October 6, 2010 is going to be a milestone day for the English Premier League. It is when Liverpool might enter the record books as the second club in the League’s history to be declared financially insolvent, Portsmouth having become the first earlier this year. The financial mismanagement of the south coast outfit was swept under the carpet as quickly as possible, a task helped by their subsequent relegation to the Championship, but this time the size and stature of the club involved make the issue unavoidable. The struggles of one of the stars of the English and European footballing traditions should be deeply embarrassing for the Premier League yet it still seems insufficient to elicit action on the financial condition of the league.
Liverpool have until the October deadline to repay a £237m pound loan extended by the Royal Bank of Scotland. The club’s owners, Americans Tom Hicks and George Gillette, have few options and even less time with only two weeks left. While refinancing the debt is possible it does little to address the future of a club which requires a new stadium and restructuring of the squad to move forward as neither owner has fresh funds to invest. The only realistic option is a deep pocketed savior, but buyers are in short supply and those who have come forward are playing coy seemingly waiting for a better deal. It is expected that should the Americans default RBS will assume control of the club and seek to sell it on as quickly as possible, a move that would put Liverpool in administration in everything but name.
However, a declaration of administration by Liverpool will never see the light of day as it would be nothing short of a public relations disaster. All involved have little to gain and much to lose by stopping the music. The British government owned RBS would incur the wrath of supporters should they cause Liverpool to be docked points, an unfavorable development for both the bank and the politicians. Likewise, the Premier League, already attracting attention from FIFA for racking up quite a balance on its credit card, would be handing Sepp Blatter ammunition by broadcasting a Liverpool foundering in the shallows. And the league fears most of all that any word of regulation will scare away the current (and future) sugar daddies English football has grown addicted to.
But denying the condition of Liverpool, and by extension the league itself, is about more than money alone; it is an inviolable psychological barrier for the league chieftains. Allowing the club to go into administration would be an admission that the system is broken and cause an emotional shock severe enough to dispel the collective delusion of an ever expanding, all powerful English football empire. This is undoubtedly a reality grossly unacceptable at a time when sport is one of the few bright spots able to lift people from the grinding pessimism of the economic depression. And so the regulatory response required is exactly the change which the people in charge would rather not make because it is inconvenient for the short term. Similar conditions led to the financial implosion of 2008-2009, and there is little indication that the resolution for the Premier League will be different as the heads seem content to continue ignoring the problem in the hopes that it will resolve itself. It seems that until the walls of Old Trafford itself come tumbling down Dave Richards and Richard Scudamore are determined to do nothing.