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Liverpool Echo
Liverpool Echo
Sport
Dave Powell

FSG approach at Boston Red Sox could give clues to Liverpool future

Fenway Sports Group have always been very clear that Liverpool and the Boston Red Sox operate independently of each other.

While both clubs come under the same umbrella of ownership, along with NASCAR team Roush Fenway Racing, FSG have long remained steadfast in their stance that what happens with one has nothing to do with the other.

Under normal circumstances there has never been a need to look at the parallels between the two, especially when you consider that success has been delivered on the field for both, with the Red Sox winning a fourth World Series under FSG ownership in 2018 and Liverpool picking up Champions League and Premier League titles in the past two years.

But then came the pandemic, with COVID-19 hugely impacting every sport across the globe with revenue streams drastically affected.

While it may be the case that each FSG-owned club operates in its own financial bubble the inescapable truth is that they are all under the same banner of ownership, one that has been seeking private investment in order to further their endeavours.

Liverpool look set to see a £42m drop in operating revenue when they release their financial accounts in the near future, although that eight per cent decline is expected to compare favourably to the burning fires seen across European football, where clubs are set to lose billions collectively.

The Reds' first appearance in the top five of the Deloitte Money League since the 2001/2002 season also points to a financial strength that will likely see them navigate the crisis caused by the pandemic far better than most.

But how have they approached the pandemic across the pond with the Red Sox? Are they in a robust position and can we read anything into what has happened there that could act as a pre-cursor to future decisions taken at Anfield?

At the onset of the pandemic the salaries of almost all Red Sox employees earning over $50,000, while in September 10 per cent of staff (around 40) were made redundant.

The payroll at the Red Sox wasn't hit, although prior to the pandemic there had been a lightening of the load in terms of their wage structure.

"I'm sure FSG see Liverpool and the Red Sox as being in different baskets," explained Brendan Coffey, a Boston-based sports finance reporter at Sportico.

"In the major leagues here it is a thing to make sure all the owners aren't taking from say baseball to fund soccer. In the past there have been different issues about that.

"I have the impression that the Red Sox ownership group is pretty closely knit, so what that means is that if they needed to spend more money they would be hesitant to do something called a capital call, which is basically calling on all your partners to kick in more money in proportion to the equity that they own. They may not want to put the squeeze on someone who owns 10 per cent to fund salaries. What happens if you don't meet a capital call is that your equity gets diluted. If you don't pony up the money you lose some of your equity."

One of the criticisms levelled at FSG presently is their perceived lack of support given to manager Jurgen Klopp in addressing their evident need for a defensive reinforcement in the January transfer window as they look to try and retain their Premier League crown without the services of the injured Virgil van Dijk.

Those calls seem increasingly likely to go unanswered as January winds down.

And with Mohamed Salah's contract situation bubbling away in the background there are scenarios that have played out behind the scenes at Fenway Park when it comes to star assets.

Just prior to the pandemic, in February of last year, the Red Sox opted to trade arguably their best player in Mookie Betts to the LA Dodgers.

Betts was coming to the end of his contract and with the Red Sox unwilling to spend the $300m it was going to cost to keep him they traded cash considerations and another player in exchange for three in the other direction.

"Mookie Betts is a fantastic player and it never used to be a thing for a rich team like the Red Sox where you would see them not trying to sign a homegrown player who is a superstar in the prime of his career," said Coffey.

"It was partly because of Luxury Tax and partly because of the rise of Moneyball, where people trust the statistics more than the traditional scouting and things like that. That has really taken over the game. You have a lot of owners asking why they have to spend $200m when the Tampa Bay Rays who made the World Series can spend $50m through using analytics.

"In one of the local papers here someone from the Red Sox was saying that while they wouldn't trade the World Series from 2018 it blew their payroll out of the water and they have kind of hit the reset with the aim of being competitive in 2022. That is something that you never used to hear a rich team say.

"Sports lost a lot of money last year and you hear a lot of chatter about teams suffering a money crunch and worries about what to do in 2021 if the season is affected, which it will be.

"There is a lot of fiscal worries and restraint because of the losses from the pandemic."

Staying under the Luxury Tax was a key consideration for FSG when trading Betts to the Dodgers.

"Baseball never used to have a salary cap so teams like the Yankees, Dodgers and Red Sox, teams from the big cities, had a lot of money," said Coffey.

"Now the situation is that the payroll for the 40-minute roster, so essentially the big league rosters of 25/26 players and extras you can call up at any time, the maximum payroll for that is about $207m this year. The first time you go above that you pay 20 per cent tax on the overage, the second time you go over it you pay 30 per cent and after you pay 50 per cent.

Blood Red: Liverpool move into top five of Deloitte Football Money League as pandemic hits top clubs hard

"I'm not sure of the Red Sox's feelings on the Luxury Tax but I know the Yankees don't like it. It was essentially brought in to rein in the Yankees. Owners generally I find are happy with cost certainty and capping salaries as it makes their teams more valuable."

Last year saw Liverpool end their 30-year wait for a league title.

The expectation among many was to see Klopp backed further and for Liverpool to assert themselves as the dominant force in English football once more after being on the fringes for so long.

And while the Reds were at the summit until recently they have dropped off markedly from last season and their injury woes and lack of depth are starting to show, allowing those around them to score big gains.

Not only is the title now a big 'if', so too is their place in next season's Champions League, something that is imperative to a club the size of Liverpool coming off the back off last season.

American sports has an acceptance that periods of transition are part of the expected, where there are seldom any periods of prolonged dominance, a reason why the Chicago Bulls' mid-1990s efforts in the NBA are lauded so.

In football dynasties are formed and continued success, or at least a push for it, is demanded.

A look at Boston post their 2018 World Series win emphasises that point.

"The Red Sox won the World Series in 2018 but were in last place in 2019, and that happened before when they won it in the last decade," said Coffey.

"There is this sort of acceptance after they win that they feel they can step back and ride the ship as opposed to creating a dynasty.

"FSG have the idea that winning is good for business but it's not the only thing. I know that some fans in England are wary of American ownership and in some situations it is justified, I know there is one where the owner really doesn't care but I never got that impression with Liverpool."

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