On October 15th 2010, Fenway Sports Group, then New England Sports Ventures, purchased
a club that had finished the previous season in 7th place and were paying interest payments
on loans of £340,000 per week. Liverpool were a failing enterprise. In less than ten
years, they have won the Champions League, reached another final and, most recently of
course, won a league title for the first time in 30 years.
The catalyst for that ascension has, undeniably, been Jurgen Klopp. The performance of the
reformed and data-led recruiting department has also been essential. Headed by Michael
Edwards, the sporting director, the club’s wild success in the transfer market – in
buying and selling and identifying value more clearly than any other Premier League team
– has helped to construct a world-class side which is still yet to realise its full
potential.
But FSG’s stewardship has been fundamental to the process, too. While it hasn’t been
without blemish, they can fairly be portrayed as enabling and innovative owners.
In Bring The Noise, the biography of Klopp written
by Raphael Honigstein, FSG President Mike Gordon described the process of identifying
Brendan Rodgers’ successor and also the attraction of Klopp’s over-performance at
both Mainz and Borussia Dortmund..
“I tried to set aside his popularity in the football world and his charisma for an
unbiased analysis”, Gordon remembered. “The process was much the same as you would undergo
in the investment business before taking a big position”.
At his initial meeting with Gordon, FSG’s principal owner John Henry and Liverpool chairman
Tom Werner, Klopp stressed the need to ‘activate the Anfield crowd’ and to create what Honigstein
refers to as ‘a self-amplifying cycle of exuberance’.
Five years later, he and they have created just that. From their dispassionate analysis,
aimed at identifying a candidate who could maximise their resources to the betterment
of more affluent rivals, Gordon, Henry and Werner found a head coach who married perfectly
with the club’s identity. But while Klopp has clearly been the driving
force behind Liverpool’s revival and his influence can also be seen in non-sporting
performance, the growth around him has not only been noteworthy but fundamental to the
club’s capacity to nourish his work with further spending.
In their near decade of ownership, the indicators of FSG’s performance away from the pitch
are universally positive. Commercial revenue has risen from £67.7m in 2010 to £188m in
2019, broadcasting revenue is up from £74.6 to £263.8m over the same period, and matchday
income has almost doubled, rising from £42.5 to £83.3m.
Behind that last statistic lies a cornerstone initiative that actually predates Klopp’s
arrival.
In December 2014, work began on the first phase of Anfield’s expansion. The new main
stand, on its opening in September 2016, added 8,500 new seats to the stadium’s capacity,
including brand new corporate and media facilities. The effect was shown immediately. In spite
of playing fewer games that season, with the club not qualified for European competition,
matchday revenue rose by over £11m.
By 2018-19, Liverpool (£84m) had the third highest matchday revenue in the country, still
behind Arsenal (96m) and Manchester United (111m) – who occupy bigger stadiums – but
with a significant advantage over Manchester City (55m) and Chelsea (67m)
But the value of stadium expansion doesn’t just show in increased gate receipts. Nor
is contained by its new capacity to stage major, year-round events.
The improvements to, in particular, its corporate facilities have immeasurable worth. In concert
with advancing performance, growing profile, and the promise of further stadium enhancements,
the new stand and Anfield’s changing image has also helped to make the club more attractive
to sponsors.
And to a certain type of sponsor, too. In 2018, Standard Chartered extended their partnership
as the club’s main partiner. In 2017, Western Union were signed as a shirt sleeve sponsor.
A year before, in 2016, the gaming brand BetVictor had become the club’s training kit sponsor.
By 2019, they had been replaced by AXA (£2m/y for 4ys), the multinational insurance brand.
They joined long-term partner Carlsberg and other blue-chip brands, such as Nivea and
EA Sports, on an increasingly diverse, but impressive list. Nine new commercial partnerships
were signed between 2018 and 2019 alone, while the club also added a new retail partner in
Malaysia and unveiled new selling channels on Amazon in the USA, Canada and in Germany.
Such regional focus has become a commercial priority. In a February 2019 interview with
SportsBusiness.com, chief commercial officer Billy Hogan (been there since ’12) stressed
the need for the club to tailor individual partnerships to specific parts of the world
and capitalise on the club’s uniquely global status.
Liverpool have an Egyptian real estate partner (Tatweer Misr), for instance, and also count
one of the country’s largest banks (AlexBank) among its sponsors. Logical moves, perhaps,
and built around Mohamed Salah’s success in England, but also indicative of a certain
agility and the kind of bespoke approach that Hogan refers to.
In the most recently released financial results, commercial revenue was shown to have risen
year-on-year by £34m and, unsurprisingly, it is the club’s fastest growing revenue
source.
It’s a success enabled by performance, but also by a precious historical advantage. Liverpool
have always been a large club, but they spent much of the modern era underperforming and,
in response, parts of their large multinational fanbase had become increasingly latent. Now,
not so much.
Additionally, according to The Athletic’s Matt Slater, many Liverpool fans who were
drawn to the club during their decadent 70s and 80s eras are now in positions of authority
at major companies across the world.
Nowhere, however, is Liverpool’s growth under FSG better charted than on their most
visible asset: their famous red shirt.
In 2012, Adidas declined the opportunity to renew their kit sponsorship agreement at a
cost of £12m/season, with the German brand dismayed by the disparity between performances
on the field and the Liverpool’s own calculation of their worth.
In 2020, having fought through the courts for a premature end to their agreement with
New Balance, Liverpool will enter the first year of an agreement with Nike. The new deal
will be worth £30m a season, less than New Balance were offering, but – by estimation
- is thought to be worth around 75-80m a year, with the club due 20% royalties on every unit
of kit sold.
It will, by those projections, be the third richest deal in the world and the most lucrative
in English football history – but it’s a bold move which characterises FSG’s growth
strategy.
New Balance had been willing to match Nike’s offer and had arguably produced the finest
shirts in years. The key to Nike’s appeal was distribution, though. According to reporting
by The Athletic’s James Pearce, they’ve ‘vowed to sell the kit in at least 6,000
stores worldwide’, whereas New Balance were never able to distribute from more than 3,000
outlets.
It’s a gamble. The deal will provide less money up front but, on the presumption that
performance will drive sales, much more as a reward for further success. It’s an aggressive,
smart and typical move.
Football is ultimately a game for the super wealthy. So, while FSG are obviously to be
credited for the hiring of Jurgen Klopp, the backing they’ve given and the many micro
initiatives they’ve overseen, their most important role – in broad terms - has been
to capitalise on his performance in material terms and provide the capacity for further
growth. They’ve done just that, becoming a behemoth club in real, rather than just
theoretical or historical terms.
The club Jurgen Klopp joined were paying an average first-team wage of £67,500 per week.
The club he now leads are paying an average of £106,500. Under FSG, Liverpool have mastered
the virtuous cycle of on-pitch success and financial performance.