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Liverpool Echo
Liverpool Echo
Dave Powell

FSG have £10bn reason to make Liverpool sale decision that John Henry favours

What the future has in store for Liverpool and Fenway Sports Group has been the focus of much rumour and conjecture ever since it was revealed in November that they were open to selling the Reds.

FSG, owners of Liverpool since 2010, have delivered much change during their time at the helm of the football club, investing in the infrastructure of the club through a new training ground and the redevelopment of both the Main Stand and the Anfield Road End. They have also been able to leverage the remarkable success that was delivered by Jurgen Klopp, where a Champions League win arrived in 2019 and Premier League title in 2020, to create a global powerhouse that delivers revenues of pushing £600m per year and has grown its legions of fans across the globe considerably over the past decade.

But with the alarming decline that has been seen on the pitch this season at Liverpool, a decline that hasn't been addressed in the transfer market thus far, there has been a growing unrest among some parts of the Liverpool fan base around what comes next.

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FSG have been open for quite some time to the possibility of selling a minority stake in the club which they acquired for £330m in 2010 but is now worth, according to the most recent analysis from US sports business website Sportico, around £3.8bn. But in engaging major US investment banks Goldman Sachs and Morgan Stanley, and in taking Klopp's closest FSG ally in Mike Gordon and placing him in charge of the investment search, there was an early consensus among some that FSG were ready to check out.

Since November there has been rumoured interest from Qatar, Saudi Arabia, India, North America and Germany, although well-placed sources in the US with knowledge of the situation have continually stressed to the ECHO that no bids have yet been received for the club and that there has been no concrete expressions of interest that have warranted high level discussions around next steps as yet.

The same sources have said that it remains the preference of FSG principal John W. Henry to retain ownership of Liverpool. The potential that the sale of Chelsea in a very hot market last year for £2.5bn was seen by FSG as being an opportune time to test the waters in the market with an explorative search with the potential for some minority partners in FSG to be ready to realise some of the financial benefits from their investment and sell their share. FSG have more than 30 partners and if one, two or three wanted to sell a shareholding that combined to make 10 or 15 per cent then that could provide a considerable capital influx at a valuation of £3.5bn plus.

Questions have arisen around what is still in it for FSG given that the value of their original investment has risen close on 1,000 per cent in 13 years, and also why a partial sale of the club would be appealing to any investors. Who would hand over money to someone else to spend when the value of an asset is so high and having no guarantee of getting any higher?

That is the nature of investment, and how the capital is deployed won't be a major consideration for investors who will be trusting FSG to do what they have continually done since at Liverpool; grow the value of the club as an asset.

FSG are looking for something more than just a private equity fund to arrive and take a stake in exchange for a chunk of capital, they want a 'strategic partner' who can provide them with some expertise and insight to try and crack a market that is on the horizon and that will likely change the dynamic of how we consume football in years to come.

As the Premier League years have gone by it has been the broadcast revenues that have truly driven the value of the English game and seen it become by far and away the richest and most powerful of all the global leagues. The latest TV deal saw for the first time international rights sell for more than domestic ones, the total value arriving at close on a staggering £10bn over the next cycle that will only continue to reinforce the spending power of the Premier League when compared to the rest of the world.

It is the growing disparity in revenues that has seen the likes of Juventus, Real Madrid and Barcelona continue to pursue a European Super League idea, and it is why people like La Liga chief Javier Tebas have railed against the growing power of the Premier League.

For all the above reasons it is why investors see huge value in the Premier League and, in particular, its most prominent 'big six' teams, of which Liverpool, however poor their season may be this year, and very much an immovable part of.

There is latent value to be released still from the Premier League, especially given that new markets are coming on board in a big way such as North America, and with emerging markets like India set to be major players in driving forward revenues for the Premier League in the years to come.

Being a rights holder is of enormous value to team owners. In the US there are team owners who own their own networks and can go straight to consumer for some of their content. In Major League Baseball, FSG own the NESN channel for Boston Red Sox content, while the New York Yankees have the YES Network. Having some element of that type of media in the future would present enormous opportunity for teams and the Premier League.

The idea of 'Premflix' isn't new. At present the Premier League has broadcast deals with Sky, BT Sport and Amazon Prime Video domestically, as well as a long list of partners internationally who broadcast Premier League games. For consumers that has meant having to subscribe to multiple content platforms in order to watch their team, and there are questions over how long this way of selling rights will continue and when the push back will start to bring things all in one place, especially given how frustrated consumers have become over the price point.

For Sky, BT Sport and Amazon Prime Video, having the Premier League is a marketing tactic, albeit an expensive one. Exclusive live content like Premier League football is the best carrot to dangle to consumers to sign up for TV bundles, broadband or online shopping and other content and has been a go-to move for media companies that offer such a range of services to drive subscriptions to other lucrative areas.

Broadcasters have continued to be the geese that lay the golden eggs for Premier League teams and the huge sums of money - despite the long-held view that the 'bubble' will burst with each passing cycle - have underpinned the growth of the league from challenger to undisputed heavyweight of the global game.

It would involve a giant leap of faith on the Premier League's behalf to set up their own platform and cut out the middle man, and it isn't a play that could happen overnight, but in going direct to consumer it does offer potentially huge financial returns, and with the biggest clubs like Liverpool the ones that drive the international engagement, the benefits for team owners are obvious and the valuations of teams would likely continue to rise considerably as a result.

Direct to consumer streaming offers leagues and teams the ability to deliver personalised, interactive content to engage specific demographics, as well as integrate merchandising, sponsorship, and ticket sales into one platform instead of being spread out over a number of them.

Prior to the start of this season, Premier League CEO Richard Masters, who spoke on being open to the idea of 'Premflix' in 2020, revealed that the league is open to the idea of going direct to consumer with its live content.

"We have sold all of our international rights to third parties," he said in August.

"In other words, we’ve licensed them as opposed to going direct to the consumer.

"However, we do have — and I can’t reveal where in the world — options to do various things. We’ve probably signed more long-term partnerships than usual – six-year agreements instead of three-year agreements – and there are options in some of those agreements to go direct to consumer in the name of the Premier League."

There is a longer plan afoot with English football, and there is an inevitability that the way we consume live sport will pivot from the traditional broadcast-led experience that is currently in situ into another model where the leagues and teams have a greater say as rights holders, with the Premier League owned by its 20 member clubs.

Such changes aren't imminent, but such latent value that exists is one reason why those who are selling now would be leaving money on the table and why there will be a rush of capital, particularly from the US and the Middle East, if the opportunity presents itself.

There is also the changing face of the English game to consider in years to come. Henry was an advocate of 'Project Big Picture' where the biggest clubs wanted to put more money the way of the EFL but in return wanted an 18-team Premier League and a reduced calendar through opting out of things like the Carabao Cup in order to free up time for potential overseas matches to drive revenue opportunities. It was an idea that was rejected but one that is back on the agenda in some form as top officials from the Premier League, EFL and FA have opened talks over a 'new deal for football' where some of the elements of Project Big Picture would be included.

For owners who look at the longer term and the potential to get an even greater return on their investment, the Premier League retains huge possibilities. What FSG know they will have to do if they stick around for the longer term is satisfy the unwritten fan contract where they have to invest at a level to allow success to have the best chance of happening. It is football success that has allowed FSG to leverage their position and create a giant in Liverpool, one that has surpassed Manchester United. They will have to make sure that success continues to arrive in order to get the true benefits of what English football's future looks like if they are to remain custodians for the longer term.


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