After months of speculation and allegations of fraud and breach of contract, New England Sports Ventures (NESV), headed by Red Sox owner John Henry, has successfully completed the purchase of Liverpool, F.C., for an estimated $480 million.
The news was welcome to the fans on Merseyside, and even more welcome to the Royal Bank of Scotland, which was owed £237 million by former owners Tom Hicks and George Gillette. The sale to NESV will result in losses of over $100 million for Hicks and Gillette.
The former owners have come out swinging since the decision by the British High Court allowed the transaction to proceed. Hicks and Gillette have claimed that the sale was “illegal” and an “extraordinary swindle,” and have vowed to continue their fight.
Hicks and Gillette have claimed damages from the sale in the amount of $1.6 billion. The former owners have an interesting choice to make in the near future: whether to continue their fight in the U.K. courts where they will have to overcome the two previous rulings against them; or to file suit in the United States where Hicks resides, where NESV is incorporated, and also where the Royal Bank of Scotland has a legal presence.
An important point to note is that had this sale not gone through by Friday, Liverpool would have been forced into administration similar to what Portsmouth had to endure last year when they were unable to meet their obligations to their creditors. Administration is a form of bankruptcy protection and would have resulted in a nine-point penalty which would have sent already-struggling Liverpool straight to the bottom of the English Premier League.
One main benefit of the sale is that now the annual payments to service the debt that Hicks and Gillette had incurred will drop from around $40 million annually to a much more manageable $3 million to $5 million. These extra funds could go a long way towards restoring the luster to a diminishing brand.