Too Much Debt Leads To Bankcruptcy.

[redrus]

Too much debt leads to bankcruptcy.

From the Independent on the American who would like to buy Liverpool.

George Gillett Jnr, the prospective owner of Liverpool, has a spectacular bankruptcy on his CV, which involved the collapse of his business empire in 1992 with debts of $1bn (£508m), and led to a personal bankruptcy to the tune of $66.2m, The Independent can reveal.

Gillett, 68, said at the time that he had "caused the problem" that led to the downfall of his Gillett Holdings firm, because of an " error in judgement and timing" about a major investment, in that case in a Florida television station.

But sources close to Gillett, who is now in pole position to take over at Anfield, perhaps within days following Wednesday's shock withdrawal of Dubai International Capital's firm pledge of £450m investment, insist the entrepreneur is the right man to take Liverpool forward.

Reports in America yesterday suggested Gillett may buy Liverpool with Tom Hicks, the Dallas businessman who owns the Texas Rangers baseball franchise.

"Gillett is a serious investor with a good track record," a source in his camp said. Since his 1990s downfall, the American has rebuilt his empire and is estimated to have a personal fortune of £440m.

Gillett has not made public how he intends to pay for his proposed £170m buyout, write off debts of £80m, pay for a £200m new stadium or fund transfers. "But if you're asking whether this a majorly debt-driven venture, then no," the source claimed. "It is not a Glazer-type deal."

The Glazer family borrowed heavily to buy Manchester United and have since heaped £660m of debt liability directly on to United's books.

Without providing any details or breakdown, the Gillett source said Gillett had given written assurances to the Liverpool board that he would indeed pay for the new stadium, and provide funds for the future.

He will also, crucially, offer the shareholders, including the chairman David Moores (a 51.6 per cent stakeholder), £5,000 per share against DIC's £4,500.

Gillett has hired the bankers Rothschild to handle his offer. A banking source said last night: "There's less stigma attached to bankruptcy in America. Chapter 11 [protective bankruptcy proceedings, which Gillett went through] are viewed as a normal route out for business collapses."

Liverpool fans may take some persuading, especially as DIC seemed to have produced an attractive offer that guaranteed a stadium and hefty transfer funds. DIC pulled out after learning that what it thought were " exclusive" negotiations with Liverpool had been widened to allow the Gillett offer to be heard.

Liverpool's chief executive, Rick Parry, who on 14 January was singing DIC's praises and saying he was "confident" that that deal was imminent, sought yesterday to calm supporters' fears. "The overriding message is, 'Don't worry'," he said. "Whatever decision is finally taken will be done so in the best interests of Liverpool Football Club... We had a duty as directors to consider a very interesting bid from George Gillett."

It is not known how much Liverpool know about Gillett's previous business failure, nor whether they consider it relevant. Gillett's only other sports interest is as owner of the NHL's Montreal Canadiens.

His errors were borrowing too much money (via high-risk "junk bonds" ) to sustain his companies, and then investing badly. The final straw, as Gillett saw it, was buying WTVT-TV in Tampa, Florida, for $385m, just as the industry went into recession. By 1989, Gillett Holdings had lost $100m on WTVT-TV alone. Things came to a head in 1991 when the junk bond interest shot up, and as Gillett said: "When the notes came due, we were dead."Gillett's empire was bust, and he was also declared personally bankrupt, losing his home and sports cars.

He did, however, remain on the payroll of one of his ski firms, and was allowed to keep millions of dollars in a settlement package that saw his various interests emerge from bankruptcy under new owners unrelated to him. From scratch, he built a new empire in meat, sport and car dealerships.

Talking to Time magazine in 1997 about his riches-to-rags-to-riches experience, he said of his personal bankruptcy and loss of his house: " I had 10 days to get out... I [later] had to buy back my clothes. I had to buy back my dogs." He also admitted he sometimes moved too fast in business, andbought too much. "I've lived my dreams, but then I blow them up."

redrus

[Tarragona]

The Independent can reveal.

http://en.wikipedia.org/wiki/George_N._Gillett_Jr.

Edited February 2, 2007 by Tarragona

[redrus]

After resultantly declaring bankruptcy, but remaining on the payroll of Vail Resort at $1.5 million a year,

:D

redrus

[fxm88]

Reports in America yesterday suggested Gillett may buy Liverpool with Tom Hicks, the Dallas businessman who owns the Texas Rangers baseball franchise.

I wouldn't worry about it, Tom Hicks has connections.

[Tarragona]

From The Guardian

From meatpackers to Globetrotters - Anfield can expect a fun ride from Gillett

Fall and rise of Liverpool's prospective new owner is built on flair for marketing

In September 2005 Glenn Wildenmann, a Montreal Canadiens fan, took his two daughters to watch his beloved ice hockey team in a pre-season training session. A photographer from the local paper took their picture and Wildenmann remarked to the journalist that this was now the only time a father of four could possibly afford to take his kids to see the side. The following day the club's owner, George N Gillett Jr, read the piece and phoned Wildenmann to invite him and the children to watch a National Hockey League game in the owner's private box once the season began.

Article continues

If Gillett's six years as owner of the Canadiens are anything to go by, Liverpool fans may be in for interesting times, because by early next week Gillett, and his partner on this venture, Tom Hicks - the owner of baseball's Texas Rangers - should be the new owners at Anfield.

After initial misgivings by Montrealers about an American purchasing Canada's oldest, most successful and revered club - their jersey is known as La Sainte-Flanelle, the Holy Sweater - Gillett has proved to be a hands-on owner of Les Habitants in the best possible way. Even though he lives a couple of thousand miles away in Denver he often travels on the team bus to games, has been known to phone fans back to answer their complaints and has thanked supporters personally at away matches for going the extra mile.

"There was concern around the city over having an owner not from Canada buying the team," said Matthew Macaskill, a contributor to Habsworld, a Canadiens online fanzine. "However, he quickly proved he was dedicated and expressed his willingness to do what he could to help the team, partly in the form of more money to go after more expensive free agents. Since the NHL has installed a salary cap, Mr Gillett is limited in his ability to help out economically. The cap hasn't completely limited him, though, as the club has the funds to spend up to the maximum amount thanks to him while other teams in the league have to work with a lower budget."

Given that any purchase of Liverpool would involve significant borrowing, the worrisome aspect for the Anfield faithful is that Gillett has a history of over-reaching himself. After an ill-fated $325m investment in a Florida television station, a transaction so unwise it was held up by the highly influential American investor Warren Buffet as an example of what he called "debt mania", Gillett Holdings Inc defaulted on $983m of junk bonds in 1991. A year later he filed for personal bankruptcy, with assets of $18.4m dwarfed by liabilities of $66.2m. As part of that settlement he paid off one creditor by giving him his antique car collection worth an estimated $5m and had to buy his clothes back from the trustee.

"My mistake," said Gillett in 1999, "was borrowing a tremendous amount of money that I could not pay back."

His fall from grace had been as spectacular as his rise. The son of a surgeon in Racine, Wisconsin, he was warned at the age of 18 that he would have to fend for himself - his father would be leaving his money to his daughters. Out of college, he started selling paper for Crown-Zellerbach before moving into marketing and consulting. At the age of 28 he owned a minority stake in the Miami Dolphins but left after a year to buy the Harlem Globetrotters. To revive that waning franchise he had the ingenious idea of getting Hanna-Barbera to produce an eponymous cartoon series which in the early 1970s helped acquaint a new generation with the antics of the basketball team.

From there, Gillett moved into the meatpacking, media and ski-resort industries. At every stop he's been praised more for his brilliant marketing (children's tickets to Canadiens games are an NHL-low C$10) than his canny management skills. In a typically American fable, the father of four boys returned from insolvency bigger and better than ever. Having failed several times to purchase NBA and NHL teams, he was finally allowed to pay $183m for Montreal in 2001 after no Canadian buyer could be found.

Gillett's compatriot, Thomas O Hicks, is in his 10th season as the owner and chairman of the Texas Rangers. Hicks, 61, is the chairman and chief executive of Hicks Holdings, a holding company for sport, real estate, manufacturing and technology assets and investments, which includes the ice hockey team the Dallas Stars.

"The businesses I've been in for the most part have been absolutely wonderful and enjoyable," Gillett once said. "We were able to put smiles on people's faces." Liverpool fans will take note.