Friday, 15 October 2010

Gillett and Hicks may be gone from Liverpool, but football's capital crisis has barely begun

Liverpool Football Club has been bought by New England Sports Ventures (NESV). Fans are, justifiably, glad to be rid of Tom Hicks and George Gillett. But is this really the fresh new beginning that they were after?

The most immediate problem - namely, the threat of Liverpool's holding company going into administration and the club being docked 9 points - is likely to be averted. According to the club, "the transaction values the club at £300m and eliminates all of the acquisition debt placed on LFC by its previous owners, reducing the club's debt servicing obligations from £25m-£30m a year to £2m-£3m."

So, on that front, fans can breathe easy. But the idea that simply changing owners will do anything to address the broader issues facing LFC (and, indeed, all football teams) is wishful thinking. Contrary to chairman Martin Broughton, the sale doesn't "comprehensively resolve" anything.

Football 365's MediaWatch section puts Broughton's comments in perspective;
"This is a great day for Liverpool Football Club and the supporters...I just hope we can deliver what we have set out to do. We have found the right owners. There will be money to invest in the squad" - Martin Broughton on John W. Henry, October 6, 2010.

"This is great for Liverpool, our supporters and the shareholders - it is the beginning of a new era for the club" - Rick Parry on Hicks and Gillett, February 6, 2007.

"NESV wants to create a long-term financially solid foundation for Liverpool FC and is dedicated to ensuring that the club has the resources to build for the future, including the removal of all acquisition debt" - A statement from New England Sports Ventures, October 6, 2010.

"We have purchased the club with no debt on the club. We believe in the future of the club" - George Gillett, February 6, 2007

"Our objective is to stabilise the club and ultimately return Liverpool FC to its rightful place in English and European football, successfully competing for and winning trophies...NESV wants to help bring back the culture of winning to Liverpool FC"- NESV, October 6, 2010.

"The Hicks family and the Gillett family are extremely excited about continuing the club's legacy and tradition. We are particularly pleased that David Moores and Rick Parry will have a continuing involvement in the club. For us continuity and stability are keys to the future" - A joint statement from Hicks and Gillett, February 6, 2007. 
The fact is that the major problems facing football remain. It is still operating on a business model which sees the sport and the fans who follow it as the absolute last priority for clubs. The danger that dangerously high wage costs will collapse clubs still remains.

In over a decade, wages for footballers have risen by 550%, whilst revenue has oly grown by 400%. This is hitting the clubs' bottom line, and driving up prices for tickets and merchandise. One result of this is that the cultural connection between the sport and the working class - as a result of families following teams across generations - is being torn apart by cost.

Meanwhile, competitiveness on the pitch is dying. Clubs with the most money claim a monopoly on the best players, the best coaches and training facilities, and thus the best performances. At the same time, the emphasis on buying in talent makes it more difficult for youngsters to go into the game.

None of this will be impacted by Liverpool getting a new owner. The reduced debt will not see ticket and merchandise prices go down, nor reduce the gap between the football club and the supporters which are now a market rather than a community. And the detrimental effect on local economies of turning teams into moveable franchises is an increasing problem.

The solution is the same as that in employment and communities more generally - taking the power away from a detatched board of executives and the capitalist class, and returning it to workers and local communities. In essence, the Spirit of Shankly union's ultimate goal of supporter ownership of LFC.

Unfortunately, it looks as though Liverpool fans will have to learn the hard way. There can be no "nice" capitalism, and changing the boss doesn't remove the underlying issues.