An Epic Swindle: 44 Months with a Pair of Cowboys

by Brian Reade

  The day the Kop Faithful came into its own was Saturday, 18 September 2010, on the eve of the 3–2 Old Trafford defeat. After the News of the World had gone to press Alan Kayll was told by Chris Bascombe that the paper was running a story saying Hicks was on the verge of securing a two-year agreement with a company called Blackstone/GSO, to pay off RBS and refinance.

  The Texan had called a three-hour board meeting in London earlier that week where he delivered the news of his plans to deal with Blackstone, telling Martin Broughton he had no intention of selling the club at the RBS debt level, and that the board had no authority to prevent him repaying that debt and keeping the club with whatever funds he could muster.

  It was the nightmare scenario. Hicks bypassing the sales process by giving ownership of Liverpool to a US equity firm, with the only proviso being they made RBS, and with it Broughton, disappear. Minutes from this meeting also show Hicks famously refer to the protesting Liverpool fans as ‘Noise we have been dealing with.’

  By Sunday afternoon 14,000 emails had hit the inboxes of Blackstone/GSO executives and those of allied companies, telling them the following:

  If your company agrees a £280 million refinancing deal with Tom Hicks to retain his share in Liverpool Football Club, then the only return that you will see on your investment is bad publicity and a severe backlash from Liverpool supporters worldwide.

  As you are aware, Hicks is trying to refinance his debt to the Royal Bank of Scotland before October 6th so that he can continue his disastrous ownership of Liverpool Football Club.

  There is no point in us listing the countless and well-documented offences of the grossly destructive reign of Tom Hicks and George Gillett. The media is full of articles about them. And that is the point. No longer do we rely on the occasional heroic journalist to expose corruption within institutions we hold dear. This is a new age, an era of organized resistance at the click of a mouse.

  You are facing an energized, well-informed mass of Liverpool fans from around the world. We are tapped into a constant stream of information on the ownership situation. Every day, dozens of web forums buzz with the latest news. Protest marches, newspaper ads, boycotts and billboards are organized. Every move Hicks makes is scrutinized. And every associate of his is warned.

  Refinancing is our nightmare scenario. Anybody who helps Tom Hicks refinance will become our primary target.

  We have a decent track record of taking on and beating those who attempt to blacken the name of Liverpool Football Club. As an example, the boycott of the Sun Newspaper following their disgraceful coverage of the Hillsborough Disaster in 1989 is said to have cost News International an estimated £10 million a year.

  If the Blackstone Group/GSO Capital Partners join forces with Tom Hicks in raping and pillaging Liverpool Football Club, then you will be making a very powerful enemy.

  You have been warned.

  Throughout the Monday, as Alan Kayll drove around in his taxi, he received texts telling him that Blackstone were rumoured to have pulled out. He wanted proof before calling off the campaign, so armed with the phone number of Michael Whitman, the senior Blackstone/GSO executive who had addressed the Liverpool board the previous Wednesday, he rang for clarification.

  At 4.50 p.m. he left a message on Whitman’s answerphone explaining who he was and asking him to call back by ten a.m. the following day. ‘If you don’t call me by then I’m going to put your name and phone number on every single Liverpool FC website,’ Kayll warned him. The next day he decided to check with Whitman’s PA that her boss had got the message. Within minutes of ringing her, the ‘Senior managing director of the Blackstone Group and Head of the European Business of GSO Capital Partners’, Michael Whitman, rang Alan in his cab.

  ‘There are reports in the press that your company has pulled out of refinancing Tom Hicks, but there’s no statement from your company. Can you confirm to me that you are not going to refinance Hicks?’ asked Kayll.

  ‘The reports are accurate, Alan,’ replied Whitman.

  Kayll told Whitman he hoped he understood why he’d been inundated with emails, before explaining that Liverpool is more than just a football club to many people. It’s their lives and their community, he told the American, and it’s being destroyed by Tom Hicks.

  Whitman replied: ‘We have taken the passion and commitment of Liverpool supporters into this and I wish you well with your campaign.’

  Alan was still struggling to get his head around a major Wall Street player admitting that the Kop Faithful had impacted on one of his company’s investment decisions, when David Enrich, a reporter on the Wall Street Journal, rang from New York to ask about the story. ‘You do know that you crashed the entire Blackstone/GSO system, don’t you?’

  As Enrich was interviewing Kayll, another story was breaking in the Big Apple. A Scouse-born New Yorker, Paul Wilson, had spotted Hicks and Tom Jr., sitting on a bench in the same Manhattan street which housed the headquarters of Deutsche Bank AG and J.P. Morgan Chase & Co. Wilson, a 35-year-old financial consultant, guessed the pair might be rattling their begging bowls at either bank so whipped out his BlackBerry, photographed them and sent the images to his wife, Erin, before following Hicks into the lobby of the building that housed Deutsche.

  Confident he had nabbed Hicks at work he told Erin to post the photos on Twitter with a brief explanation, and soon they were picked up by Kop Faithful. Key addresses of J.P. Morgan and Deutsche executives were pasted on to the same email Blackstone had received, with the same orders, and within an hour one J.P. Morgan banker was telling the Wall Street Journal: ‘It’s totally viral right now.’

  On Thursday Enrich rang Alan Kayll to say, ‘You’re going to be famous tomorrow … you’re on the front page of the Wall Street Journal.’ Which he was, in a long article, under the headline ‘A Texas Tycoon Learns a Lesson: Don’t Mess With Liverpudlians’.

  These were a few of the highlights:

  In the old days, English soccer hooligans settled scores with knives and broken bottles.

  As Texas billionaire Tom Hicks is learning this week, the weapons of choice these days: camera phones, twitter and spam e-mails, can be almost as scary.

  Mr. Hicks, co-owner of England’s hallowed Liverpool FC, is on the run from a mob of angry fans who blame him for the team’s tailspin. Liverpool faithful are waging a fierce campaign to evict the American owner. Their strategy: Scare away banks and other financiers who might throw Mr. Hicks a lifeline, starving Mr. Hicks of needed cash and forcing him to sell. To do that, they are using the tools of the digital age to track Mr. Hicks’ efforts to drum up money, then bombard would-be lenders with thousands of irate emails, phone calls and tweets.

  Lately, financial institutions have borne the brunt of Liverpool’s rage. Fans have been flooding RBS with letters and phone calls urging the bank to seize the club and give Mr. Hicks the boot. Top executives’ inboxes sometimes have been hit with several hundred emails per day.

  A few weeks ago, some fans started a Facebook page encouraging people to boycott RBS. Mr. Kayll, the cab driver, drew up lists of financial institutions Mr. Hicks is believed to have approached, posting them on a website he helps run that urges fans to help oust Mr. Hicks.

  The campaign hit Stephen Schwarzman, the billionaire co-founder of Blackstone Partners, whose GSO Capital Partners hedge fund considered participating in a deal to help Mr. Hicks refinance the RBS loan. By Monday, GSO had backed out of the talks.

  There was scepticism in some quarters over whether Kop Faithful’s email campaign against Blackstone/GSO had actually killed the deal. Some observers say Blackstone was never going to proceed anyway, and that the scheming Texan was overplaying the significance of his talks to con the board into believing he was still very much in control of his destiny. We’ll never know the exact truth, but there is no doubting the fact that the email storm warning did have an impact on influential American decision-makers in those key days when Hicks sought the refinance.

  If the dec
ision was in the balance, and any negative thoughts about Liverpool FC were harboured, Kop Faithful (especially after the Wall Street Journal front page) gave Hicks a mountain to climb. Even Hicks himself blamed the ‘cyber-terrorists’ for leaving him with nowhere to run. They may not have eventually trapped their prey but they bricked up a lot of his escape routes.

  A senior Liverpool executive believes you cannot underestimate the influence the Spirit Of Shankly and their offspring Kop Faithful had on driving Hicks and Gillett out of Anfield.

  ‘If it wasn’t for the intensity of the fan opposition towards them I’m in no doubt they would have become worse than the Glazers and put more and more debt on the club. Thanks to SOS, their protests, constant vigilance and media profile they were very wary of how far they could go,’ he said.

  ‘As for the email campaign as major people were about to come to the table, that was really effective. I know that worked because we had the banks and financial institutions ringing us up and asking what the hell was going on. Hicks and Gillett knew that too, but there was nothing they could do about it.’

  Kop Faithful knew the Blackstone victory would mean nothing if RBS decided to give Hicks his refinancing, so they re-trained their sights on Edinburgh.

  As a new blitz of emails was sent out demanding they call in the loan, Alan Kayll rang Roger Lowry, their head of public affairs, and left a message saying he could stop all the mails coming RBS’s way if he’d pick up his phone and have a chat. Alan was sat in his cab outside Liverpool John Lennon Airport, one late September morning, waiting for a fare, when Lowry called back. ‘Just to let you know, Alan,’ he said, ‘we don’t have a problem with your emails. We are reading them and so are all the senior executives.’

  It threw Kayll because that wasn’t the kind of message he had been expecting. He sensed he was now dealing with people who understood. He began to hope that maybe they were looking at Liverpool’s situation like normal, caring individuals, instead of faceless bankers chasing their next bonus pot. As the possibility of achieving real justice washed over him, Kayll poured his heart out to Lowry.

  ‘I just sat there and gave this stranger the most passionate plea I’ve ever given anyone in my life,’ he said. ‘Please, please, please pull in this loan now. You have to understand that it’s destroying a great football club and it’s destroying a great community. You’ve got to do it for us, please.’

  There was a short silence, and then Lowry replied: ‘We can’t say anything to you because there’s a confidentiality agreement but believe me we’re listening to you.’

  Kayll went straight on to the forums demanding a change of tactic. Forget the standard emails to RBS, because they’re listening. In future everyone should write a personal one, telling the bankers exactly how it feels being a Liverpool fan right now and how much you fear for the future if RBS refinance Hicks and Gillett. Just give it to them straight from your heart, he said. And in their thousands, they did.

  This is the part of the Hicks and Gillett saga that should fill Liverpudlians with genuine pride. It started as a gathering of 350 fans in the backroom of the Sandon pub and spawned a grass-roots union, mass protest, media campaigns and internet warfare. It led to meetings with representatives of some of the richest and most powerful men on earth and eventually made the Gordon Geckos of Wall Street quiver in their Prada shoes. Those fans refused to just sit back and take what Hicks and Gillett were throwing at them. They exposed these two for what they really were and made them pariahs in their own moneyed community.

  There was something quite noble about that, especially when you consider how low the average football fan is viewed by the rich and the powerful. They could have done nothing, as many fans did, in which case Liverpool might now be in administration or being run into the ground by an American hedge fund. But they stood up, stayed united and fought the American imposters on every front possible, and made rich men realise that real power doesn’t lie in how many friends you have in the White House, how many companies are listed in your investment portfolio or how well you can schmooze big, corporate cheeses over dinner.

  It lies in that old trade union maxim of strength through numbers, and more importantly the intensity of the passion that glues those numbers together. No group of sports fans has ever left so many rich men feeling so powerless, confused and unsure about their decisions as Liverpool’s did during those forty-four months.

  They did not ultimately evict the Americans from Anfield, the Royal Bank of Scotland did, by taking them to court. But those fans made it increasingly difficult for the bank to not follow that course of action.

  In decades to come, when social and football historians look back, it may well prove to have been the Twelfth Man’s finest hour.

  CHAPTER FIFTEEN

  ‘They are guilty of unconscionable conduct which conclusively demonstrates just how incorrigible they are’

  – Mr Justice Floyd

  Towards the end of July something called football broke out again at Anfield as a strange oasis of calm was sighted amid the madness.

  For a short while, on-field progression took precedence over the off-field frenzy, with fans allowing themselves a rare feel-good moment, optimism even, for the coming season. In hindsight, strange doesn’t start to cover it. New manager Roy Hodgson was saying all the right things a Liverpool leader should, coming across with a calmness, humility and old-school decency which reassured the Rafa-haters who’d become exhausted by the Spaniard’s brinkmanship.

  Fernando Torres (after much persuasion) and Steven Gerrard (after no persuasion) let it be known they were staying. Joe Cole snubbed offers to move to Arsenal, Spurs and Manchester United, instead choosing Liverpool. Or, in words that gave Liverpudlians more of a lift than Cole will ever know, ‘The biggest club in the country.’

  Few had expected Cole to flee London for Anfield, and it brought smiles back to troubled faces, especially as the nation had recently been screaming for him to start every World Cup game, and he was leaving a Double-winning Chelsea side whose fans were last heard telling Kopites ‘You’re ancient history.’

  But, quicker than you could say Milan Jovanovic, that summer oasis turned out to be a heartless mirage. The rest of Hodgson’s buys would have failed to inspire the Wigan unfaithful (although, to be fair, he was working on a relative shoestring and had no Champions League to offer); and when the season began it was clear why Chelsea had allowed Joe Cole to leave on a free, and why Hodgson had never won a trophy outside Scandinavia.

  The football was dour and unambitious, the team lacked spark and cohesion, and by October they were down among the relegation sides. An epoch-defining low-point was imminent and duly arrived on 3 October when Blackpool won 2–1 at Anfield. The result only tells a fraction of the story.

  It was the second home game running that a Spirit Of Shankly-organised mass march on the ground and a sit-in afterwards was called-for. For thirty minutes half of the Kop stayed behind to demand the removal of Hicks and Gillett and as embarrassed players went through their warm-down exercises, some like Steven Gerrard and Jamie Carragher applauded in a show of unity while the majority didn’t. Their lack of empathy with the protesting fans was in keeping with the 30,000-plus empty Anfield seats on all three stands but the Kop. Here was a club dying a death by many cuts. Not least, apathy.

  It was hard to blame any fan for feeling defeated by the struggle. Hicks and Gillett had taken so much away from them, and appeared to have the ability to survive every attempt at removal, that many supporters had long ago lost the will to oppose. However, hope could be gleaned from across the Atlantic, where Texas Rangers fans, who had been dragged to an almost identical pit of despair by Hicks, found the courts coming to their rescue.

  In early 2009 the Hicks Sports Group, the holding company for Hicks’s empire, had defaulted on repayments for $525 million loans (it is no coincidence that Liverpool never had a net transfer spend in any future window under Hicks).

  According to sources who
saw original documents relating to the loans, Hicks defaulted on a $350 million bank term loan, $100 million second-lien loan and a $75 million revolving credit facility.

  Days before the banks announced that Hicks had defaulted, he hired Merrill Lynch to explore the sale of a minority stake, of up to 49 per cent, in the Rangers. That failed and Hicks was forced to place the Rangers into administrative bankruptcy, known as Chapter 11, to fend off creditors while he attempted to sell the club in a deal that would have allowed him to stay on as a shareholder.

  But other parties took legal action to halt any potential ‘sweetheart deal’ and baseball’s governing body, Major League Baseball, had to become the team’s administrator, loaning the Rangers $40 million so they could carry on paying salaries and bills.

  In August 2010, a court ruled that the team had to be sold by auction, and Hicks was removed from the process. The new owners were a group headed by Chuck Greenberg and baseball legend Nolan Ryan, who, with Hicks gone, had led them in fairytale style to that year’s World Series final.

  The Hicks default with the Texas Rangers is still regarded as the most dramatic manifestation of the recent economic crisis on the American professional sports world. Ironically, Gillett was in similar dire straits, having to sell the Montreal Canadiens in 2009 for $550 million, just to stay afloat.

  Before the sale of the Rangers, Hick Sports Group owed an estimated forty lenders $600 million in loans, unpaid interest and fees. As a result he sold his luxury chalet in Aspen for $18.5 million (claiming that his family preferred to go on holiday elsewhere) and tried to sell the Dallas Stars ice hockey team. How was a man estimated to have been a billionaire in 2009 in so much trouble? What was his true worth? Was it all on paper? And if so, when the American markets went into melt-down, did Hicks’s wealth prove not to be worth the paper it was written on?