Accounts warning reminder that Liverpool is in the wrong hands

Liverpool Football Club is a highly successful company, returning a handsome profit, and yet it is unable to invest in its future because it is hampered by its owners’ unmanageable debts. Ironically, the club’s financial impairment may have paid a paradoxical sporting dividend earlier this week, when Rafa Benitez lost Gareth Barry, a player he has long coveted, to newly wealthy Manchester City.

Liverpool’s inability to gather together £12 million to purchase the England midfielder should intensify its focus on retaining the services of Xabi Alonso, whose range of passing was essential to a sustained title challenge last season. However, if Alonso goes to Real Madrid, and if Benitez cannot freshen his squad with players drawn from the top level of the European game, then the club will not build on its achievements.

Liverpool itself last year made a profit of £10.2m, taken from record £159.1m turnover. However the holding company suffered a £42.6m loss due to the crippling burden of servicing the owners’ loans. Once again Hicks and Gillett are casting around to restructure £350m of debt, which remains on their purchase of the club and (as yet unsuccessful) attempts to finance a new stadium at Stanley Park.

In light of these incomplete negotiations, auditors KPMG have recorded their opinion that there is ‘significant doubt’ as to the group’s ability to remain a going concern. When the Americans took control of the club, there was an explicit promise not to encumber it with the debts incurred in its purchase. Liverpool supporters have long recognised those undertakings as simple lies.

Hicks and Gillett are confident enough that credit facilities with RBS and Wachovia will be extended. And KPMG’s warning relates solely to refinancing, rather than the viability of Liverpool as a business. The situation is not, per se, dangerous for the existence of the football club.

But after the progress made last season, on the field of play, it is hugely dispiriting that boardroom difficulties continue to hold Benitez’ team back. It remains patently obvious that the institution which is still (for the time being) England’s most successful football club is in the wrong hands. In order to retain that status new owners need to be found.