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Oct 22, 2008

Money matters: Liverpool profits to be siphoned

There was good news and bad news for Liverpool fans this week, but sadly for the club's controversial co-owners one has rather overshadowed the other.

The good news emerged first, with the club seemingly bucking the trend of the global credit crunch by lining up a series of new commercial deals that would rake in more than £10 million.

However, then came the bad news, that Liverpool's co-owners plan to divert the club's profits to service the interest on the loans they took to buy the club, a development that will send a shiver down the spine of all Liverpool fans, especially those who have long warned that this might happen.

The wave of enthusiasm for Hicks and Gillett following their arrival in February 2007 soon subsided when the two men's off-field disagreements began to create factions within the club, which then in turn began to impact on-field performances.

There have always been those sceptical supporters who were not impressed with the American duo and have always suspected that the financial wherewithal to repay the loans that allowed them to buy the club in the first place would be siphoned from Liverpool's coffers and not from Hicks and Gillett's own resources.

First the duo borrowed £185 million to buy the club and then subsequently borrowed a further £165 million to finance its operation. But despite the current economic downturn, which shows no signs of abating, Hicks and Gillett believe that Liverpool's £350 million debts are manageable, particularly if profits continue to rise.

The Daily Telegraph reports that Liverpool's profits for the last financial year are expected to be in the region of £40 million, of which half has been earmarked by the duo to meet interest payments.

What about bolstering the playing squad? Is diverting £20 million away from Rafa Benitez really the best way to take the club forward? And that's before we even mention stalled plans for a new stadium. It all paints a rather sorry picture and leads fans to the conclusion that the pockets of their American benefactors appear to be much shallower than first hoped.

Viewed in that context the club's announcement of £10 million worth of commercial deals begins to look a little tame, particularly when you consider that the figure is derived from four deals, covering travel, online betting, video gaming and, bizarrely, motor racing.


Overweight, overpaid and over the hill. That was the sceptical assessment of Ronaldinho this summer when AC Milan handed Barcelona €21 million to acquire the services of the jaded former World Player of the Year.

But there was a method to this apparent madness, and it didn't lie solely in the hope that the buck-toothed Brazilian would rediscover his mojo, but rather on the bank-ability of his profile.

In a little less than three months AC Milan's club shop has sold an impressive 18,000 Ronaldinho shirts, netting the club almost €1.2 million, and the club's commercial team have also managed to shift all the available sponsorship in the San Siro.

Milan vice-president Adriano Galliani admitted to La Gazzetta Dello Sport: "We bought Ronaldinho for the team first and then for marketing reasons, which comes second but it is linked.

"Ronaldinho at Milan goes to show that we are always a Champions League team. For the first time we have sold all the space which is reserved for sponsors."

Season ticket and matchday gate receipts have increased exponentially since the 28-year-old's summer arrival, as have various merchandising lines. With his form and fitness improving on the pitch, the Ronaldinho effect appears to haven taken hold.

Add in AC Milan's potential signing of David Beckham, albeit only on loan, and Milan could soon boast two of the most profitable and marketable footballers the world has ever known.

Perhaps it's time for the Milan club shop to consider longer opening hours and extra staff?


Just in case Manchester City fans had forgotten how lucky they were that the club was taken over last month by the Abu Dhabi United Group for Development and Investment, a timely reminder came this week as Thaksin Shinawatra was sentenced to two years in prison by a Thailand's supreme court.

Although Shinawatra, the former Thai prime minister, has long insisted that all charges and claims against him are "politically-motivated", the impact of having someone convicted of corruption owning a Premier League club would have been intolerable for the Premier League.

In a ruling that made him the first Thai politician to be convicted of corruption committed while prime minister, Thaksin was found to have violated conflict of interest rules in helping his wife buy land from a state agency at a reduced price.

The conviction is just one of a number of corruption charges which have been made against Thaksin since he was deposed by a military coup in 2006.

The former City owner fled to England two months ago along with his wife, who skipped bail after being sentenced to three years in prison on similar corruption charges, and can expect to face a formal extradition proceedings as the Thai authorities try to force Thaksin to serve his sentence and face other corruption charges.

Although Thaksin is 'honorary life president' of Manchester City and still holds a 10% stake in the club, his sentencing is expected to have minimal impact on the club.

How different it could have been if September's takeover had not gone through. The Eastlands club could have been in a situation where their billionaire owner, whose fortune had been frozen, was a convicted felon facing extradition.

Not exactly in keeping with the image of glamour, prestige and sporting excellence the Premier League have worked so hard to cultivate around the world.

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