Liverpool Is No Laughing Matter For ManUtd Supporters

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”

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Liverpool Is No Laughing Matter For ManUtd Supporters

Premier League Chiefs Fiddle While Clubs Burn

 

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. Continue reading “Premier League Chiefs Fiddle While Clubs Burn”

Premier League Chiefs Fiddle While Clubs Burn