William Gaillard, the advisor to UEFA President Michel Platini who claimed that the English FA was the ‘weakest’ in Europe, has claimed that the previous ownership at Liverpool was a classic example of why new financial fair play rules have to be introduced.
Gaillard told a Parliamentary hearing into English soccer that Liverpool had come dangerously close to going under after Tom Hicks and George Gillett loaded it with debt before the club was taken over by American tycoon John Henry’s New England Sports Ventures (NESV) company.
He stated: “Leveraged buy-outs for many clubs end in disaster. Just take Liverpool where you have owners who came, contracted debt, bought out the previous owners and saddled the club with the debt.
“What brought them down were two failed banks, one British, one American, that had been nationalised. They suddenly found themselves being owned by two failed banks that had been taken over by Governments – RBS by the British Government and Wachovia by the US government.
“The club has now been rescued and thank God because it has tremendous heritage – but it was a close call.”
The new financial fair play rules being introduced by UEFA are designed to force clubs to break even after an initial period of flexibility and when Gaillard was asked why it was wrong for clubs to be given fresh investment to fulfill their ambition of climbing through the leagues, he added: “There is nothing wrong with it but what we’ve seen is that when you get an investor who invests his own money at a loss it drives transfer prices up and drives wages up.
“It pushes other clubs who cannot afford it to try to match the club who has suddenly become rich, and creates an imbalance. We’ve seen more than 80 clubs in Europe in 10 years going into administration.”