wattWhenever Fenway Sports Group adds one of its vast global sports franchises (currently worth more than $10 billion), the stated intent is the same: respect tradition, build brands, and put teams on a more sustainable path path of. Lay the foundation for future growth and most importantly, win. FSG Chairman Tom Werner told the Pittsburgh Post-Gazette, looking back at the second anniversary of the group’s acquisition of the Pittsburgh Penguins hockey team in 2021 late last year, “We feel a certain responsibility as managers to ensure that we are not only retaining the Penguins. legacy, but we’re working hard to bring more Stanley Cups to Pittsburgh.”
From the mouth of any other sports investor, such remarks would seem like standard corporate wisecracks. But FSG has more than two decades of accumulated track record to back them up: from Boston to Liverpool and beyond, FSG’s arrival has heralded success on the pitch and renaissance off it, bringing trophies and creating a legacy among teams. There comes a fresh sense of connection. The teams it takes over and the communities those teams represent.
Especially at Liverpool, FSG offers the best model for sustainable institutional investing in the Premier League, creating happy memories on the pitch without burning the balance sheet: Liverpool’s latest financials for the year to May 2022 Performance, the club generated record revenue of £594 million and pre-tax profits of £7.5 million. Of all the American investors who have invested in European football over the past two decades, FSG is undoubtedly the smartest and most successful – and while that distinction may seem easy to achieve when the main rivals are the Glazer family, winning requires time it.
But what now? Jurgen Klopp’s announcement that he will leave the club at the end of the season is a blow to both FSG and Liverpool. The Red Sox and Liverpool, acquired in 2002 and 2010 respectively, have long been FSG’s crown jewels, helping to transform the investment group into a Reputable hedge funds, where the success of one team helps compensate for the failure of another. In 2004, the Red Sox broke the “Curse of the Bambino” by winning their first World Series in 86 years, and won three more championships in the years since. Success in Boston helped bolster FSG’s reputation as a savvy sports investor and earned some patience among Liverpool fans during the early years of the group’s tenure at Anfield, when the Reds came close to winning a first title since 1989 It seems to be a long way off.
However, over the past five years, the team’s fortunes have reversed. Liverpool enjoyed their most sustained period of post-Boot Room success – capturing the new Premier League and Champions League trophies – while the Red Sox slipped into the (undoubtedly very competitive) American League East Division in four years Down to the final three, it was a dismal performance from one of baseball’s most storied teams. The Red Sox have remained relatively inactive on the player market in recent months, despite promising to go “all in” over the winter and budgeting for big-money signings. Fans are increasingly apathetic to team owners who are weary in the face of chronic failure. Does FSG still care? Can it handle more clubs? Soon Liverpool supporters may be asking these questions too.
FSG’s principal owner, John W Henry, was known for his obsession with data and detail, a figure that profile authors like to describe as a “shy quant” or a “walking algorithm”: he was famous for trading soybeans Make a fortune from futures. Helping his family with the farming business; After buying Liverpool with relatively little football knowledge, he read more than 60 books on football to learn the game; As the owner of the Red Sox, his first directive was to prepare for Fenway Park The infield ordered new clay because the existing clay “didn’t suit his color.”
Henry’s teams have built a similar reputation for focus and technical prowess, but for all the talk of data “revolutionizing” football, FSG’s success at Liverpool is ultimately down to an inspirational hiring of Klopp in October 2015. decision. The early wins came through the same smart recruiting decisions, but the core ownership group — Henry, Warner and FSG president Mike Gordon — are all baseball fans, giving their involvement in the ballpark operations a different texture and depth. . At Liverpool, they are more reliant on Klopp’s charisma and energy to drive the club forward – and they are very lucky to have him.
In the face of a football and financial tsunami like Manchester City, no other Premier League manager other than Klopp can lead a team to maintain sustained competitiveness – and even more impressively, he has a major owner. It was Manchester City as a club that did that. The penny-pinchers of the American Midwest, not the headless spenders of Boili or Saudi Arabia. Klopp’s departure will leave a footballing and cultural vacuum at the heart of Liverpool that the Fenway Group will struggle to fill: there is no Klopp-like figure waiting in the wings, no set to shine in the dark. The finish, whoever comes in, will inevitably take time to reshape the club in their image. When Henry and Werner were in their late 70s when another of the group’s gold assets was also affected, the challenges raised a real question: whether the group was up to the task of expanding on its own.
Make no mistake: expansion is a top priority for FSG. The group has long seen itself as a bulwark against the corporate orthodoxy of growth for growth’s sake (“We’re skeptical of the idea that ‘we need to get bigger,'” Gordon once said), and at one point FSG yes Unlike other big investors active in European football: it is more concerned about financial sustainability than most and has not embraced the multi-club ownership model popular with City Football Group and Red Bull, preferring to invest in different sports and market for investment. FSG’s investment style is heavy on blue-chip, established names: it’s hard to see Henry and Werner looking for value in Italy’s third tier, or listing on the Brazilian savannah.
In other respects, though, FSG, like other investors, wants to make as much money as possible: the whole impetus for the group to look for investment opportunities outside the United States, culminating in the purchase of Liverpool, was Henry’s interest in MLB restricting franchise ownership freedom to maximize income.
FSG may still be skeptical about the need for scale, but there is no doubt that scale is becoming a reality. In addition to the Penguins, the group now owns a NASCAR team, Tiger Woods and Rory McIlroy planned TMRW golf league franchises, and two U.S. regional sports networks; news emerged last week that , a new investment consortium led by FSG will inject $3 billion into the PGA Tour’s commercial operations, potentially creating a new bone of contention in the endless merger talks between the PGA and LIV Golf. While Henry remains FSG’s majority owner and largest shareholder, the group has recently brought on a variety of new investors, from LeBron James to RedBird Capital Partners.
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Investors love to talk about synergies, and it’s easy to see how an investor like RedBird, with a well-regarded data analytics business, could support the teams in FSG’s portfolio. But synergies can multiply to the point of distraction. FSG has been a somewhat unusual investor in European football in that it does not seek returns uncorrelated to the broader market like many institutional investors: its interest is solely in sports, rather than in sports as a hedge against non-sporting losses tool. This has allowed the group’s operations to be focused, but that focus on sport requires a whole-hearted dedication to the task, which may now be difficult to maintain given all the new demands on ownership’s core focus.
Klopp will keep Liverpool in good shape after recently revamping the squad. But any post-Klopp slump would push FSG into uncharted territory, leaving its main assets in limbo while it expands its management and attracts new businesses and investors.
At that point, trimming the group’s holdings to take advantage of increases in the value of its most prominent assets may start to look attractive. Both the Red Sox and Liverpool plan to release refreshing documentaries in the coming year (the latter, although Klopp has long been opposed to the idea), which could conveniently double as pre-sale marketing material. Given FSG’s historical and emotional relationship with the Red Sox, it seems unlikely that it will exit the Red Sox anytime soon. Henry also owns the Boston Globe, of which his wife Linda serves as chief executive. The family has deep roots in New England. In old England it was different. Henry & Co considered selling Liverpool at the end of 2022, then quickly rebranded it as looking for “new investment” before eventually selling a minority stake in the club to US private equity firm Dynasty Equity late last year. The furious reaction from Liverpool fans to the club’s proposal to join the Super League in 2021 – for which Henry eventually took personal responsibility and apologized to supporters – gave bosses a glimpse of how things would have turned out for them if the results had come to fruition. Turn sour.
Now, with Liverpool on the verge of losing their beloved beer boxer, FSG may have further reason to reconsider their stance. The club’s reputation was unquestionable off the pitch, but it was restored on it. A balance sheet that would be the envy of European super clubs; Anfield’s seating capacity is expected to reach 61,000. As Liverpool prepare for the pain of Klopp’s future, its owners are racing for a reckoning – which could ultimately see the time finally come when they decide to bid farewell to Merseyside.
