Tom Hicks, the Texas private-equity and sports investor, said a dysfunctional management structure and favorable market led to Friday's announcement that he and partner George Gillett will sell the English soccer club Liverpool.
The sale, which will be handled by Barclays Capital, would bring to an end a three-year tenure for Messrs. Hicks and Gillett at the helm of one of the world's most storied sports franchises, which has been dogged by financial pressures, a strained business partnership and a fractious relationship with the club's fans.
For Mr. Hicks, selling Liverpool, which he hopes will fetch as much as £800 million ($1.24 billion), will draw to a close his run that brought him to the top of the sports industry. The sale of his 50% stake in Liverpool, combined with sales of Major League Baseball's Texas Rangers and the National
Hockey League's Dallas Stars, marks the final chapter of his rocky venture into the sports business.
Mr. Hicks' sports investments have met with mixed results. His Dallas Stars won the Stanley Cup in 1999, and the Texas Rangers, which he bought from his friend, former President George W. Bush, in 1998 for $250 million, were division champions in 1998 and 1999, but never won a World Series.
While the Stars performed well on and off the ice and the Rangers have recently improved after faltering, both teams ended up costing Mr. Hicks dearly. Mr. Hicks gave shortstop Alex Rodriguez a $252 million contract before the 2001 season, but never had a winning year with the slugger before he traded him to the New York Yankees.
The teams no longer are profitable enough to cover debt obligations, and in March 2009 Mr. Hicks stopped making quarterly payments of $10 million on the loans. Mr. Hicks' Hicks Sports Group defaulted on $540 million in debt on his U.S. sports teams a year ago, leading him to put those franchises up for sale to pay creditors. A person familiar with the team's finances has said Mr. Hicks personally invested $275 million in the teams.
Mr. Hicks's interest in Liverpool is separate from his U.S. sports investments, but a £237 million debt with Royal Bank of Scotland Group PLC is due this fall, putting pressure on the partners to sell. Last year, Mr. Gillett was forced to sell one of his most beloved assets, the NHL's Montreal Canadiens, amid his own struggles to stay ahead of creditors.
Mr. Hicks said he expects the team to fetch £600 million to £800 million, though financial observers said that estimate may be inflated. Messrs. Hicks and Gillett paid £238 million for Liverpool three years ago, and each owns 50% of the franchise.
"Liverpool will be the most profitable investment I've ever made," Mr. Hicks, who made a fortune in his deals for soft-drink brands Dr Pepper and 7-Up, said in an interview Friday. "It's been the most rewarding in so many ways and the most painful in so many ways. When you feel fans turn against you it's very frustrating."
Mr. Gillett declined to comment.
Messrs. Hicks and Gillett on Friday appointed Martin Broughton, chairman of British Airways PLC, as chairman of Liverpool, granting him power to direct the sale in the best interests of the club. Mr. Broughton will serve as a neutral party for the two partners, who battled over the choice of the team's chief executive and the design of a planned stadium for the club.
Other teams such as Manchester United and Aston Villa also are owned by U.S. citizens. But fans have rebelled, especially when the transactions resulted in the teams carrying substantial debt. Liverpool fans have campaigned against the U.S. owners and called for them to sell the club amid anger over its decline to sixth in the standings and use of club revenue to service loans incurred in the takeover and for expenses.
The campaign against the American owners has intensified in recent months. A group known as the Spirit of Shankly demonstrated outside the team's home stadium, Anfield, when Mr. Hicks attended a match against Bolton in February.
Mr. Hicks said Friday that much of the criticism has been unfair as both revenue and spending on players have increased under U.S. leadership. The team's net spending to acquire new players has risen to £34 million from £16 million, and the annual player payroll is now more than £100 million, compared with about £75 million before he took over.
"The fan blogs blame the owners but we had terrible injuries with our star players out for more than a month, and we just weren't a very good team without them," Mr. Hicks said.
The team has covered its costs in part by increasing sponsorships to nearly £100 million from £40 million, including a four-year £80 million deal with Standard Chartered PLC, which placed the name of the Asia-focused U.K. bank on the team's jerseys. Plans also have been approved for a new 72,000-seat stadium that would enable the team to compete financially with Manchester United, Chelsea and Arsenal.
Messrs. Hicks and Gillett have been independently seeking outside investors to help raise capital, an arrangement Mr. Hicks on Friday called "dysfunctional" and ineffective. That failure helped prompt the decision to bring in Mr. Broughton.
It isn't clear whether Mr. Hicks will be able to sell the team for the price he expects. Manchester United recently has been valued at £1.5 billion. But that team has a recently renovated and expanded stadium and a world-wide following. A new owner of Liverpool will have to spend about £375 million to construct the proposed stadium that Messrs. Hicks and Gillett designed for the team but weren't able to finance during the financial crisis.
Still, he is optimistic. "There's a strong business rationale," Mr. Hicks said. "I should make four times my money."