There have been stories flying around the British media, and I’m sure have permeated to news outlets worldwide, that Liverpool are about to be placed into administration and docked 9 points.
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What none of these stories I’ve read has provided is clear evidence that the Premier League would impose a nine-point penalty should the parent undertaking be put into administration. There has not been one attributable quote from anyone; it’s always ‘an insider’. Also, these stories are speculation disguised as fact as nothing is set in stone..
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Unfortunately, there are some media outlets with a real axe to grind over Liverpool, and are only too quick to stick the knife in when the club has problems. Others just see this as a good story and a way to attract readers/website visitors.
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I don’t believe Liverpool is about to enter administration or about to receive any point deductions. Wanting Liverpool to go into administration and it actually happening are two different things.
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Just to recap the ownership structure of Liverpool FC. The company of the club itself is called Liverpool Football Club and Athletic Grounds Ltd. (I’ll call this LFC). This is owned by Kop Football Ltd (KFL), the parent company, which is in turn owned by Kop Football (Holdings) Ltd, which is turn owned by Kop Football (Cayman) Ltd, which is in turn owned by Kop Investment LLC.
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It is Kop Football Ltd that is in debt to the RBS, not LFC, and it is KFL that will potentially become insolvent and placed into administration should it be unable to pay its debts.
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So let’s look at this from the viewpoint of the rules of the Premier League, which you can look at the link below to read yourself, should you wish to.
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http://www.premierleague.com/staticFiles/4f/53/0,,12306~152399,00.pdf
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Rule C.67 states “Upon a Club or its Parent Undertaking suffering an Event of Insolvency the Board shall have the power to impose upon the Club a deduction of 9 points scored or to be scored in the League competition. If the Board exercises this power it shall forthwith give written notice to the Club to that effect”/www.bigsoccer.com/forum/images/smilies/tongue.gif[/img]>/www.bigsoccer.com/forum/images/smilies/tongue.gif[/img]>
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Two big points can be taken from this rule. Firstly, the league treats a club and a parent company as two separate entities, so it sees LFC and KFL as two separate bodies, this is important. Also, the wording of this suggests that any penalty imposed is at the discretion of the league. Basically, the league has a choice whether or not to impose a points penalty, it isn’t mandatory.
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Also, the rules state that there is a right to appeal if the worst happens. Rules C.69.1 and C69.2 state:
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69.1 the Event of Insolvency was caused by and resulted directly from circumstances, other than normal business risks, over which it could not reasonably be expected to have had control; /www.bigsoccer.com/forum/images/smilies/tongue.gif[/img]>/www.bigsoccer.com/forum/images/smilies/tongue.gif[/img]>
69.2 its Officials had used all due diligence to avoid the happening of that event.
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Again this is important. It could be argued that LFC had no control on the debts amassed by KFL, as the club itself was no part of the acquisition debt taken by Hicks and Gillett.
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Also, the actions of Broughton et al this week will hopefully prove that the board tried to avoid administration by selling the club. If Hicks and Gillett hadn’t interfered, the club would’ve been sold and the debts to the bank repaid.
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There is a precedent here too. In 2008 the parent company of West Ham, Hansa, went into administration. The club itself was solvent and debt-free (like Liverpool) and the league decided against a points deduction (I know the circumstances of the administration were different, but it is still a relevant precedent in the way the Premier League applied their rules).
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To be honest, I doubt Liverpool will receive a points deduction. Only this week the Premier League released a statement saying that they approve the proposed takeover of Liverpool. There is no good reason why, after approving the sale of Liverpool, they would scupper the deal by imposing a penalty. Especially, as if RBS do place KFL into administration, they would probably just sell the club to New England Sports Ventures anyway.
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I don’t think the RBS will put the holding company into administration regardless of the outcome of the court case. There have been noises coming from the RBS that they would like to remain Liverpool’s bank and I don’t think they would want to jeopardise both the current value of the club and future business by placing the club into administration.