of key board members Christian Purslow and Martin Broughton. In fact I have found it difficult to believe on several occasions that they are acting in the best interests of the club. They would have to be blind, deaf and stupid to not have noticed the uprising against them from within the fan base.  So why are they putting up such a fight against the owners, or are they? It seems a bit early for pantomime season but for us Liverpool fans it feels like it all year round at the moment, so I just don’t know.

What I do know is that there is a very real chance that Tom Hicks, come the start of the 2011/12 season, may well still own ‘our club’. I keep saying that I expect many twists and turns both before and after the October deadline, I’ve still not seen anything to convince me otherwise.

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