Feb. 9 (Bloomberg) -- Former Liverpool owners Tom Hicks and George Gillett want more than $1 billion in damages for the forced sale of the 18-time English soccer champion. They'll ask a judge in London this week whether they can pursue their case.
Lawyers for Hicks, 65, and Gillett, 72, will return to the court that ordered, over their objections, the 300 million-pound ($483 million) sale to the owners of baseball’s Boston Red Sox. The pair is seeking a change to the Oct. 15 ruling to pave the way for the damages suit. At the time, Hicks, who valued the team at as much as 800 million pounds, described the sale as an “epic swindle” and claimed $1.6 billion in damages.
The Americans’ departure followed three years of acrimony and controversy at the club. Their battle to seek recompense may last even longer. The hearing starts this morning.
“The case is not being concluded at this hearing and could take some time to resolve,” Hicks’s Texas-based attorney Tom Melsheimer said in a telephone interview, without identifying which parties would be sued. “We look forward to presenting our side in court.”
The sale of Liverpool was contentious, featuring lawsuits in both the U.S. and U.K., a debt default and red-shirted Liverpool supporters cheering the pair’s exit on the steps of London’s neo-Gothic Royal Courts of Justice.
Hicks and Gillett say the terms of the October judgment were too harsh and blocked their ability to seek damages for losses incurred from the sale. The duo lost their entire equity stake -- worth about $222 million -- once the team’s English board members overruled their objections and sold the team to John W. Henry’s Fenway Sports Group. The deal meant Royal Bank of Scotland Group Plc and Wells Fargo & Co. were repaid the 200 million pounds they loaned Hicks and Gillett.
Justice Christopher Floyd, who decided the earlier case, will also hear a claim from RBS and Liverpool’s former chairman, Martin Broughton, who was hired to find a buyer when the team was put up for sale in April. They’re countersuing to block any future damage claims by Hicks and Gillett.
“The courts described the claims made by Hicks and Gillett last year as ‘not realistic and abusive,’” RBS spokesman Michael Strachan said in an e-mailed statement. “Any further claims against RBS will be vigorously opposed.”
Ian Cotton, a spokesman for Liverpool, and its current owners, described the hearings as “another step towards wrapping up the last legal loose ends following the sale.” Craig Breheny, a spokesman for Broughton, declined to comment.
“I think every step Hicks and Gillett have taken up to the last hearings has been nonsense,” Danny Davis, a partner and sports specialist with Mishcon de Reya, a London-based law firm not involved in the case, said in an interview. Even so, he expects the Americans to be allowed to seek damages.
“I find it difficult to come to terms with an idea that a court is going to tell them that they cannot sue someone,” Davis said.
In last year’s court hearings, Hicks and Gillett said the sale wasn’t done transparently, with Broughton and two other English board members of the team concealing negotiations with Henry’s group from them. They also claimed that the team was sold below its market value, and cited a Forbes magazine estimate that said the club was worth 533 million pounds.
Hicks and Gillett increased sales 46 percent to 195.5 million pounds in three years through July 31 and raised operating profit -- which doesn’t include interest on debt or player acquisition costs -- more than threefold to 32 million pounds. They spent about 25 million pounds a year to pay interest on debt linked to their 219-million-pound leveraged buyout of the team in 2007.
U.S. investors Goldman Sachs Inc., Rhone Capital LLC and Mill Financial, as well as Singapore businessman Peter Lim and Middle Eastern groups, all discussed buying the club.
If the former owners are successful, they’ll assess who to make claims against and whether to sue in U.S. or U.K. courts. Justice Floyd’s judgment forced Hicks and Gillett to scrap a Texas suit, saying the issue had no connection with a court there and that legal action had already started in U.K. They faced being in contempt of court, a charge that carries a prison sentence, if they proceeded.
During their ownership Hicks and Gillett had disputes between themselves, as well as with then-coach Rafael Benitez, and faced continuous fan protests over rising debts and the failure to build a new stadium.
Last season, the club failed to qualify for the Champions League for the first time since 2003. The competition, which the Reds won for a U.K.-record fifth time in 2005, is worth as much as 40 million pounds to the winner. Liverpool has also struggled in the first half of this season, although four straight victories, including a win at champion Chelsea at the weekend, have lifted it to sixth place.
The loss of form and the rise of teams such as Manchester City and Tottenham may have affected the valuation of the team, which is one of the best-supported in the world.
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