What On Earth Is Going On At Liverpool?

This season's major trend has been a very singular type of managerial sacking, involving "intolerable pressure" building up in the media, directors and owners panicking, and a manager's job becoming basically untenable, regardless of whether he deserves to be sacked or not. In some cases, it was undignified to the point of being embarrassing to watch, such as at Chelsea, where the boardroom politics, the despotic ownership and the ridiculous amount of control given to senior players were made public. At Newcastle, Sam Allardyce did the impossible, in becoming a figure of public sympathy for being ousted through a mixture of supporter ignorance and an owner that seems to be too eager to please said ignorant supporters.

Now, at Liverpool, the position of Rafael Benitez seems to have been undermined still further by the actions of their owners, George Gillett and Tom Hicks. It has become apparent as the season has worn on that Liverpool are not going to mount a serious championship challenge in the Premier League. In fact, if anything they seem to have taken a backward step since last season, and are currently playing like they have more in common with the likes of Everton, Manchester City and Portsmouth than they have with Chelsea, Manchester United and Arsenal. The money that was reported to be delivered to Benitez to further strengthen his squad doesn't appear to have been forthcoming, and now there are worrying rumours coming from Anfield regarding a need to restructure the club's finances ahead of the construction of a proposed new stadium in Stanley Park. There are some Liverpool supporters that are starting to sound increasingly alarmed, to the point of drawing similarities with the beginning of the decline of Leeds United.

The problem at the centre of Liverpool's current difficulties is the funding of their take-over last year. As with Manchester United, Liverpool were subject to a leveraged buyout, meaning that Gillett and Hicks utilised stock market rules to purchase the club for a fraction of its actual value. At the time, Liverpool's supporters were very supine about it all. Stars and stripes flags were waved at Anfield. The new owners were more than happy to lap up the praise when they got to the European Cup final in May, even though they'd had precious little to do with it. This season, their big summer signing Fernando Torres has carried them single-handedly through the season. They made a dog's dinner of getting through their group stage, losing to Besiktas and Marseille in a group that they should have had sewn up with games to spare. In the Premier League, they have slowly and consistently fallen further and further away from the top three since the start of the season.

The major problem for Liverpool FC is that they simply cannot afford to not qualify for the Champions League this season and, indeed, every season for the forseeable future. The buyout of the club cost £300m, which has been loaded against the club itself. On top of this, one of Gillett and Hicks' first acts when they took over was to promise to build a new stadium, at a cost of a further £300m. Liverpool were already said to be £80m in debt at the time of the buyout. Gillett and Hicks are said to be trying to restructure the club's finances through the banks, but this in itself is an expensive business. A recent report in the Daily Telegraph put the cost of the restructuring at £15m, and the cost of the new stadium has already risen to £400m, with £20m having already been paid to architects.

In the beginning, Liverpool's supporters were open to the idea. Broadly, they supported Gillett and Hicks against their rivals in bidding, Dubai International Capital, who represent the interests of the ultra-wealthy Maktoum family. Gillett and Hicks said the right thing. However, leverage buyouts are done for one reason. To buy something that is considered under-valued in the market without putting much investment in and sell it on at a profit. DIC may well have the funding to underwrite the club's debts, but they have already stated publicly that they don't much want to pour money into a black hole (and why, indeed, should they?). The danger, for Liverpool, is that they could end up hundreds of millions pounds in debt, unable to service so much as the interest payments on debts that they may already have unnecessarily run up.

At Manchester United, supporters were already protesting before the Glazer takeover. It might not have been enough to prevent the buyout there from going through (although anyone looking at the end of year figures coming from Old Trafford will be able to tell you that journalists stating massive profits there simply hasn't read the full story of how they've been massaged), but their disaffected supporters at least have an alternative. Liverpool supporters might just find that things could get a lot worse for them before they get any better.