- Associated Press - Sunday, October 10, 2010

LONDON (AP) - Liverpool’s takeover by the owners of the Boston Red Sox will not go ahead if the English club is forced to enter a form of bankruptcy protection and gets penalized in the Premier League standings, people with knowledge of the negotiations said Saturday.

Liverpool is already in the three-team relegation zone after its worst start to a season in more than 50 years and would receive a nine-point penalty from the Premier League if it became insolvent before the Boston deal was completed.

A penalty could doom Liverpool to dropping down to English soccer’s second tier and would cause New England Sports Ventures, which owns baseball’s Red Sox, to walk away from the deal, two people with knowledge of the negotiations told The Associated Press. They spoke on condition of anonymity because neither side is discussing the situation publicly.

The club could avert financial administration if three Liverpool board members persuade a London court next week to force co-owners Tom Hicks and George Gillett Jr. to sanction the $476 million sale to NESV.

Hicks and Gillett will claim the trio don’t have the power to approve a takeover bid, which they said “dramatically undervalues” the club.

But if the court rules in favor of Hicks and Gillett, the pair must repay the team’s bank debt by next Friday to prevent the Royal Bank of Scotland from taking control of Liverpool and potentially placing the holding company for the club in administration, a form of bankruptcy protection.

A third person familiar with the negotiations said that, in this scenario, NESV could try to secure a cheaper deal to buy the 18-time English champions.

Meanwhile, before accepting NESV’s bid earlier this week, Liverpool’s board also considered an offer from an unidentified Asian consortium. And even though it has approved NESV’s potential takeover, the Premier League is still carrying out the same checks into the suitability of the Asian group to run the club.

Liverpool managing director Christian Purslow, one of three members on the club’s board who agreed to the sale to NESV, urged the owners to allow it to proceed so they could leave with some dignity intact, rather than necessitating the High Court action.

“Right now, they do have an opportunity with one simple short correspondence today to allow a sale to complete and that would clear the club of all the acquisition debt and give us a massive lift before the Everton game (in the Premier League next Sunday),” Purslow told BBC radio on Sunday.

“That’s in their gift and would enable them to leave with some peace rather than precipitating a messy dispute. I hope they’ll think about that.”

Liverpool chairman Martin Broughton told the AP earlier this week that Hicks and Gillett would be taking a loss of about $223 million on their three-year tenure at Anfield if the NESV deal goes ahead. He said they could also owe a further $175 million in personal guarantees to Royal Bank of Scotland as a result of the club entering administration.

The Boston investors are pledging to wipe out all Liverpool’s debts, which currently stand at around $453 million.

They will look to turn around the fortunes of the club in the same way they returned success to the Red Sox.

Since they purchased the team in 2002, Boston has won two World Series titles, ending an 86-year wait for a championship. Liverpool won its most recent English title in 1990.

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