100 days since it was revealed Liverpool’s owners were ready to listen to offers, what happens next for the club?
This week saw the 100-day milestone reached for Liverpool since it was first revealed that the club’s owners were ready to listen to offers.
The Athletic broke the news back on November 7 that Fenway Sports Group had compiled a sales deck for any interested parties and were ready to listen to expressions of interest over both a full and partial sale of the football club that they have owned since 2010.
In the following days further detail emerged, including that Mike Gordon, the most hands-on member of FSG at Liverpool and a major ally of manager Jurgen Klopp, had been handing the baton in terms of his day to day responsibilities to Reds CEO Billy Hogan while Gordon led the search for inward investment or a full sale, with US investment banks Goldman Sachs and Morgan Stanley facilitating the process.
Since then there has been a tidal wave of rumour online about who might be in for the club. From private equity to sovereign wealth funds, those with deep pockets have been linked with a potential move for the club.
The rumour that gathered significant traction online was that of Qatari interest. It came from a place of reason, with Qatar, on the back of hosting the 2022 World Cup in December, wanting to leverage their position in spotlight through investment in sport, investment that would provide the gateway to diversifying revenue streams away from oil and gas.
The granting of freeport status to both Manchester and Liverpool by Government, where tax exemptions make it more attractive for inward investment, made it even more appealing given the fact that Gulf nations had been exploring their own port strategies to aid international trade.
Last week saw Qatari interest crystallise, but it was a move for Manchester United that was in the offing. That move to acquire the club from the Glazers, which has not yet been presented via a formal bid, with the soft deadline of this Friday the cut off, was being aided by the Qatar Investment Authority but to be fronted and run by a private consortia of investors. That kicked open the door to suggestions that another Qatari bid may arrive for Liverpool, but with such a huge transaction and investment as the purchase of a football club undoubtedly having to have the blessing of Qatar’s Emir Sheikh Tamim bin Hamad al-Thani, a Manchester United fan, and with a unified approach the most likely course of action for Qatar given its geopolitical ambitions and rather self-defeating potential of having a competing asset, a move for Liverpool was never likely.
Social media heated up with the Qatari rumours, but well-placed sources in the US with intimate knowledge of the situation have maintained the line to the ECHO that while there may have been interest privately in Liverpool no bid or expression of formal interest was presented to FSG that required any kind of high-level discussion, and no talks were held with the QIA. Claims of QIA chiefs being in Liverpool to meet with Reds owner John W. Henry were also erroneous.
Reports of major guests at Anfield for the clash with Everton on Monday were also wide of the mark. Former chairman Sir Martin Broughton, who had looked at putting together a consortium last year to invest before stepping back from the idea, was in attendance, something that was planned due to him promoting his new book. Hollywood funnyman Will Ferrell was the most high profile guest, taking pictures with Reds players and taking in the game. It is understood a Nike delegation were also present in relation to the collaboration with LeBron James on the club’s new clothing line. Other rumours of RedBird Capital being present were also false, with RedBird executives in Italy from Monday morning ahead of the Champions League win over Tottenham Hotspur on Tuesday night.
RedBird had been reported to be interested in increasing their FSG stake, the New York-based firm having acquired 11 per cent of the Liverpool owners for $750m in March 2021. And while RedBird chief Gerry Cardinale is understood to be open to doing more with FSG in the future, they won’t be forming part of the Liverpool investment search right now, their focus being on AC Milan, who they acquired back in September for £1.1bn.
There hasn’t been any concrete bids for Liverpool or high-level talks as things stand, no serious expressions of interest. The fact of the matter right now is that there is little urgency for FSG and the market conditions that existed when they first decided to test the water have changed, and for the kind of partner that they want, one that they could work with who could aid business growth and help them unlock latent value, potentially accreting their interest into a full stake over time, they are holding fire right now.
There were three factors that prompted FSG to open themselves up to investment or a sale in November.
The first was that Chelsea were sold last year for a major price, well over what many thought the valuation should be. There is a view among US investors the ECHO has spoken to that the new owners of Todd Boehly and Clearlake Capital paid a premium that was over market value for the London club.
But that sale, expedited due to the strict timeframe to get a deal done owing to Roman Abramovich’s sanctions in the wake of Russia’s military invasion of Ukraine, sparked a bidding war and pulled back the curtain on some of those who wanted to acquire a Premier League football club. Broughton was part of that pack in a bid with Harris Blitzer Sports & Entertainment, linked with Liverpool, and Sacramento Kings owner Vivek Ranadive.
That sale process created losers, losers who would surely be willing to spend big when another Premier League asset became available. Before Chelsea there was tremendous scarcity value in the big six of the Premier League, assets that rarely came on the market.
But with the geopolitical situation with Russia and Ukraine having a major knock-on effect through economies, driving up prices and squeezing margins, some held back. Then, of course, Manchester United came on to the market almost immediately after Liverpool, with the Glazers far more keen to sell the club than FSG. That meant that the potential pool of investors that may have only been looking at Liverpool and a minority stake would have the chance to potentially acquire a full shareholding in Manchester United, and that has skewed the search and dimmed the buzz around Liverpool.
Thirdly was that there is a major expense coming that requires capital, namely a squad overhaul. While amortising transfer fees isn’t a major concern given that Liverpool are considerably lower than their rivals on that accounted cost, it is the funds needed to get those deals done that will need addressing, where making considerable payments to clubs via instalments would be impactful for cash flow in the business. With the backdrop of the Chelsea sale it was seen as a good time to test the market and see if there was strong enough interest from someone they could work with long term that would enable them to create some liquidity on that front.
In the 100 days that have passed since FSG’s plan first made headlines there is, as has consistently been the line, little that has materially changed.
There will be interested parties weighing up their next move and it is expected that some more concrete interest will arrive in the coming weeks and months. It is not that nobody is interested and everyone wants Manchester United and Tottenham Hotspur, the subject of rumoured takeover interest from MSP Sports Capital co-founder Jahm Najafi, it is that the dynamics around what FSG want for the club is different than that of the Glazers. FSG remain in ‘growth mode’, and Liverpool remains their most valuable asset, one that they won’t sell all or part of for anything less than what they feel it is worth.
Valuations will continue to rise in the coming seasons as the dynamics around broadcast pivot to a more direct-to-consumer approach, while new technologies will allow for the increased monetisation of the relationship with global fanbases. However, core to Liverpool’s success financially over the past decade has been success. What Klopp and his team have been able to do is strengthen the Liverpool brand through new generations of fans and reach new markets with their appeal and what they achieved. It won’t be lost on FSG that they cannot allow the club to simply drift and assume that the pull it currently has will continue to be a strong, for both fans and commercial partners.
The frenzy around a potential sale that has existed on social media has not been reflected in real life and the search for investment. FSG will have an exit plan in around potential succession and how it plays out. But, as chairman Tom Werner said to Broughton, a conversation that Broughton recalled with the ECHO this week, a major offer out of the blue could change things.
He said: “I spoke to Tom Werner and asked him were they seeking to sell? Were they seeking investment? What was the objective? And he said: ‘There isn’t one. We’re testing the water. If there is an offer that is a very high figure then we’d be daft not to look at it.”
As things stand, nothing has really changed