An Epic Swindle: 44 Months with a Pair of Cowboys

by Brian Reade

  Benitez, no stranger himself to the world of realpolitik, signed up to this alliance of mutually loathing bedfellows mainly because he was completely isolated and needed all the help he could muster to survive.

  He knew they were both culpable of gifting his job to Klins-mann, just as he knew Parry was involved in the talks. He had tried to get answers from Parry but was told: ‘I’m sick of being blamed for everything so I’m staying out of this.’ He tried to get answers out of George Gillett but was stonewalled. He rang up Foster Gillett but he wasn’t answering his phone. Maybe he thought it was the Wigan Warriors.

  So Benitez stuck a wet finger into the storm that was blowing around Anfield, captured the wind direction, decided his enemies’ enemy was his friend, pulled back the Texas Rangers bedspread and jumped into the sack with Uncle Tom.

  He phoned certain friendly journalists asking them to call their dogs off Hicks and turn them on Parry and Gillett. From now on, he said, I only deal with one owner. His reasoning, he claimed, was not self-serving. Hicks was promising to give him a contract extension and cut Parry’s balls off, which, in Benitez’s eyes, was the only way the club could be saved.

  The Spaniard refuses to admit he ever aligned himself with either owner, instead claiming he was stuck in the middle of a raging civil war and, in order to do his job properly, he needed a line of communication with at least one of the owners. Preferably the one who called the shots.

  He was finding it impossible to move forward. The only time he would hear from either Hicks or Gillett was when he sent one of them an email and the other demanded to know why it hadn’t been mailed to them. They would follow that demand up with another one telling him that the next time he sent an email he should do so just to them.

  When Hicks began to respond more to his demands, and when he told him that Gillett wanted out of the club, Benitez chose to go with the one he thought was more powerful and less crazy.

  Gillett certainly did want out, and had done for many months. When Moores and Parry refused to do the whitewash he knew if the club loan was to be refinanced in February he would have to dip into his own pocket and supply written guarantees before the banks agreed. As the chill winds of recession began to blow across the world, he thought back to the bailiffs dragging away his yelping dogs as they kicked him out of his house, and suffered a serious dose of the jitters.

  Hicks, like Gillett, realised when the credit crunch kicked in that buying Liverpool with all that debt had been a mistake. But in Hicks’s eyes only a partial one. He still viewed them as a rough diamond that could yield untold riches once the stadium was built and football clubs took control of their own TV rights. So he refused to give it up without making a whacking profit, especially when he believed he had a sheikh poised with his pen over a blank cheque.

  Hicks initially met Amanda Staveley at a pheasant shoot in Yorkshire in October 2007. She told him that Sheikh Al Maktoum was considering whether to come back in for the club and Hicks told her the valuation was now £1 billion, but they could give him £150 million for a 15 per cent stake if they fancied it. Unsurprisingly that was rejected out of hand, but she returned with an offer of just over £500 million to buy the whole club in early 2008.

  Hicks, who was close to securing a new refinancing deal, told them the figure was way too low. He also told Gillett, who verbally agreed with DIC in March 2008 to sell his 50 per cent stake for just over £250 million if their overall bid failed, that he was wasting his time.

  He had power of veto over his partner’s 50 per cent and he would use it because there was no way he was ceding equal partnership to the Arabs. If anyone was buying Gillett’s stake, he told him, it was Tom O. Hicks. Indeed, his only compromise on Gillett selling to Al Maktoum was if he could take 1 per cent of his partner’s stake, with 49 per cent going to the sheikh.

  In other words, they would put their hundreds of millions in but he would call the shots. The talks between the two camps lasted, on and off, for almost a year and a half until the sheikh walked away for good in early 2009, with those close to the bid saying Hicks’s attitude had been so brash and obstructive he would never return.

  Amanda Staveley arrived at the conclusion that a deal with the Americans, particularly Hicks, would never be reached because whenever she came close to an agreement, they saw it as a point of weakness and demanded more.

  David Bick, whose Square1 Consulting firm was advising the Middle Eastern consortium, said: ‘The Americans were constantly playing the game and were impossible to deal with. Their thinking was that just because somebody else wanted to buy the club, keep asking them for more.

  ‘Hicks never seemed to get the picture. He still kept sending people over to the Middle East behind the Maktoum group’s back to strike deals but they knew who they were seeing and when they were seeing them. They didn’t understand there are a lot of connections in the Middle East. They just hacked off so many people there.’

  Some journalists go even further, claiming when word of Hicks’s brusque approach to business spread through Arab circles the chances of another serious Middle East investor coming in vanished.

  A senior Anfield figure at the time said: ‘There is a way of doing business in the Middle East based on respect. They were flashing into town, virtually going through the Yellow Pages to find rich businessmen and speaking to anyone who would listen. The Hicks family approach was like American foreign policy in the Middle East. Very random.’

  Tony Evans, The Times football editor, who dealt closely with Al Maktoum’s representatives, said: ‘They managed to alienate not just a city like Liverpool but an entire world region, and that takes some genius. Bearing in mind who Tom Hicks was dealing with, his business technique was the equivalent of sending the US Marines into Grenada. Go in, unleash maximum force, and get it over with.’

  Such a shock-and-awe policy backfired as word began to spread across the seriously rich families in the Middle East.

  ‘Whenever a story came into The Times linking a Middle Eastern group with them we ignored it because we knew that no one was seriously dealing with them,’ said Evans.

  ‘It was very interesting when a Kuwaiti takeover deal got within hours of being done, only to fall apart inexplicably. There was a strong suggestion that the Arabs were deliberately leading Hicks on before pulling out at the last minute at the behest of Dubai. What is indisputable is that Liverpool could have been sold much earlier to rich Middle Eastern interests if it hadn’t been for Tom Hicks’s unpalatable approach.’

  The irony of Hicks’s stubborn refusal to take this generous offer was not lost on Liverpool fans in 2010 when the club was prised off him at a reputed personal loss of £70 million. Had he accepted the Al Maktoum bid he would have walked away with £100 million profit from less than twelve month’s work, and spared himself another two and a half years worry, effort, stress, abuse and misery. So, life’s not all bad, is it?

  At the time the fall-out with Staveley and Al Maktoum was no big deal to Hicks. Unless they were going to make him an offer he couldn’t refuse, he wouldn’t be flogging the club to Dubai. And it had nothing to do with Israeli passport-holder Yossi Benayoun being ineligible for pre-season tours of the United Arab Emirates.

  No, he’d managed to secure a new £350 million bank loan, with RBS and Wachovia, at interest rates of 7–8 per cent, meaning £30–£40 million would have to be found every year out of club revenues just to pay it down. While Liverpool were still in the Champions League that wouldn’t be a problem, and as Rafa’s men brushed Inter Milan aside to make the quarter-finals, the prospect of more brand-enhancing glory lay ahead. Why the rush, or the need, to sell, thought Hicks.

  One significance of the new deal was that the details of the takeover were no longer shrouded in confusion. It was out there for all to digest: Hicks and Gillett had borrowed £185 million to buy the club the previous February and were lent a further £113 million by the RBS for twelve months. They refinanced that total loan of £298 million, and w
ith interest and further work on the stadium, the new loan came to £350 million. Because Moores and Parry had refused the whitewash Hicks and Gillett had to pledge £40 million between them as well as personal guarantees and letters of credit.

  Which, in layman’s terms, meant that Liverpool FC, or Kop Football Holdings, was just another company registered in the low-tax US state of Delaware, via the Cayman Islands. It would be paying the interest on Hicks’s and Gillett’s loans out of its own cash flow and only if it failed to make enough one year (which was not likely to happen) would the Americans need to use their own money. So while the American duo stayed in charge, the club would be paying up to £40 million annual interest, year after year, on the cost of being taken over. Any difference between this deal and the Glazer one, scale aside, was clearly negligible.

  One interesting aspect of the new loan arrangement was that Gillett had refused to put his name to it. He wasn’t quoted on the statement, only Hicks, further confirming their partnership’s terminal fracture. This was a club in such paralysis they didn’t hold a board meeting for two years.

  And in case anyone had failed to notice that a civil war was raging at Anfield, Hicks took it upon himself to lay it bare before the world, with one of the most dramatic letters ever leaked in the club’s history, followed by one of the most shameful PR stunts.

  Less than forty-eight hours after Liverpool dramatically beat Arsenal 4–2 at Anfield to reach the Champions League semi-final (in April 2008), Hicks sent a three-page letter to Rick Parry, demanding his resignation. Parry, who was in London at a league management meeting when the letter dropped on to his office desk, began to receive texts from family members telling him the contents of Hicks’s missive were all over Sky News. Fans’ groups also claimed they were texted extracts of the letter from somebody in the Hicks camp.

  Parry, to his credit, maintained some dignity when he was besieged by reporters as he left the meeting, telling them he was too busy concentrating on doing his job to respond. Indeed the texts from his family as he waited for the league management meeting to start brought out a whole new side in him. During the roll call each club was supposed to respond with the word: ‘Here.’ When Liverpool was called, a straight-faced Parry responded: ‘Just about here.’ The meeting erupted with laughter, not so much at the quality of the gag but at the realisation of who was cracking it.

  Sadly for Liverpool fans there was little to laugh about. They were still basking in the glow of a glorious comeback against Arsenal after a Theo Walcott solo goal looked to have killed the dream of another Champions League semi-final, when Hicks’s leaked letter lashed a bucket of cold water over their heads.

  Once again their club was big news off the sports pages for all the wrong reasons, with the Daily Mirror demanding a front-page comment piece from me under the splash headline ‘Another Kop Out’:

  They gave the Anfield faithful less than two days to bask in euphoria.

  Barely 40 hours after pulling off a stunning Champions League triumph over Arsenal, one half of the Barnum and Bailey circus act who own the club woke up in Texas and chose to remind Liverpudlians of their horrible reality.

  That their beloved club’s future lies in the hands of ruthless sharks who care nothing about them or the Reds’ reputation, whose sole motivation is to screw every cent out of Anfield and bring down any opponent who tries to stop them.

  Tom Hicks yesterday demanded chief executive Rick Parry’s resignation. Hicks believes Parry is siding with co-owner George Gillett in the club’s increasingly bitter boardroom battle. The latest twist came on the day representatives of Dubai’s sheikh Al Maktoum said it will wait for the ridiculous saga to be resolved before pursuing its interest in the club.

  The fans weren’t to know it at the time, but when George Bush’s pal Hicks and his sidekick Gillett swaggered into Liverpool last February promising the earth, they were taking them for patsies.

  Their club was simply another underperforming brand which could be bought with a bank loan, its customers fleeced to pay the interest, and eventually sold on at profit. Only when the American credit crunch put pressure on their borrowing plans were their true intentions revealed.

  And for six months the club has been engaged in a bloody civil war, with virtually every senior figure washing filthy linen in public, forming shifting alliances and briefing against each other.

  Only on the pitch and on the terraces on nights like Wednesday, when that unique communion between fans and players produced another historic victory, has Liverpool FC been recognisable.

  So it was no surprise to hear yesterday that the chief executive had learned via Sky Sports that his resignation was demanded.

  Such a joke has the club become, the buddy of the most powerful man on earth couldn’t even sack him. Because he doesn’t have enough plotters in his camp.

  There won’t be too many fans weeping over Rick Parry‘s plight. It was he and former chairman David Moores who jilted DIC at the last minute to sell to the Yanks for a bigger return.

  But fans will despair for their manager, Rafa Benitez, and their players, who once again face questions about ownership when they should be thinking about football.

  And they will despair for their club. The most successful in British football history and not long ago one of the most respected sporting institutions in the world.

  And wonder how it was ever allowed to become such a laughing stock.

  In an echo of Rafa Benitez’s famous ‘focus on coaching and training’ response, Parry released a public statement saying: ‘It is my intention to remain focused on the job of serving Liverpool Football Club to the best of my abilities.’

  In private he did three things. He took legal advice from a top lawyer, gained assurances from Gillett that Hicks couldn’t sack him because he did not have the required boardroom majority, and wrote a letter back to Hicks.

  In it he thanked him for his letter and the offer of a generous pay-off should he wish to walk, reminded him that what the club needed more than anything was unity, and told him his personal criticisms had made ‘interesting reading’ but he would only resign if the entire board asked him to. Until that day he was remaining Liverpool’s chief executive.

  Which only served to stir the beast in Hicks into even uglier action. His favourite Sky News reporter, and a camera crew, were summoned to his Dallas mansion for the most repulsive PR stunt ever pulled by anyone connected with Liverpool.

  As he sat in his favourite armchair, his facial expression as fake as the gas-flamed fire burning behind him, making wistful glances and measured frowns at camera, opening out his hands in gestures of innocence, complaining in a slow, self-pitying tone about an abusive partner, media manipulation and a world that failed to understand his noble motives, déjà vu kicked in.

  This was Princess Diana at the peak of her manipulative powers. This was her famous ‘there were three people in my marriage’ interview with Panorama. For Martin Bashir read Sky’s Alan Myers. For Charles and Camilla, read Gillett and Parry. For the People’s Princess read the People’s Cowboy.

  And like Diana it ended up in a car crash because there wasn’t a Red on the planet who didn’t stare at that comical face beneath the tragic comb-over and feel a vomit-surge violently make its way up their windpipe.

  Reciting a script that was undoubtedly honed by his PR people, in the kind of homely setting Perry Como shot his Christmas TV Specials in, Hicks went straight for Parry’s jugular: ‘If you look at what has happened under Rick’s leadership it’s been a disaster, to fall so far behind other top clubs.

  ‘The new stadium should have been built three or four years ago. We have two sponsors, maybe three, when we should have twelve to fifteen.

  ‘We are not doing anything in Asia the way Man U is and Barcelona is. We’ve got the top brand in the world of football, we just don’t know how to commercialise it.

  ‘In the very first meeting George and I had with Rafa a year ago he told us about a number of play
ers we have missed out on and his inability to communicate with Parry when he needs to.

  ‘The manager isn’t in charge of contracts, he just hands them over to the CEO and too many times nothing happens.

  ‘Rick needs to resign from Liverpool. He has put his heart into it but it’s time for a change.

  ‘A football club has to grow and that’s how you have success. You certainly have to have the ability to work with your general manager and I think Rick has proven he can’t do that.

  ‘We need change and we’ve got a great group of guys ready to go.’

  Liverpool’s dirty washing was not so much being hung out in public as draped over the Shankly Gates and the Kop crossbar as the club’s owner passed around snacks for the grateful camera crew.

  ‘I can’t force George to accept but I can make him an attractive offer soon. George and I started this as friends. Fifty-fifty is a difficult business proposition but we had a good honeymoon.

  ‘Over time we had serious issues, with the stadium design being the biggest one. I wanted to make the change with Rick Parry and the chief financial officer for some time now but George doesn’t because he likes his relationship with Parry.

  ‘I’m working on the money to make Liverpool’s finances more sound. If I’m the majority owner I can put more capital in. I know of investors who want to be a minority investor with me.

  ‘My goal is to take the debt off the club, except the normal working capital needs, and get the permanent financing in place for the stadium.’

  Read the beginning of that sentence again, ‘My goal is to take the debt off the club,’ then remind yourself who created the debt in the first place, who tried to force Moores and Parry into whitewashing every penny of debt on to the club, and who had just taken out a £350 million loan at interest rates of 7–8 per cent against the club.

  ‘If I were to buy George out the first thing I would do is offer Rafa a one-year extension to make sure he is going to be here up to when we get the stadium.