Whenever Fenway Sports Group added to its sprawling global portfolio of sports franchises, now valued at more than $10bn, the story it told about its mission was the same: respect tradition, build the brand, leave the staff on a more sustainable basis. a base for future growth, and above all, victory. Reflecting on the two-year anniversary of the group’s 2021 acquisition of the Pittsburgh Penguins ice hockey team late last year, FSG chairman Tom Werner told The Pittsburgh Post-Gazette: “We feel a certain responsibility as stewards to make sure that we only carry on the legacy of the Penguins.” preservation, but that we want to bring more Stanley Cups to Pittsburgh.”
In the mouth of any other sports investor, words like these would seem like standard corporate grunt. But FSG has the track record, built over two decades, to back them up: from Boston to Liverpool and beyond, FSG’s arrival on the field has been successful and refreshing, bringing trophies and recognition. fresh of connection between the teams he took over and the communities those teams represent.
In Liverpool in particular FSG has offered perhaps the best model of what sustainable institutional investment looks like in the Premier League, engineering happy memories on the pitch without burning the balance sheet: in the year ending May 2022, the league Liverpool’s latest financial results. , the club generated an outstanding income of £594m, with a pre-tax profit of £7.5m. Of all the American investors who have come into European football in the last two decades, FSG has been the smartest and most successful – and although that distinction seems easily deserved when Glazer family is the main competition, it’s time to win. it.
But now what? Jürgen Klopp’s announcement that he will be leaving his position at the end of this season is as much a blow to FSG as it is to Liverpool. The Red Sox and Liverpool, acquired in 2002 and 2010 respectively, have long been the twin jewels in FSG’s crown, and for much of the past 15 years or so both teams have helped the investment group to turned into a kind of famous hedge fund. , with success in one team helping to make up for failure in the other. The Red Sox broke the ‘Curse of the Bambino’ and claimed their first World Series in 86 years in 2004, with three more titles to follow in the years since. Success in Boston helped shore up FSG’s reputation as a rare sports investor and bought Liverpool fans some patience through the early years of the group’s successive tenure at Anfield, when the Reds seemed at once a slip and an eternity away. since winning their first championship since 1989.
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In the last five years, however, the teams’ fortunes have reversed. Liverpool enjoyed their most sustained period of post-Boot Room success – claiming fresh Premier League and Champions League trophies – while the Red Sox slumped to three last-place finishes in a (very competitive, admittedly ) in the American League East for four years, an abysmal performance for one of baseball’s most historic franchises. Despite promises of a full-throttle winter and the budget to go after big signings, the Red Sox have remained relatively inactive in the player market in recent months. The attitude of the owners in the face of chronic failure has increased apathy among fans. Does FSG care any more? Can he handle a larger portfolio of clubs? Liverpool supporters may soon be asking these questions too.
John W Henry, principal owner of FSG, is known as a data and data obsessive, the kind of figure profile writers love to describe as a “shy quant” or “walking algorithm”: he made his fortune trading soybean futures to helping his family’s farming business; he read over 60 books on soccer to educate himself about the sport after buying Liverpool with little football knowledge; and one of his instructions as Red Sox owner was to order new clay for the infield at Fenway Park because the existing clay was not “the right color” for him.
The Henry group of leaders has achieved a similar reputation for focus and technical mastery, but for all of football that is “revolutionizing” data, it was the single, inspired decision to hire Klopp in October 2015 that led to FSG’s success in Liverpool eventually. The early hits were achieved through similarly smart recruiting decisions, but the core ownership group—Henry, Werner, and FSG president Mike Gordon—are all baseball fans, giving their involvement in field operations a different texture and depth. At Liverpool they relied much more on Klopp’s charisma and energy to drive the club forward – and they were lucky to have him.
There has been no manager in the Premier League but Klopp has been able to steer a team to the point of sustained competitiveness in the face of the footballing and financial tsunami at Manchester City – and he has done it even more impressively at a club with its main owner. a midwestern American bean counter rather than a headless man in the Boehly or Arabian mold. Klopp’s departure will leave a footballing and cultural vacuum at the heart of Liverpool that FSG will struggle to fill: there is no Klopp-like figure waiting in the wings to take over, no veneers glowing in the dark, and whoever comes in will always be . The club needs time to be reshaped in their image. At a time when the group’s other golden asset is also suffering, with Henry and Werner approaching their mid-70s, these challenges pose a real question as to whether the group is up to the task of expanding itself.
And make no mistake: expansion is very much the order of the day for FSG. The group has long presented itself as a bulwark against the corporate orthodoxy of growth for growth’s sake (“We’re skeptical of the idea of ’we have to be bigger,'” Gordon once said), and in some FSG ways. yes differs from other major investors active in European soccer: he is more concerned with fiscal sustainability, and has not adopted the multi-club ownership model popularized by City Football Group and Red Bull, preferring to invest do it across different sports and markets instead. . FSG’s investment style is heavy on established blue shale names: it would be hard to see Henry and Werner scrambling to unlock value in the Italian third tier or hanging shale on the savs of Brazil.
In other ways, however, FSG is an investor like any other, looking to make money wherever possible: the whole motivation for the group was to look for investment opportunities outside the US, which eventually led to the acquisition of Liverpool , caused Henry’s frustration at MLB restricting the freedom of franchise owners to maximize revenue.
FSG may still be skeptical of the need to be bigger, but there is no doubt that there is more to what it is doing. In addition to the Penguins, the group also now owns a Nascar team, Tiger Woods and Rory McIlroy’s planned TMRW Golf League franchise, and two regional US sports networks; last week news broke that a new investment consortium led by FSG will inject $3bn into the commercial business of the PGA Tour, which could present a fresh bone of contention in merger negotiations between the PGA and LIV Golf. While Henry is FSG’s primary owner and largest stockholder, the group has also recently moved to bring in 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 not hard to see how an investor like RedBird, for example, which values a data analytics business, can support teams across FSG’s portfolio. But synergies can increase to the point of distraction. FSG has always been a somewhat unusual investor in European soccer, in that it does not seek returns uncorrelated with the wider market like many institutional investors: its interest is in sport and sport alone, not in sport as a hedge against non-sport losses. . This gives focus to the group’s operations but the exclusive concentration in sport requires total commitment to the task, which may now be difficult to maintain given all the new demands on the core ownership’s attention.
After a recent squad overhaul, Klopp will leave Liverpool in good shape. But any downturn in the post-Klopp fortunes would put the FSG team in uncharted waters, leaving its key assets in trouble at the same time as the group reaches out to manage and correct new ventures and investors.
Trimming the group’s holdings to take advantage of the increase in value of its most visible assets could, at that point, start to look attractive. Both the Red Sox and Liverpool are set to release fly-on-the-wall documentaries in the coming year (the latter despite Klopp’s long opposition to the idea), which could double as marketing material pre-sale. It seems unlikely that FSG will walk away from the Red Sox anytime soon, given the historic and emotional nature of their attachment to the franchise. Henry also owns The Boston Globe, where his wife Linda serves as CEO; the family is rooted in New England. In Old England, it’s a different story. Henry & Co explored putting Liverpool up for sale in late 2022 and quickly rebranded it as a search for “new investment”, culminating in the sale of a minority stake in the club to US private equity firm Dynasty Equity late last year . The reactions of Liverpool fans, in 2021, to the club’s inspired participation in Super League – for which Henry eventually took personal responsibility, issuing an apology to supporters – gave the owners a glimpse of how things could turn out look for the results to begin. sharply.
Now, with Liverpool set to lose its beloved beer sister, FSG may have another reason to rethink its position. The prestige of the club, which he had no doubts about off the field, has been restored to him; the balance sheet is a concern for Europe’s biggest clubs; Anfield is well on its way to 61,000 seats. As Liverpool prepare for the pain of a Kloppless future, their owners are racing towards a reckoning – one that could see them finally decide the time has come, finally, to say goodbye to Merseyside.