Fired Rafa Benitez Costs Liverpool

Liverpool Football Club paid former manager Rafael Benitez and his staff €7.8 million pounds ($12.8 million) in compensation after firing him at the end of last season, according to the team’s annual accounts.

Benitez left after Liverpool finished seventh last season in the Premier League and failed to qualify for the Champions League for the first time since 2004. His departure came as former owners George Gillett and Tom Hicks were forced by their lenders to put the club up for sale. Liverpool was bought by the group that controls the Boston Red Sox in October.

Liverpool, which hasn’t won the English championship since 1990, remains one of soccer’s most popular teams with supporter groups spread around the world. The club’s latest shirt sponsorship deal with international bank Standard Chartered is worth 80.1 million pounds over four years and is among the largest in the sport. The accounts confirm the club lost 19.9 million pounds for the year ended July 31, 2010. 

Much of that was because of the exceptional costs linked to removing Benitez, the Spanish coach that led the team to its fifth European Cup in 2005, and higher interest costs. Interest payments rose to 17.7 million pounds from 12.9 million a year earlier. Total staff costs soared by 20 million pounds to 108.5 million pounds.

Hicks and Gillett lost control of the team after the forced sale to Fenway Sports Group, which was then called New England Sports Ventures. The sale went through after FSG agreed to repay loans totaling more than 220 million pounds to Royal Bank of Scotland Group Plc (RBS) and Wachovia Corp.

RBS, a government-controlled lender, has agreed to lend 92 million pounds to the club’s new holding company UKSV for working capital and stadium development funds, the accounts show. The team had used 94 percent of the funding by the end of January. Hicks and Gillett spent about 50 million pounds on planning and preliminary work at site near the team’s current Anfield stadium. FSG has said the team may stay there and “it is highly likely there will a significant right-off of the new stadium project cost”.

The club is likely to refinance its agreement with RBS “on acceptable terms.”

Since the end of July Liverpool has committed 76.2 million pounds to pay for new players and recouped 76.1 million pounds. The purchase of strikers Luis Suarez and Andy Carroll in January and the capture of midfielder Raul Meireles make up the bulk of the team’s outlay. Sales include the U.K. record 50 million pound transfer of Fernando Torres to Chelsea, Javier Mascherano’s move to Barcelona and sending Ryan Babel to Hoffenheim.

Liverpool fired Benitez’s replacement Roy Hodgson in January and brought in former title winning coach and player Kenny Dalglish. He’s lifted the team from its worst start in more than 50 years to sit in fifth place with three games remaining.