Fenway and Liverpool: Time’s up?

SOME Liverpool fans may be anxious about the prospect of a new owner; if nothing else a change at the top can bring about disruption and, in what is proving to be a difficult season for the club, they could do without a period of uncertainty. But it is no coincidence that Fenway are contemplating a divestment, be it a partial disposal or complete sale. In the current climate, there have to be concerns about the type of investor that might be drawn to Liverpool and if you believe everything you read, the supporters will be demanding a say in who takes over. That won’t happen, of course, FSG are smart business people and professional sports team owners.

Since 2011-12, Fenway’s first full season as owners of Liverpool, the club has spent £1.2 billion in transfers, the fifth highest gross outlay in the Premier League. However, the club’s net spend, a popular topic of discussion at Anfield, was £ 446 million. By comparison, Manchester United and Manchester City run-up a net outlay of over £ 1 billion. Liverpool have been very smart in the market and their success has been a combination of good use of resources and dynamic leadership from Jürgen Klopp. But the Klopp team that won the Champions League in 2019 and the Premier League in 2020 has peaked and a rebuild is needed. The Premier League, especially when you have opponents like Manchester City, doesn’t allow you the time to change the oil. In all probability, Liverpool will have to tolerate a couple of transition years, unless of course, fresh impetus arrives. Furthermore, if Liverpool fail to qualify for the 2023-24 Champions League, the club’s market value will surely drop.

There seems to be a disproportionate amount of angst over Liverpool’s current position. The fans seem obsessed with Manchester City and Klopp appears more irritable by the week. Klopp was appointed in October 2015 and it wasn’t until 2019 that he won his first piece of silverware. Nobody ever felt Klopp wasn’t doing his job properly, the trajectory was positive and there were visible signs that something special was happening. The 2021-22 season could have been the greatest ever campaign, but two trophies, admittedly the two lesser baubles, was the outcome. Klopp’s team went into 2022-23 possibly a little burnt out. The club didn’t strengthen in the right places and the finger was pointed at Fenway rather than Klopp, whose popularity remains strong.

Despite Fenway’s conservative ownership and investment in the club’s infrastructure, the underlying feeling is that Liverpool’s owners cannot or will not attempt to compete with the seemingly endless resources of state-owned or influenced clubs. Why should they? If they are sports team owners, who treat clubs like assets, then why would they run a club in a manner that diminishes the asking price?

There is every possibility Liverpool’s valuation has peaked, although people appear to be sticking a pin on a graph in coming up with the club’s true value. Let’s say £ 4 billion is a likely price – who will be in a position to pay such a figure? With interest in the Premier League from the US still growing, it is possible Liverpool will exchange one American owner for another. On the other hand, if they want to compete with Manchester City, they will have to find a sovereign wealth fund or oil billionaire with money to spare. How will that align itself with the club’s values?

Fenway may have concluded the time is right to exit. John Henry was an advocate of the aborted European Super League and was left red-faced when it collapsed, prompting him to publicly apologise. At the moment, it is all very tentative, but they are not likely to declare they want completely out as it can compromise the price and may deter any auction. The fact they have engaged Wall Street names like Goldman Sachs and Morgan Stanley to sound-out the market means they are very serious. Fenway will have no shortage of takers, the club would be an attractive acquisition, regardless of who manages the team or who sits in the boardroom.

However, with clubs now costing billions, fans cannot hope to exert much influence on how their owners handle their property. Football is no longer the property of butchers, bakers and candlestick makers, it is now part of the asset management industry. While fans may hope for a new owner who indulges the culture of the club, they are at the mercy of the free market. As we have often seen, the popularity of an owner is not necessarily determined by how efficient they are at running a club, it depends on how much they “invest” in a team and how successful that team becomes. Like coaches, owners can go from hero to zero in a short space of time.

Manchester City set new financial records

ALTHOUGH the sceptics will claim there’s plenty of smoke and mirrors at the Etihad campus, Manchester City generated record revenues and profits in the 2021-22 season. As well as lifting their sixth league title in 12 years, City’s turnover totalled £ 613 million, the second highest figure in Premier history and their pre-tax profit hit £ 41.7 million.

The 2021-22 campaign saw City win the title after a titanic struggle with modern rivals Liverpool but they also reached the last four of the FA Cup and UEFA Champions League. Since 2010-11, City have won 14 major trophies, almost double the number secured by their nearest contenders, Chelsea, with eight in that timeframe. Liverpool and Manchester United have both won five and Arsenal four. Tottenham, the other “big six” club, have not lifted a single trophy since 2008.

City’s 7.6% increase in revenues was largely attributable to their massive rise in matchday earnings, from £ 0.7 million to £ 54.5 million. The average crowd at the Etihad was 52,774 which equates to a stadium utilisation rate of 99% at Premier League games. City’s ticket prices are actually lower than some of their Premier League opponents.

While TV income went down by 15% to £ 249.1 million, the club’s commercial activity was up by 14% to £ 309.5 million, a record for the Premier League. City said this was down to new sponsorship agreements as well as the return of music events to the stadium. Commercial income among the top six clubs ranges from just below £ 150 million to £ 300 million, but beyond that there is a huge gulf with the next club generating less than £ 50 million.

City’s brand value has been growing impressively in recent years and according to Brand Finance, they have the second most valuable brand in world football, bettered only by Real Madrid. The club claim fan engagement went up by 12% in 2021-22, including a 19% growth rate in the US and 17% in Japan.

According to the club’s annual report, City’s squad has a gross value of £ 1.1 billion, while Transfermarkt’s valuation comes in at € 1 billion. City’s squad has the oldest average age among the leading English clubs at 27.3 years and comprises almost 70% foreign players. In 2021-22, their wage bill was more or less unchanged at £ 353.9 million, representing 58% of income. Only four clubs in the Premier top the £ 300 million mark when it comes to salaries – Manchester United, Chelsea and Liverpool are the others.

As ever, City were big players in the transfer market, with purchases of £ 149 million against £ 86 million of player sales. By far the biggest signing was Jack Grealish (£ 100 million), while the club received £ 55.6 million from the sale of Ferran Torres to Barcelona. City’s profit on player trading amounted to £ 68 million, which was comparable to 2020-21. The club had an enormous number of players out on loan, most of whom originated from City’s academy. Over the last five years, City have made around £ 250 million from transfers.

Manchester City are pivotal in the growth of the City Football Group (CFG) multi-club structure which was founded in 2013. In the past five years, CFG’s teams have won the league in six countries (UK, US, Japan, India, Australia and Bolivia). The most recent acquisition for the group was Italy’s Palermo.

While City will remain a controversial club in some ways but there is little doubt that they have a long-term view that may well provide a blueprint for other clubs. In 2020, they won their appeal to the Court of Arbitration for Sports after initially being found quilty of serious fair play breaches by UEFA’s controlling body.

Aside from the financial advantages they clearly have, and that is something not every club can aspire to, they have invested in infrastructure, women’s football, academies and global growth. Their ownership model remains a topic of hot debate and there are similar moral concerns about Abu Dhabi as both Qatar and Saudi Arabia. Despite their success, people still delight in criticising City and peddling conspiracy theories about their financial integrity. Do the claims have any substance or are they just examples of wishful thinking?