Expert Views on FSG's Potential Sale of Liverpool FC – Deep Dives

(Plus views of some amateurs, including me)

The following deep-dive article involves two sides to the debate as to why FSG would sell Liverpool, if that's the case. (Less so about whether or not they should, albeit that's kind of covered in a less direct way.)

I have no inside knowledge on this whatsoever, and yesterday I felt it to be highly unlikely; right now, it seems that there's enough smoke to make a fire seem possible, albeit contrary to the "where there's smoke there's fire", it could just be a smoke machine, providing an illusion. I genuinely don't know, but clearly something is happening, whether it's investment or a full sale.

Before the reasons as to why they might sell (and why they might not), a quick explainer about my own experience with FSG and others at Liverpool Football Club since the launch of The Tomkins Times in 2009.

I have spoken at length on several occasions with John W Henry in the past, albeit I always eschewed any role with Liverpool* and always sought independence and the ability to owe no-one (beyond my readers) anything, and even my readers don't get to decide what I think or say – which is why I have always regularly pissed some of them off!

(*Edit: Of course, I was the weekly columnist on the official Liverpool FC website from 2005 to 2010, but I was a freelancer for the website, not employed by the club itself. I quit in 2010 on the day when Rafa Benítez was fired, and when it was clear that the club’s owners at the time, and their henchmen, were not to be trusted. I was subsequently put on a blacklist of ‘enemies of the club’ by the stooges of George Gillett and Tom Hicks, which I still find highly amusing.)

I have met with other members of FSG at their behest, and, always driven by them, been approached by or personally contacted by people in almost all positions at Liverpool over the past 13 years: managers, owners, directors of football, CEOs, scouts, coaches, analysts, and so on.

I wouldn't share them publicly, of course, but I have saved emails and messages from all of them. (The phone calls disappeared into the ether.)

I have gleaned fleeting snippets of information from them all, but often turned down chances to meet and get further involved. For instance, I have a photograph of my book 'Mentality Monsters' on Michael Edwards' desk at Melwood from 2019, which he happily paid for, and sent the snap as a thank-you; things that make trying to analyse the club and the team worthwhile.

In some cases I met up with these key people, just to get some insight, but never to have them as 'sources', as I'm not a journalist per se, but a sportswriter and an analyst.

(I don't want sources, but if someone of note contacts me with information, I'll consider it. I hardly use Twitter now – if Twitter still exists at the time of writing, 12 years on from being an early recipient of the blue tick that I’m apparently going to be asked to pay for – so I spend less time chatting with proper journalists, but it also helps keep me out of the outrage/consensus machine, where furiously-worded conformity in the midst of an emotional and overwhelming cascade of reactions can stifle clear-headed thinking. No matter the topic, in sport or politics, the outrage leads the thinking – or lack of thinking - and then it’s hard to find the space to have a discussion of pros and cons.)

Only this year I turned down an invite for coffee from someone else at the club, who I'd like to have met, but equally, where I just prefer to stay as an observer. (The trouble with not meeting these people is the info you won't then glean – but of course, people can steer you wrong, too, or you can become eager to please, which is not something I like to feel obliged to do. But these are all 'real' people to me, not avatars, as they are to most fans.)

My job – limited by chronic health issues that date back to 1999 – is to write about football and to assess where the Reds are at on the pitch and where they're going; not to get involved in anything beyond that – such as turning down Henry in 2010 to be his personal football adviser, to sit next to him at games and help explain the sport to him. (I do okay given my health condition, but it’s quite limiting. I tend to focus on what I can do, not what I can’t, but obviously it stops me living a ‘normal’ life. I have often mentioned it to explain how I struggle to go to games – it’s a rare treat now – having been a season ticket holder in the 1990s, and how it limits the projects I can work on. It’s never for sympathy, just as a way of noting that I can’t be a ‘fan’ or a ‘reporter’ in the way others might, or how I might be without long-term, ongoing health issues.)

As noted at the time, I met Henry for lunch 12 years ago, however, to hear him out, and he would phone or email to ask my opinions on players and performances, up until 2012. I wrote about it, without knowing if I was interviewing him or he was interviewing me. He mentioned about joining him at the next game, but it wasn’t something I could physically commit to, nor something I felt comfortable with, assuming there’d be some kind of spotlight on the weird bald dude sitting next to the owner.

(For the record, he had liked my books on Liverpool FC, which he bought before buying the club, and felt I could help him to understand the game – contrary to the outrage that came my way when SOS threw me under the bus – albeit they did at least pre-warn me – in a press release in 2012 questioning why he would speak to someone like me, when my role not to tell Henry how to run the club. I would mostly help Henry understand tactical sources – how to use tools from the time, like The Guardian Chalkboards, as he tried to figure out how to ask questions to the people he employed – and for me to give my opinion on players and what their roles were. I offered no views on what to do regarding fans, or any operational matters at all – other than him asking me who I thought should replace Roy Hodgson in 2010, seeing as I was so set against a manager who was so patently wrong for the club; I passed that suggestion on to a future director of football at a major European club, as it was not something I felt qualified to decide – I just knew that Hodgson was a horribly bad fit, and that Kenny Dalglish could make for a good caretaker to lift the toxic mood, until a permanent replacement could be sought. I was also later asked for an opinion in March 2012 as to who would be a good director of football, as they planned to replace Damien Comolli, but again, I did not know enough about all the talent out there in those harder to judge roles in the sport. Someone rather unhinged and vocal concluded that I got Kenny Dalglish the sack – a ludicrous idea! – and that’s when I stepped away from contact Henry, and he from me, and I took a break from Twitter. I had also just been put under pressure from some high-profile fans to get Rafa Benítez back, so I tried to put both parties in touch, but heard no more, and maybe people thought I’d tried to get Rafa in at Kenny’s expense; again, utterly ludicrous. It was a few years before I heard from anyone at FSG again.)

Anyway, I've always found those at FSG to be committed to winning. But that doesn't mean that winning, for them, couldn't also be walking away with a big profit, as part of the 'big win'.

But their aim was clearly to make Liverpool great, and to me, if they did that, they'd be entitled to walk away with the spoils (although I'd like it if some contingency was put in place from any huge profit, to help the club going forward – albeit they are not obliged to do so, and those who have investment shares in FSG would likely oppose such a move. Perhaps it could be baked into the sale of the club in the way that it was for Chelsea: new investment in the team and club as a whole is part of the deal.)

FSG didn't raise Liverpool to the very top of the world game by pumping in their own money, granted, but by being smart, as they promised in 2010: employing Dr Ian Graham, Michael Edwards, some incredible scouts and analysts, and then Mike Gordon – more football savvy than John Henry – convincing Jürgen Klopp to become manager, which is something Manchester United had thankfully botched a year earlier. That decision alone is worth a billion, if you can put a price on the success of the past few years.

They bought cheap (Philippe Coutinho, Luis Suarez) and sold huge, to rebuild the team.

They gave interest-free loans to rebuild Anfield, construct a new training complex, and to navigate the hit of Covid (and never took money out of the club). Making Liverpool self-sustainable was a great gift that many fans don't appreciate, with Covid almost skewering it – but to become the world's best team at different points in recent years without financially doping or racking up debt on the club was, to me, the biggest achievement in English football in decades, only below Leicester City's title triumph. Nothing else for decades comes close, given the way other successes were funded (or in Arsenal’s case under the brilliant Arsene Wenger, a lack of European success).

Even now, Man City haven't won the title and the Champions League, and the World trophy. The Reds did it on a much smaller budget, with no investigations into financial cheating along the way. As plenty of neutrals noted in the summer, Liverpool stopped the Premier League becoming a one-horse race for the past half-decade. They made the league interesting in a way that it’s not in France or Germany right now.

But I never got to know any of the people at Liverpool FC on any deep level, and never assumed that the owners were the Good Samaritans, or were always being truthful to me (even if I had no reason to suspect lies; you just never know if you're being used as a pawn, which is one reason I don't want to get involved. My health means that I can't really do another job, so my integrity is my 'product' – and I won't sell that, just as I won't pander to my own audience, but continue to say what I believe, based on evidence and experience and analysis, and be open to being wrong about things when it's made clear to me. Once you’ve sold your integrity you’re soulless, and whether or not you agree with me, or think I’m a deluded dickhead, I’ve tried to keep my my integrity).

My sense has always been of FSG improving the fortunes of the club, and then that could lead to either – or both – personal kudos and personal wealth. They are very smart businesspeople, but like all humans, not without flaws.

Sometimes they've been too far ahead of the game for people to appreciate their ideas; other times they've shot themselves in the foot. But overall, it's been the best sustained period in the club's history, apart from 1977-1984, which younger fans may not appreciate.

(1986-1990 was great in many ways, but there was no European football; while European glory eluded the great 1960s team.)

I don’t want Liverpool to be owned by some dodgy foreign state, and would have to consider finding something different to write about if that was the case; but that seems unlikely given the new Premier League rules – and that’s good for us, in that we won’t be corrupted in that way. (But it doesn’t help from a competitive point of view that rival clubs exist with such owners.) I don’t want some crazy owner/s who make/s constant erratic decisions and creates carnage and instability. But good owners are hard to come by. (I also don’t want fan ownership, as fans are not the best judges; Barca’s model looks disastrous right now, with fans often voting for the stupidest solutions, and chasing glory at the expense of common sense. But that doesn’t mean fans shouldn’t have some kind of voice.)

Whatever happens – to sell, or to not sell (both of which are discussed below) – it's been a phenomenal half-decade (and 2013/14 was a brilliant ride that should not be forgotten), but all good things come to an end.

Equally, before they do come to an end, some good things are revived and regenerated.

Certainly Liverpool Football Club is at a bit of a crossroads right now, but what direction it takes remains to be seen. And to be clear again, I haven’t got the foggiest as to what’s going on, so on this stuff, I’m just trying to make educated guesses.

The Debate

The following is an exchange from our discussion thread yesterday, about why FSG wouldn't sell Liverpool in its entirety, with some of our long-time US subscribers (‘Jeff’ dates back to our launch in 2009 and had been contacting me since 2007 to warn about the previous owners; ‘OT’ not much later) being far more savvy about the business of sport and the legalities of business, given their lines of work.

As such, I’d call them experts, and well-informed.

None of which is to say that they are correct, of course, as these are just their educated guesses.

However, before sharing those comments, I think that there are various reasons (purely guesses on my part) why selling the whole club now would appeal to FSG, from my far-less informed business mindset, but where I can see a few common sense reasons.

• the state of the economy and the value of the pound versus the dollar, and how they could make billions on the back of a £300m investment 12 years ago (albeit one that saved the club, and they transformed the club on and off the pitch, in a way that would have been even more effective had FFP had more teeth and petro-doping and sportswashing was not allowed, with the weird thing that American sports seem fairer and more 'socialistic' than the rampant financial abuses in football in Europe);

• the collapse of ways to make the club self-sustainable (ESL) in the face of clubs who find slippery ways to invest their limitless funds, with the merits of the ESL lost amid the clear downsides (closed shop), including taking power away from UEFA, who don't always seem like a force for good, just as FIFA are about as honest as (insert your own metaphor) . And even if Liverpool could join the ESL, there would be fan revolts, and as things stand, dismissal from the Premier League;

• while flawed, the ESL could be believed to be the future of the sport, with enforced exclusion of English sides meaning that the ESL could overtake the Premier League in due course (which I wouldn't say would happen, but if it got off the ground, the ESL could become the place to be, depending on how many major European clubs were in it and the funding it received);

• the highly "amusing" commercial figures Man City seem to come up with on an annual basis, that doesn't seem to tally with their 'brand value' or global support;

• the toothless nature of FFP in Europe and in England, with the investigation Man City's past breaches entering into a fifth year;

• the way the Saudis, let in a year ago, may squeeze an honestly-run club not connected to human rights atrocities out of the four limited spaces to the Champions League, to essentially halve the spots available from four to two, and so there's already a kind of European Super League within the Premier League, where Sheikhs call the show and sportswashers cut the qualification slots in half;

• the continued criticism and outright hatred of FSG from a noisy section of the Reds' fanbase, with sick abuse directed at them online (albeit that's online life for you);

• the chance to cash in, or cash out, even if things could get better still, with changes to the way broadcasting might work (as Jeff covers below) – because the value of clubs is higher right now than expected after the Chelsea sale, and sometimes you can sell 'high' even if it could get higher later;

• the need for reinvestment in the team, and the club not really working in the old united way, with more disruption and resentment across the various departments (certainly over the summer), even if there were clear-the-air talks when the window closed – the things that got Liverpool to the top of the tree splintering, and it remains to be seen how any rebuild goes, and if harmony has been restored. However, it seems the summer was a fairly unpleasant one all round, on the back of the crushing emotion low of the final two games, and the debacle in Paris;

• feeling it to be the end of a cycle (whether or not it actually is, you could argue a case for it feeling that way), and thus avoiding the need to possibly sack Jürgen Klopp if things continued to dip (not that they would sack him, even if things got worse in the league and the season ended badly, but obviously that would be a hugely contentious decision to face at some point, and likely to cause carnage);

• a possible loss of interest, as the key men are in their 70s now, having won every single trophy possible (bar the minor European ones that the club hasn't competed in since 2016), been ranked the best team in the world in 2020 and 2022, and yet they still remain fairly loathed and under-appreciated in the era when many fans want to win the transfer window more than the actual trophies;

• and so on.

But reasons to keep the club, or sell just a share and/or seek investment?

Jeff

We all know that FSG are in the business of owning major sports teams - Liverpool FC, the Boston Red Sox, and the Pittsburgh Penguins. Second, we also know that FSG own one of the most profitable regional sports cable channels - NESN. Simply put, they know the world of owning a major sports team and the world of broadcasting sports.

They know that between 2018 and 2022 the cost of buying a NFL team went from 2 billion dollars and change to 4.5 billion dollars and change, and it appears that in 2023 the cost of buying an NFL team will be at least 5 billion dollars, and more realistically at least 6 and possibly 7 billion dollars.

In the days of rapidly increasing prices for a major sports team, does anyone think that FSG know this reality and in their world it makes sense to wait some time to see how much the value of a major sports team appreciates. On this point, the Phoenix Suns of the NBA were reportedly worth 1.8 billion in 2021 and they will be sold some time in the nest year for way north of 3 billion dollars. Any price that FSG would receive in the near future would be far less than they would have received down the road.

Second, if one has been paying attention to who wants to get into the broadcasting sports, one would quickly learn the names of Amazon, Apple, and Facebook. With these names coming to sports the money teams will receive will skyrocket.

Everyone seemingly believes the European Super League is dead but I say maybe maybe not. No one knows how the courts will or will not rule.

Second, ESPN wants this league to happen and Apple, Amazon and Facebook are prepared to back roll this league. With the financial resources that want the Super League to happen, I would say that it is more likely to happen as it was said years ago matches would never be broadcast live. In this world one team that will reap the financial rewards of the Super League is Liverpool and it makes no sense to sell before this money starts to come in to the club as once it starts coming in the price the club would fetch would go up dramatically.

Third, I know people talk abut how sovereign wealth funds have come to football but I would pay far more attention to the fact that venture capital firms are buying up clubs, not only in England but also all over Europe. Why? They see the value of clubs about to explode and the revenue streams in football are also going to explode. In this reality, today is too early for FSG to sell Liverpool.

Fourth, as I have written any number of times if FSG sell Liverpool they would have to have in place a plan to reinvest the money or the capital gains taxes would hurt, and they would be forced to sit on an immense pile of money and getting no real return on the money.

Until I learn of a plan to buy something where they would need say 4 or 5 or 6 billion US dollars in cash to make the deal work I seriously doubt that they will sell Liverpool FC. If a deal such as the one they struck with RedBird Capital comes along and allows them to get 750 million in cash and use this cast to buy the Pittsburgh Penguins, they may well sell a part of FSG but again before they sell a stake in FSG they would have to have a plan to employ the cash they receive.

At the end of the day FSG are businessmen and the truth is that none of the people talking about FSG selling Liverpool are businessmen, and they have no clue as to how businessmen think.

OT

Jeff - FWIW

1) I may be wrong - but I do not believe FSG will ever "sell" LFC.

Why? My understanding (rightly or wrongly) is that the tax bite would be enormous.

2) If FSG decide to part with LFC, I believe it will be accomplished via a partnership spin off/out.

Why? My understanding (again rightly or wrongly) is that such would be a non-taxable event.

Perhaps I am delusional.

3) In any event - for a partnership spin off/out to happen there has to be a reasonable relative valuation of the assets in the partnership.

There would also have to be owners of a share of the partnerships equal to the percentage of asset value the spin off/out who would be agreeable to owning the spin off/out rather than the previous whole.

IE. ... if Redbird wants LFC and FSG wants to move on from LFC, it seems to me once a value is agreed upon, as long as Redbird already has, or invests further into FSG – such that they hold at least the percentage ownership interest in FSG – that LFC has of the total asset value of FSG, the transaction is rather straightforward, avoids sales tax and gives FSG a boatload of cash to redeploy in a rising interest rate environment.

4) Maybe they are looking at the Suns or the Commanders and figure that either of those would be better fits ... or maybe they are just making plans in case the ESL doesn't happen.

Because if the ESL doesn't happen ... perhaps they see no way to keep football as a competitive business and sport.

People were posting here last week that FSG need to end their "spend what you earn" model because it won't work anymore. Well if that is true then football is done. Because that model has to work for the totality of the sport else there is no sport, nor competition. It becomes just a nation state's (or sportswasher's) whim.

If football does not live within its means, it will by necessity live upon the largesse of those nation states and sportswashers.

It will turn into an exhibition (not a competition) resembling the Harlem Globetrotters vs. the Washington Generals where the handful of teams owned by the sports washing nation states and their related ilk will be the Globetrotters ... and everyone else will be the Generals ... or go bankrupt.

If I had to bet, I would bet on the ESL - because that is the only way I ultimately see the Reals and Juves and Barcas surviving ... and they seem to know that. ... and I am confident that the American-owned teams understand it all as well.

However ... if I actually had a stake in the game ... I would sure as hell hedge my bets ... especially if there are more fools like Todd Boehly out there.

Red Mick

OT, that’s a great post. It’s always been my argument that by failing to deal with sportswashers/oligarchs etc, football would ruin itself.

The Premier League investigation into City’s finances and spending is now entering its FIFTH year. As such, it doesn’t warrant the name investigation.

We are facing a scenario like the basketball one you outlined. Without FSG and LFC, City would have won six titles on the bounce, relegating the EPL to the parlous state of the French league or the Bayern dominated Bundesliga. These are existential issues for the European game and, to me, the only solution was a tightly regulated Super League, without the sportswashers if necessary.

I still hope it comes about, if only for the reason that the ‘legacy clubs’ could stick it to the sportswashers. In terms of the game and global politics, that’s the best outcome. As to the financial wisdom of LFC for an investor, there does seem to be some appetite in America for further EPL acquisitions, the thinking being is that there is plenty of room to grow revenues exponentially, given the example of the NFL.

(All posts lightly edited to correct a few typos and add an extra line-break or two.)

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