Oct. 16 (Bloomberg) -- The owners of the Boston Red Sox baseball team yesterday agreed to buy Liverpool soccer club for 300 million pounds ($481 million), ending a legal fight for the 18-time English champion.
New England Sports Ventures LLC, controlled by John W. Henry and Tom Werner, was able to take advantage of the forced sale by Americans Tom Hicks and George Gillett. The former owners were in default for 280 million pounds to Royal Bank of Scotland Group Plc and Wells Fargo & Co., and tried to block the “low-ball” purchase in courts in the U.K. and Texas.
The owners dropped a final Texas case yesterday and the Liverpool board approved the deal hours later. The sale ends a turbulent three-year tenure at England’s most successful team. Since their 219 million-pound leveraged buyout in 2007, Hicks and Gillett have had disputes between themselves and met with fan opposition over rising debt and their failure to build a promised new stadium.
“We have a lot of work to do,” Henry said at a press conference. “We are committed first and foremost to winning.”
Hicks and Gillett had a deadline of yesterday to repay their loans after having agreed to sell the club as part of a extension granted in April. The transaction removes all of the pair’s debt, cutting payments to 2 to 3 million pounds from 25 to 30 million pounds, Henry’s group said.
“I can guarantee this is not a leveraged buyout,” Henry said. The club will retain a 77 million-pound loan with RBS, including a 52 million pound facility for work on the proposed new stadium, the bank said.
Liverpool, a five-time European champion with a global fanbase, faced becoming the second team in England’s top league to go into administration, a form of protection from creditors. The club has dropped to near the bottom of the standings, and relegation to the second tier would cost it millions of pounds. It’s already missing out on as much as 30 million pounds after failing to reach this season’s Champions League.
“It’s too early to say what we are going to do but we are here to win,” said Henry, whose Red Sox won two World Series titles since he bought the team in 2002. “We have a history of winning. We’ll do whatever it takes.”
The new owner declined to say that he’ll definitely build a new stadium. New England was advised by New York-based Inner Circle Sports.
Hicks and Gillett argued that the sale to Henry’s group wasn’t the best deal available. Singapore billionaire Peter Lim made a 320 million-pound bid on Oct. 12, trumping his earlier offer that was matched by the New England group. Lim withdrew two days later saying the board and RBS refused to meet him.
More Legal Fights
Hicks and Gillett are planning to pursue more legal challenges and to seek $1.6 billion in damages from RBS after withdrawing a restraining order blocking the sale today. The purchase price means the pair will lose about 144 million pounds, Chairman Martin Broughton said last week.
“This outcome not only devalues the club but it also will result in long-term uncertainty for the fans, players and everyone who loves this sport because all legal recourses will be pursued,” Steve Stodghill, the Texas attorney representing the Liverpool owners said.
Supporters were unhappy at the debt the owners loaded on to the club, and the lack of progress on a new stadium after financing problems delayed construction. Thousands marched in protest before recent home games. Liverpool is 18th in the 20-team division and would be among the three teams relegated to the second tier if the season ended now.
“The last three years have definitely been the worst in the history of the football club. They’re history, now we can move on,” said supporter Adam Blakeman, a 27-year-old fan who traveled about 200 miles (320 kilometers) from Liverpool to hear an Oct. 13 court verdict.
RBS got an interim injunction on Oct. 8 to prevent Hicks and Gillett from removing managing director Christian Purslow and commercial director Ian Ayre and replacing them on the board with Hicks’s son Mack and Lori Kay McCutcheon, who is a vice president at Hicks Holdings LLC.
The two sides faced off in court in London and Dallas, with Hicks and Gillett able to block completion of the transaction for a week before the High Court in London ruled the Texas suit could not go forward.
Hicks and Gillett dropped the case yesterday and tried to repay the loan with the assistance of U.S. hedge fund Mill Financial, a lender that Gillett defaulted with on Aug. 22. Talks between Mill Finance and RBS didn’t influence the deal with the Boston group.
The sales contract - the third signed by Henry in the week - was ready just after lunch in London, but couldn’t be completed until Wells Fargo opened in California four hours later. Henry spent the time pacing the blue carpeted halls of Slaughter & May, Liverpool’s attorneys in the U.K.
Tycoons from around the world had been linked with the team, including Lim, India’s Sahara Group and a consortium led by Canadian-based Syrian Yahya Kirdi. Lim was told he was the preferred bidder Oct. 5 before New England raised its bid.
Several investors approached RBS to buy the debt as the repayment deadline approached. The government-controlled bank declined to sell after receiving thousands of e-mails from supporters urging it not to refinance Hicks and Gillett. The Premier League will formally ratify the takeover next week.
RBS said it is “confident this will provide the foundation for the Club and its fans to enjoy renewed success on and off the pitch.”
The saga may not be over. Hicks and Gillett said the order forcing them to lift the restraining order is too broad and unfair.
“We believe that once the English court finally has a chance to hear all the facts, a very different picture will be painted,” the pair’s attorney, Tom Melsheimer of Fish & Richardson, said.
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