Managing director Ian Ayre insists it was essential for Liverpool to clean up their accounts to be able to move forward – even if it did mean making a loss of nearly STG50 million ($A79 million).
Documents filed to Companies House have revealed in the year up to July 2011 the club’s accounts were STG49.4 million in the red before tax.
That was primarily the result of an incredible STG35 million of wasted money from previous owners Tim Hicks and George Gillett’s ambitious Stanley Park stadium plans being written off in a single stroke.
The departure of former manager Roy Hodgson, managing director Christian Purslow and other staff cost a further STG4.8 million.
Owners Fenway Sports Group (FSG) decided to settle up all the costs – which includes design, legal, planning and other associated fees related to the stadium project – to get the balance sheet back in order, having inherited a difficult financial position from Hicks and Gillett, despite eradicating almost STG200 million of debt when they took over in October 2011.
“I think what today’s accounts show is that we have gone through a phase in the last year which has involved a cleaning up of our accounts and our business,” said Ayre.
“There was much talk and conjecture around the debt that the club was with under previous ownership.
“There has been over STG200 million of that debt paid down and that’s very important for the club moving forward because, at the height of it, debt service was around STG18 million and that has been reduced to somewhere around STG3 million now, which is obviously a much more palatable and manageable position for the club to be in.
“It creates a very stable platform for us to move forward from, it creates a situation where most of those things are now off the books and we move forward in a positive sense in a sustainable business and with the ability to grow on that basis.
While FSG could do little about Hicks and Gillette’s ill-fated stadium proposal – the 70,000-seater glass and steel project designed by Dallas-based HKS architects was scrapped due to it being unviable – the money spent on pay-outs for former staff falls under their remit.
Purslow’s departure was inevitable once the Americans had taken over, but Hodgson was dispensed with after just 191 days in charge after a run of disappointing results.
On the accounts as a whole, Ayre told the Liverpool Echo: “I guess people will focus on the loss of 49.4m and there’s no business – or people running any business – who are going to be pleased with any loss.
“But I think the important indicator here is this STG59 million charge for exceptional items and as a business that’s been in a transition, it’s about moving from where we were to where we want to be.”
The figures, which have yet to be made available for public inspection, do not include the kit deal signed with American company Warrior Sports which is worth at least STG25 million a year.