Liverpool FC & The 9pts Risk Explained

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Liverpool head to the High Court to try and validate the sale of the club via a declaratory judegement, the proof that the boards actions were valid. Led by a confident Chairman in Martin Broughton, they hope to complete the sale of the club swiftly and obtain Premier League approval for the purchase. In doing so however, they face both the stubbornness of “Dear Mr Tom Hicks” and his somewhat quieter partner in crime George Gillett… along with the risk of a Premier League 9 point Premier League reduction, should plan B be chosen to be adopted.

Plan B comes in to play if for one reason or another the High Court decide that the board that voted 3-2 in favour of the sale of the club, was indeed not the board of the club at the time that vote was cast. The legal confirmation is sought as the board that cast the votes (For: Martin Broughton, Ian Ayre, Christian Purlow – Against: Tom Hicks & George Gillett), is cited by Tom Hicks and George Gillett as being invalid as they just prior to the votes being cast they replaced Ian Ayre & Christian Purslow with Mack Hicks & Lori McCutcheon, to control the voting process. An action that is deemed by Martin Broughton after consultation with solicitors Slaughter & May, who have provided guidance through the process, to be invalid, with himself being the only person to be able to sanction any changes to the board, of which he blocked.

Plan B is a logical next step on the route to sale, should the Americans retain control of the club and this would need to come from the hand of RBS. At present H&G have £237m & above outstanding in debt to RBS in loans that they have so far been unable to refinance, this lies with Liverpool FC’s parent company “Kop Football (Holdings) Ltd”. The repayment deadline for these funds to RBS at present has 7 days remaining on it (October 15th) and RBS are likely to be exceptionally buoyed, that in the form of New England Sports Ventures (NESV), owners of the Boston Red Sox, they have a guaranteed method of payment of that debt which has spiraled out of control for H&G.

For a sale to be forced through under these circumstances and to avoid further stalling on the recovery of their funds, the parent company Kop Football (Holdings) Ltd would need to be placed in to administration, should RBS opt to travel this route. Liverpool FC on its own, is both a profitable and solvent part of the portfolio thus would not go into administration in its own right and avoid a 9 point Premier League penalty. However, as the vehicle which owns the club (Kop Football Holdings Ltd) could be deemed by the Premier League rules as being solely concerned with the ownership of Liverpool and football-related matters, it could technically trigger the nine-point penalty rule. Should the parent company have had other financial interests, such as non football activities then such a rule would not technically be invoked as was seen in the the instance of West Ham when Icelandic bank Straumur collapsed. The club were a solvent part of the overall portfolio and Straumur had interests in others areas.

Therefore the risk of a 9 points reduction, technically exists, should the rule be taken to the letter and no other circumstances be considerable, then Liverpool FC would see themselves fall from 6pts in 18th place to the bottom of the table on -3pts.

It is not a matter that is by any means being deemed as crystal clear, it is an obvious interpretation of the Premier League rules for its member clubs to follow and abide. With the matter heading for the court house next week, it is something that any Liverpool fan would hope never needs to have any clarity provided to it, with a positive result seeing the infamous owners banished from the club.

As court information is awaited, Hicks & Gillett will not only hope that their fall from grace isn’t made complete with a big thud as rock bottom verdict arrives but that several thousand Liverpool fans are  not outside to wave them off. There is certainly every chance that it could turn out to be a day that will haunt them forever, without doubt there are enough wishing it.

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5 Comments

  1. This seems arguable to my mind. West Ham were 1 of several companies owned by the Straumur Icelandic Bank and as they were profitable did not receive 9-pt penalty. LFC are 1 of only 1 company owned by Kop Holdings and do receive 9-pt penalty. Fine so far BUT this means , surely , that any club owned by a company can escape being punished with this penalty IF the owning company buys another one for its portfolio as long as the football club is profitable?
    What is to stop a company whose football club is facing a penalty from completing such a deal? This doea not appear a level playing field to me…

  2. I see where you are coming from Blindside, but how does a broke 1 of 1 company (Kop Holdings LTD in this case) raise the capital to purchase a company large enough to make the entire operation profitable? If an owner had the money to do that, they wouldn’t be in a position to go into receivership (er sorry administration) to begin with.

  3. One thing is for sure, if the PL do try and invoke the 9-point penalty then LFC will fight it to the bitter end and that will include going through numerous courts! I believe the PL to be fairly spineless so not sure if they would be up for that fight? I am sure the G18 (or whatever it is) group of top European clubs would back Liverpool as well (including Man United) as it would ultimately be in their best interests to avert such action as they themselves could be in the same position someday (I think of Barca as well when I say this although I am unsure as to how things work in Spain?).

  4. As a Liverpool fan i would actually welcome a 9 point reduction. It would serve as notice to the Premier League to get its house in order in terms of ownership if a club like LFC went into administration. But on another note I think it would give the players more of a focus with a united desire to overcome adversity. We need something to spark the footballing side of things and this season could be all about being battling underdogs.

  5. Everyone seems to have forgotten about Southampton. They were Deducted points when the holding company went into administration.

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