When Forbes magazine published its annual valuations of football teams in May last year it showed a remarkable leap for Liverpool.
Acquired for £300m by Fenway Sports Group in 2010 and in a state of disarray following the ruinous regime of George Gillett and Tom Hicks, the past 12 years has seen the Reds owners benefit from investment into infrastructure and success at a time when ballooning media deals have seen team valuations soar to eye-watering levels.
In the 2021 list Liverpool were ranked as the fifth most valuable football club in the world with a valuation of $4.1b (£3.15bn). Only above the Reds in the list were Manchester United in fourth, Bayern Munich in third, Real Madrid in second and Barcelona in first. Chelsea, a club in the midst of a takeover battle where they have been valued as high as $5bn and have three parties seeking to take charge, were back in seventh in the Forbes list at a value of $3.2bn.
The valuation of Liverpool meant that they passed that of the Boston Red Sox to become the most valuable sporting team in an FSG empire that is now valued at around $10bn following the acquisition of the Pittsburgh Penguins and introduction of new partners such as LeBron James and fresh capital through the selling of 11 per cent of the business to RedBird Capital Partners. With the 2020 values not accounted for due to the impact of the pandemic and uncertainty that it created due to the potential impact on commercial and media revenue streams, the two year leap from 2019 for the Reds, a year when they won the Champions League and followed it up with a Premier League title in 2020, saw their value leap 88 per cent, a jump that was behind only Borussia Dortmund (112 per cent at a $1.9bn valuation) and Paris Saint-Germain (129 per cent at a $2.5bn valuation).
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Such growth came on the back of progression both on and off the field and Liverpool's continued success in leveraging their global appeal. The success of infrastructure projects such as the Main Stand redevelopment as well as the Reds being a significant draw in helping to drive TV rights forward globally has meant that the £300m investment that FSG made when acquiring the club has paid off, and continues to do so.
The new Forbes list will likely drop next month and it is likely to see values across the board rise once more. Only three teams saw a fall in value over the two years prior in the previous 18-strong list; West Ham United, AC Milan and AS Roma. For the teams who have occupied the top spots the values are set to leap once more, especially for Premier League teams after the bumper media deal that they secured internationally. For teams that regularly make the Champions League, the forthcoming media deal will be its biggest yet at £12.5bn, a deal so big that it should be enough to kill the idea of the European Super League for the foreseeable future.
If Chelsea are mooted at $5bn to would be investors then Liverpool, a club with a greater pull and healthier balance sheet would likely be north of that, but the Forbes list will likely be more conservative in its estimations than those of the people attempting to sell Chelsea. The Reds' value will almost certainly continue to rise, and in the next list of team valuations there could be a significant change, with Liverpool potentially overtaking Manchester United on the list for the first time with a £3.5bn valuation possible, a sign that the power of the brand that some at United thought was not predicated on winning games of football, finally coming under some strain due to continued failings on the pitch.
Just $0.1bn separated the two last time. Since then United have plummeted even deeper into chaos, although their position as one of the world's most popular football clubs has endured despite them being in the shadow of the likes of Liverpool, Manchester City and Chelsea now. But with valuations to be even more closely linked with the power of huge media deals in place, a lack of Champions League football would most certainly hurt United's valuation, although it will likely continue to rise. The pace of their rise in the last Forbes list over a two-year period was 10 per cent compared to Liverpool's 88 per cent, and there has been little done to address that particular trajectory.
Gerry Cardinale, founder and managing partner of RedBird Capital, who closed a $750m deal for 11 per cent of FSG in March of last year, believes that valuations will only continue to rise for the forseeable future.
Speaking to Bloomberg, Cardinale said: "The valuation discussion is complicated. There isn't a great amount of rigour to it. There is a little bit of LIFO (last in, first out) to it, as in you look at the last trade and you put a mark-up on it. What is alluring there, and deceptive, is that people have become used to everything always going up in sports. That's anti-Darwinian, that's not possible. Now, the slope of that curve may change, but for the forseeable future everything keeps going up.
"The valuations signal the fact that there is something very premium here, there is scarcity value and there is something very unique in everything that is going on in media and the convergence of (sports, media, entertainment, technology) streams where this is some of the best content that you can access."
For FSG and indeed RedBird, both are in the business of growing businesses. FSG are 20 years into their ownership of the Boston Red Sox and 12 into their ownership of Liverpool. John Henry, Tom Werner and Co have little interest or inclination to sell any of their teams, not least the team that continues to see its valuation soar. The ownership believe there is much scope for continued growth and their commitment to their 'FSG 3.0' project, where bringing new ideas and fresh capital into the business has been a major theme over the last 12 months or so, suggests that pursuing greater growth is the plan, and it will be a case of adding more teams and businesses to the FSG empire, not shedding them.
Liverpool have asserted their dominance on the field over Manchester United for some time now, but it has been the financial stakes where they have tried to keep pace. The next set of valuations could point to a true changing of the guard in English football, where success on and off the field go hand in hand, the final hurdle to clear for a club that looks set to leave their rivals in the dust.
