Can China save Liverpool from the red?

Can China save Liverpool from the red?
Liverpool football fans in Thailand cheers on their team

Our poll last week, like many a soccer match, ended in an unsatisfying tie -- readers couldn’t make their minds up about whether China should buy Liverpool Football Club or not.

As businesses go, English Premier League football teams tend to be spectacularly good at losing money. Even success is no guarantee of profits. Star players command salaries out of all proportion to the revenues of most clubs, with the result that a team like Liverpool, a Champions League winner in 2005, is indebted and struggling to find a buyer.

The club’s American owners have only made things worse. The leveraged debt they used to buy the club in 2006 has added punitive interest costs to a business model that already struggled to make money. They will reportedly have to pay Royal Bank of Scotland a ₤20 million ($31 million) penalty fee if they can’t find a buyer this month.

Kenneth Huang, chairman of Hong Kong’s QSL Sports, has made an offer of ₤400 million that the Chinese government was rumoured to be backing through its sovereign wealth fund, China Investment Corporation. Official state media reported the story, adding substance to the rumours, but CIC has denied it, unsurprisingly.

It is unlikely that China could expect to earn much money from owning Liverpool, which is perhaps the most popular club team in Asia, but our readers were nevertheless split 51% to 49% in favour of the idea.

Stranger things have happened, particularly in China. And who knows? Perhaps a CIC-backed team (which is already nicknamed The Reds by fans) really could turn a profit by selling replica kit and merchandise to patriotic Chinese fans. That, in turn, would make the team’s shirts an even more attractive advertising opportunity.

Half our readers might think China is mad to consider buying Liverpool, but every other investor in the world would have to be even madder. If the Chinese can’t turn a profit from Liverpool, it is unlikely anybody else is in a better position to do so.

Photo by AFP.

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