After the dust settled on the reveal that Fenway Sports Group were open to selling Liverpool for the right price, the talk has pivoted to one of a partial sale being the preferred option.
A valuation of around $4bn (£3.3bn) has been placed on the Reds, although it would take an offer in excess of that for FSG to be willing to talk. The stance from those well placed in the US, when speaking to the ECHO, remains that a partial sale of the club to free up some capital would be the preference, certainly for FSG principal John W. Henry, and for some of key shareholders with investments that haven't yet been afforded the time to mature.
Talk of the Middle East and rumoured interest from Indian billionaire Mukesh Ambani, which was denied by his offices, arrived. But it is understood that little has changed on the situation from where it was at the beginning of November, and with valuations of teams set to continue to rise, albeit at a slower rate that had been seen over the past five years, there is little need to rush for FSG.
READ MORE: 'I saw the links' - Teun Koopmeiners breaks silence on speculation over Liverpool transfer
READ MORE: Liverpool have identity problem and three players have exposed it for Jurgen Klopp
Strategic partners are something that FSG would prefer: firms, funds or individuals who can provide both capital and expertise to the business and the club, and who could accrete their initial investment over time into full ownership of Liverpool. US investment banks Goldman Sachs and Morgan Stanley have been engaged with that task for more than a year while FSG president Mike Gordon - manager Jurgen Klopp's closest ally within the Reds ownership - is leading the search.
Investment into European football from American private equity has flowed over the past couple of years, with the likes of RedBird Capital Partners (11 per cent stakeholders in FSG), Clearlake Capital, Silver Lake, 777 Partners, Arctos Sports Partners and CVC among those to take either partial or controlling stakes in clubs on the continent. Not all of those investors are active investors who will put their capital to work and seek to make change, some have simply parked their investment and will wait for the growth that they hope will follow over time.
The question from some has been why would investors want to hand over hundreds of millions of dollars to the likes of FSG to not have a controlling say in Liverpool? And to have no say on how that capital might be deployed. Would the spending of a chunk of an investment on a midfield overhaul for a slice of a business that they won't have the power to make decisions on really be that appealing?
Firstly, the notion that whether or not the Reds will make the to four this season and secure Champions League football for 2023/24 being something that will be concerning FSG over the value of the club to investors moving forward is somewhat flawed. While access to the potential £100m pot that the Champions League brings would be a welcome boon to any investors, as it provides not only more prize money potential but also access to a wider market for commercial partners, failure to do so likely won't have a damaging effect on the valuation of Liverpool.
Manchester United's Forbes valuation stands at $4.6bn (£3.8bn) despite being in Europa League this year, with the Glazer family reported to want more than £2bn more than that to part company with the club that they have owned since 2005.
Liverpool, like United, have something that very few sports teams across the world have, and that is a passionate fanbase that has touchpoints in near every area of the globe. The Red Devils estimate that they have more than one billion fans globally, and while that number may have been enhanced somewhat, both they and their rivals from the other end of the East Lancs Road do have a fanbase around the world that stretches into the high hundreds of millions. That is something that protects the value of the business, and it is the potential for greater monetisation of emerging football markets as India, the MENA region and North America that offers further prospect for growth.
The idea that the 'bubble' will burst has been pushed for some time. And while broadcasters cannot simply pay more and more each cycle ad infinitum, the way that football and sport in general will be consumed will change in the years to come, with the likelihood that a more direct-to-consumer streaming approach will eventually take hold, one that would provide huge potential for further growth of revenues for the biggest clubs. Also, the adoption of new technologies that chime with the way that new generations engage with sport will mean that there are growth opportunities that will further increase the value of sports teams, especially in football, the most popular sport on the planet, with the Premier League at its pinnacle.
Private equity in the US has been emboldened to enter the European football market over the past couple of years, attracted by the growing valuation of teams and their identification as being under leveraged when compared to their American counterparts. To gain entry to the major North American sports market of the NFL you would need some $5bn or more for a mid-level team, the multiple of revenues in some cases being more than 10 compared to multiples of four, five and six in the Premier League. There is, of course, greater cost certainty that comes with owning a North American sports team, where salary caps and no relegation are in place in most leagues. The greater security that comes with owning a North American sports team is why FSG have the Boston Red Sox (MLB), Pittsburgh Penguins (NHL) and RFK Racing (NASCAR) among their portfolio, but the potential for growth that has been seen with Liverpool has shown just why the US funds look to get involved.
"Viewing private equity entering football clubs as being an immediately profitable investment is not the most practical approach," Charles Baker, partner and co-chair of the entertainment, sports and media practice at international law firm Sidley Austin told football business website Off The Pitch.
"I would consider them growth investments, which funds in this space appreciate as you see most of them with very long holding periods. These types of funds are not in search of the quick flip. They go in to create long term growth opportunities, and a potential exit is long down the road.
"These investors wouldn’t make the capital commitment if they didn’t see the opportunity for a solid return. The funds are often times buying into global brands with huge fanbases that have not yet been fully accessed in terms of maximising the potential revenue streams. Many of these clubs have an excellent opportunity to generate more revenue, especially when you look at their digital opportunities."
"Public demand for consuming sports as live entertainment continues to provide a strong and stable revenue base for clubs along with tremendous upside due to the unrealised commercial opportunities. The manner in which fans interact with their favourite clubs continues to evolve, thus creating a constant stream of new ways for clubs to generate additional revenue."
Chelsea co-owner Behdad Eghbali, of Clearlake Capital, when speaking at the Sportico Invest in Sports conference in New York in October where the ECHO were in attendance, spoke of European football being some 20 years behind the NFL in terms of its sophistication when it came to leveraging its position in the market. In 2021 the NFL inked a 10-year $100bn broadcast deal and the value of its teams, where private equity is currently forbidden, have risen exponentially.
Valuations will slow but there are plenty of sports-focused investment funds that will be ready and willing to deploy capital in 2023. Liverpool won't be short of interest from such funds, but the task for FSG over the coming months will be to see just who they can be comfortable bedfellows with, who will provide them with the ability to not only provide funds but also knowledge to help them tap into what is to come in European football as it plays catch up with the likes of the NFL on the commercial and broadcast side. Whether a new partner could eventually be a viable option to take a majority stake further down the road could also be under consideration.
Jude Bellingham, Moises Caicedo and two more midfielders tipped to sign for Liverpool in January
Liverpool must capitalise on January boost Chelsea, Tottenham and Manchester United won't get
Liverpool have 'two lists' of targets as transfer outlook for January and summer explained
Jamie Carragher has already warned Liverpool of transfer mistake they can't repeat in January
FSG ignored Carlo Ancelotti warning and Liverpool are now paying the price