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Shootout in the U.K. Corral

When Wall Street colonized English soccer.

Speaking on BBC radio at the end of 2003, as his novel Absolute Friends was published in the shadow of the Iraq war, John le Carré compared himself to Victor Klemperer, the German-Jewish scholar and diarist. Klemperer had said that, while surviving in Dresden during the war, he told himself he was waiting for the good Germans to return, and now le Carré told us that he was “waiting for the real Americans to come back.”

This is the kind of thing that makes even the novelist’s admirers want to tear the nearest copy of The Spy Who Came in from the Cold into small shreds: His reputation as a writer is not enhanced by smug and fatuous political reflections. And yet, come to think of it, Liverpool fans have been feeling something similar.

For more than three years, their famous soccer club writhed in agony under the ownership of two American financiers, Tom Hicks and George Gillett. Then John W. Henry of New England Sports Ventures (NESV), which owns the Boston Red Sox, arrived to acquire Liverpool, just before the club was engulfed by financial calamity. He’s the latest in a line of transatlantic owners who have bought English soccer clubs, which might seem odd given that Association Football has never managed to plant roots in the United States. Liverpool apart, Manchester United, Aston Villa, and Sunderland are now American-owned, and the largest shareholder in Arsenal is also American.

In both Manchester and Liverpool, the Americans were first welcomed as succoring angels by fans and players, before they turned into devils, interested only in the bottom line and asset-stripping. But Henry is the real American—isn’t he?

His arrival was the culmination, for the moment, of a bitter and bruising contest played, not on the field, but in the boardroom and courtroom. In February 2007, Hicks and Gillett bought the club from the family that had owned it for generations. The two have made their money in Texas and New York through the dark arts of junk bonds and leveraged buyouts, and it was clear that they were buying Liverpool for money, not love—not to say buying it with money they didn’t have. That’s not illegal, or even unusual, but the economics of soccer are, if anything, darker still than those of hot-rod finance.

Having bought with borrowed money, the two then loaded further debt onto the club in addition to its very heavy existing obligations. Its main creditor was the Royal Bank of Scotland (RBS), which actually means me and my fellow long-suffering taxpayers: During the financial crash two years ago, the British government acquired a majority stake in the bank, which had been gravely mismanaged and nearly went bust. One tranche of 237 million pounds in loans was due to be repaid to RBS by Friday, October 15, failing which the club would be put into administration, one step away from bankruptcy. 

To heighten the drama, Liverpool has made its worst start to a season in living memory. On that Friday, they were ranked 18 of 20 in the English Premier League, under whose rules a club that goes into administration has nine points deducted on the league table. That could have condemned Liverpool to relegation, a drop to the division below, which is even more financially woeful.

By the spring of this year, Hicks and Gillett wanted out, but they also wanted to make a profit, or not suffer too much of a loss. They appointed a new chairman of Liverpool, Martin Broughton, a self-made businessman who spent most of his career at British American Tobacco (or BAT, which, like BP, prefers to shelter decorously behind initials nowadays) and as chairman of British Airways for ten years. His job at Liverpool was to find a purchaser, and he set about doing so. 

But when he struck a deal with Henry, Hicks and Gillett realized that they were going to take a huge loss. They began frantically to search for another buyer who might be prepared to pay more, while seeking desperate expedients to stop the lawful sale. “As every Liverpool fan knows, the most nerve-racking way to win a football match is in a penalty shootout,” Broughton said when it was over, and the comparison was apt, since the lead kept swinging back and forth.

Over several acutely tense days, there were alternate hearings at the High Court in London, which found in favor of Broughton, RBS, and Henry, and in a court in Texas. It wasn’t wholly obvious to me, or to more learned legal folk either, what the Texan jurisdiction in this matter was, but Hicks and Gillett thought they had managed to block the sale.

Then it was back to the High Court, where counsel for RBS didn’t mince words: The wrecking action by Hicks and Gillett was “scurrilous, outrageous and inappropriate.” Mr. Justice Floyd agreed, and Hicks and Gillett conceded defeat, with ill grace and only for now: They’re threatening to sue for billions. All the same, NESV owns Liverpool.

Few soccer clubs have a more glorious history behind them. Alas, “behind” is the operative word. Liverpool may have won 18 English league championships, seven Football Association (FA) Cups, and five European Champions’ titles. But the last FA Cup was in 2006, the last European trophy was in 2005, and the last domestic pennant was all of 20 years ago. And this eclipse of the club seems to echo the fate of the city. Once one of the greatest entrepôts in England, Liverpool has been in severe decline for more than half a century. 

It has, in any case, a dark side to its history, as its commercial greatness was founded on the slave trade. Liverpool’s most famous son, at least before Lennon and McCartney, was William Ewart Gladstone. Born in 1809 in fashionable Rodney Street (the idea of any street in Liverpool today being called fashionable would be far-fetched), he went from Eton to Oxford to Parliament to Downing Street, where he became “the people’s William,” a prime minister adored by the masses. And yet the family fortune that supported his career originally derived from slavery.

But then there’s a bleak side to the story of the football club as well. The last golden age of Liverpool soccer was in the 1980s, with a clutch of pennants and two European Cups. Sad to say, those were also the years of two frightful disasters, at the Heysel Stadium in Brussels for the European Cup final in May 1985 and at Hillsborough in Sheffield, where Liverpool was playing an FA Cup semifinal in April 1989. At Heysel, unruly Liverpool fans broke through a barrier and 39 people were killed, most of them of them supporters of the Italian club Juventus; and at Hillsborough, 96 Liverpool fans were killed in a crush when the crowd got out of control

Anyway, there is the larger Football Problem. For two decades, English soccer has paralleled or even parodied the great financial boom. The creation of a Premier League, detached from the rest of the domestic leagues but closely linked to Rupert Murdoch’s Sky TV, transformed the game financially, with unprecedented new revenue gushing over the big clubs. They thought it would never end, just as those other wise guys at Lehman Brothers did, not to mention RBS. 

Within my lifetime, English footballers were paid a weekly maximum wage—that’s right, not minimum—of 20 pounds. Now, many of the Premier League players earn, or at least receive, well over 100,000 pounds per week. A high proportion of them come from abroad and so, increasingly, do the owners. Americans apart, Chelsea has been carried to the top of the league by oligarchic rubles from Russia and is now joined there by Manchester City with its Arab oil wealth.

Even those who love the game as a game feel that there is now something gross or monstrous about English soccer. And there was a large dose of hubris in all this. It could be seen even from the outside that without such fairy money, or sometimes even with it, many of the clubs were effectively insolvent. Nemesis has duly arrived, with several clubs teetering on the financial brink or, like Portsmouth, falling over it. As if to make the point with ironical eloquence, some of the teams have as their “shirt sponsors” corporations which themselves went to the brink. You have to smile at Manchester United players with “AIG” emblazoned across their chests, or Newcastle players with “NORTHERN ROCK.”

“I don’t have ‘Sheikh’ in front of my name,” Henry said as he arrived, suggesting that he won’t just be pouring out limitless money. His modest demeanor has impressed people, and he speaks calmly, pointing out that the Red Sox “have gone toe-to-toe with the Yankees, even though they have got a much higher revenue” (well, not quite toe-to-toe this season, if he’ll forgive the pedantry).

And so, on Sunday, October 17, Liverpool played its first game under new ownership—which just had to be an away fixture against Everton, the other club in the city, and the greatest rival of all. Hicks and Gillett “were about leverage,” said Tom Werner, Henry’s partner in NESV, before the game, but, “We are about winning.” A more superstitious man might have left that unsaid, as they then had to watch Liverpool being beaten 2-0, to fall to one place from the bottom of the table.

If it was any consolation, this sorry inaugural was driven off the sports pages the next day by two other stories: the likely departure of the brilliant but wayward and self-destructive striker Wayne Rooney from Manchester United and gross corruption in the bidding process for the 2018 and 2022 World Cups. Henry and Werner may be the real Americans, but soccer at present is far from the Beautiful Game.

Geoffrey Wheatcroft’s books include The Strange Death of Tory England and Yo, Blair! This article ran in the November 11, 2010, issue of the magazine.

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