Christian Purslow answers questions from Spirit of Shankly

Spirit of Shankly (S.O.S.) recently met with Christian Purslow (Liverpool’s new chief executive). Below are the questions that were asked by S.O.S.

1. What does LFC and its associated companies owe to banks and other funders? How much of the borrowings are secured upon Liverpool Football Club Ltd?

He indicated that currently the TOTAL debt owed by the Club and its associated companies was approximately £245m. GS asked him specifically to confirm that that figure represented the total debt (rather than just that owed by LFC) and he confirmed the £245m figure again.

2. How much does it cost each year to pay the interest on these loans?

This figure wasn’t given (only as the meeting jumped between issues) but he made reference more than once that the Club was in a good financial position and could service what it owed.

The last accounts showed that the club could not service all the debts solely with the income, with the reduction in debt and the rise in commercial income; it could now do that comfortably.

With H&G recently paying off £60 mill they may not be in a rush to input further equity but the debt is being managed.

3. Is the interest rate paid by the Club (or associated companies) to the owners for any funds they have introduced the same rate as the owners are being charged from wherever else they borrowed that money?

CP said that the owners had recently introduced £60m into the Club. GS asked him if these sums carried their own cost to the Club in terms of giving a return to the owners in interest or other finance payments and CP said emphatically that was not the case and this was equity that was introduced by the owners, reducing the debt burden to £245m.

4. Where has the money gone for the initial ground work on a stadium? If the owners had stuck to their initial promise of debt not being put onto the club then surely the initial £350 million borrowed from the bank to purchase the Club could have paid for a stadium?

CP was positive about the stadium project. He said that whether we all liked it or not the credit crunch had had an impact and that in some ways it was better that we hadn’t started the project before the bank problems as that could have seen a half completed project by now. Currently, deferment of the project was the only option although he estimated that 2010 should see the economy easing and banks’ attitude to projects like the stadium becoming more positive.

GS made the point that if the owners had done at the outset what they said they were going to do, which was to not use borrowed funds to purchase and fund the Club then at the time they wanted to start the stadium the Club would have been debt free. No one would have considered a loan unreasonable to fund the stadium and even if the credit crunch had then hit they would have been able to use the £60m they have just injected to assist in getting over any difficulties. The problem was not completely credit crunch related more the fact that they were fully borrowed.

5. Can you tell us your background and experience? Where RBS consulted, instrumental or insistent in any way whatsoever that you were appointed to the role that you have or can you confirm that they played no role whatsoever in your appointment?

In response to this question CP indicated that as far as he was aware RBS played no role in his appointment and he was appointed independently by the owners but he agreed that the banks were probably happy at the appointment.

6. Is any part of your role to be actively seeking a purchaser for the football club right now? If so would you be prepared to sit down with a fans’ consortium to discuss a possible sale?

CP was very clear that it was not his brief to sell the club. His job was to work with the manager on football matters and to improve the commercial aspects of the club and make us more successful off the pitch, this in turn would make LFC more successful on the pitch and obviously more attractive to investment, but his job was not to directly seek a purchaser for the club.

7. You suggested that this summer “We’ve spent about £20 million more than we’ve generated…….” suggesting that the Summer transfer window saw the £20m of excess expenditure you are quoted as having been spent. Can you clarify this point, as on the basis of a look at who left and at what price during the summer transfer window it cannot be accurate.

CP gave a detailed review of how the transfer system operated and the fact that the manager’s first goal at the start of the recent window was to see key players signed up on new deals. This was considered “new money”. He went on to state categorically that the spend after incoming sales money (the actual sums received this summer, which in every sale case this window was an installment) was about £20m more than received.

The first thing that the Manager wanted was Gerrard, Torres, Kuyt, Skrtel, Benayoun and Agger signed on new deals, before any new signings, he then wanted Glen Johnson, to replace Alonso with Aquilani, and due to Hyypia leaving we needed an extra centre back.

8. What proportion of the club’s revenue in percentage terms is being used to service the Club’s borrowings bearing in mind the last set of published accounts shows the Club’s profits being insufficient to service the Club’s borrowings?

No figures were given for this question but the previous answer above was reiterated stating that the debt reduction had seen interest and servicing costs reduce significantly due to the fact that the owners had injected £60m of equity (not further loans requiring repayment or interest payments).

9. The owners were due to refinance the Club’s debt at the end of July – has this been formally completed and if so, when is it due for its next review?

CP stated that the refinancing had been formally signed off by RBS on the basis that the equity mentioned above had been injected.

He mentioned that although all fans had the right to express their views that specific protest action at games made the financial and commercial part of the development of LFC more difficult as it can put off potential sponsors and business partners if they think there will be hassle. With a fan now on the inside leading the club and with access to him assured he hoped fans will feel they are being listened to.

In conclusion CP stated he wanted an ongoing dialogue and that he would welcome the opportunity of meeting on a quarterly basis, either in his office with the committee or at a broader group, with the SOS, was happy to attend a Management Committee meeting and would attend a mass meeting.

More about the Spirit of Shankly can be found on their website www.SpiritOfShankly.com