Some Manchester United supporters maybe watching the troubles at Liverpool with a grin, but the mess at Anfield is no smiling matter because the contagion could spread to Old Trafford much more easily than many are ready to admit.
1. Both Liverpool and Manchester United were bought by ownership groups who used a leveraged buy out, a transaction in which the target being acquired is used to fund its own purchase by taking out debt against its value.
2. Each of those ownership groups is the sole owner of the club. Should external conditions render the owners financially unstable it would be disastrous for the club (see Sacha Gaydamak’s exit at Portsmouth). While many other clubs bear the risk of having a single owner, the consequences are magnified in a highly leveraged situation. A debt laden balance sheet hinders the ability to find reasonably priced financing and quickly amplifies the damage an unstable owner can inflict. Continue reading “Liverpool Is No Laughing Matter For ManUtd Supporters”