With Fenway Sports Group having put to bed the talk around whether or not they were looking to sell Liverpool the focus turns to how they will be able to grow the club moving forward.
In a Q&A session with the Boston Sports Journal earlier this week, FSG chief John Henry stated that the ownership group weren’t looking to sell the club, instead focused on bringing in investment through a minority partner.
FSG’s empire that also includes the Boston Red Sox MLB team, the Pittsburgh Penguins NHL franchise and the NASCAR team RFK Racing, as well as businesses such as FSG Real Estate and Fenway Sports Management, is now valued at more than $10bn. Approaching half of that sum is related to the value that Liverpool have.
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The search for new investment is more focused that simply who is willing to park a lot of capital into the club for an equity stake, it is a process that is tailored to finding what US sources have described to the ECHO as a ‘strategic partner’ who can bring both capital and expertise to the table, potentially accreting their stake over time into a larger part of the football club.
US investors believe that there is plenty of latent value to be unlocked in the Premier League, particularly for the ‘big six’ clubs, with the potential for future revenue growth and improved commercial sophistication one of the main reasons why Todd Boehly and Clearlake Capital were so keen to take control of Chelsea last year for what was seen by some as an overvaluation at £2.5bn.
North American sport is seen by many investors as being more advanced in terms of its commercialisation, with Chelsea co-owner Behdad Eghbali stating at a conference in New York last year where the ECHO that “European football is probably 20 years behind US sports” on the commercial side.
The growth of the Premier League into the world’s most watched and most lucrative football league has been built on the enormous media rights, which last year’s deal for the next cycle saw achieve higher international rights than domestic ones for the very first time, the total package now worth £10bn over the life of the next deal.
What happens after that may have a huge financial incentive for ownership groups to stick around, with the likelihood being a greater push towards streaming and direct to consumer content, something that would be of enormous benefit to the biggest clubs, of which Liverpool is very much one.
The London-based CLV Group, that work with sporting teams and organisations across the globe with regards to unlocking value within their fan bases, published their 2023 Fan Relationship Index last week which put focus on the emerging opportunities for unlocking greater value.
“The opportunities we have uncovered are very real and within their grasp if the clubs follow the FRI model,” said CLV Group co-founder Neil Joyce.
“It’s their chance to be at the forefront of embracing new technologies and innovations to deliver direct-to-fan propositions similar to direct-to-customer business strategies. When you look at how Nike made the step change to boost revenues with a D2C offering, it was harnessing a new business model with content at its core that delivered a shift to a 20% digital direct to consumer model and huge margin improvement also.
“The income generated from fan partnerships and dramatically increased engagement will easily dwarf the financial rewards of playing in a controversial breakaway European Super League that fans have no appetite for, and which would almost definitely compromise the integrity of our national leagues.
“Many major football clubs already have enormous global reach but most of those fans will never make it to a game. If they’re lucky, a few will get to see a pre-season tour game or a meet-and-greet at a shopping centre. These fans crave a deeper level of engagement with their club and while the technology exists to engage with them, most clubs are focusing on lower funnel fans who are well known to them.
“The emergence of club-based content propositions combined with the rapid explosion of streaming services in recent years gives further credence to the need for clubs to increasingly provide the option for global fan ecosystems which intersect fans, the club and partners/sponsors. Increased demand for access to content and digital propositions back this up.
“There’s a real opportunity to revolutionise loyalty and reward fans with what they want, raising revenue in the process, but clubs need to increase the pace on how they invest and mobilise these opportunities. Web 3.0 has the potential to form the backbone of next-generation loyalty schemes akin to those of retailers and airlines where fans get the benefits they want, in an ecosystem they value, while clubs capture first-party data and drive new revenue streams.”
Liverpool’s recent collaboration with FSG partner and basketball icon LeBron James was an example of unlocking more value from global fan bases away from more traditional means.
The Liverpool x LeBron Collection of merchandise, release earlier this month with Nike, sought to create a range that would appeal to not only Reds fans globally but also those who may not have an affinity with the club, creating something of a lifestyle brand and allowing Liverpool to tap into that D2C model that Nike have been pushing towards. The true value in Liverpool’s kit deal with Nike, which delivers a guaranteed £30m per year, comes from the 20 per cent that the Reds receive from the sale of Liverpool/Nike merchandise globally.
For Liverpool and FSG, being able to unlock greater value from their huge popularity is a key factor in their intentions to continue with the club as being core to their long-term aspirations for continued growth.
But success on the pitch aligns closely with how successful they are able to be off it, something that will be a consideration as to how much money the Reds owners make available this summer and beyond for squad strengthening.
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