FSG were quick to come out and quash the rumours of a sale after reports surfaced in the UAE that they rejected a £1.5bn bid. However, had an offer been made and accepted, Liverpool would become the most expensive club purchase in history. It would also have marked an almost 500% return on FSG’s initial investment in just over seven years. It begs two questions. Why would FSG reject it and how much is Liverpool FC worth?
How Much is Liverpool Football Club Worth?
Modern Owners
This same week, Arsenal FC held their AGM. In that hall was a demonstration of what 21st century club ownership has become. During the meeting, Arsenal fans, paying the highest season ticket prices in world football, were told to be happy. They were informed after finishing fifth, they are performing above expectations on the metrics they measure themselves against.
The boos that rang around the Arsenal AGM would lead you to question why American owners want to be a part of the Premier League. However, the owner of the club, Stan Kroenke in an interview the day before stated that he was happy with how things were going, and reiterated he was staying for the long haul. When looking at the revenue increases and the global dominance of the coverage of the Premier League, it is obvious why owners will put up with fan discontent. Football clubs are becoming the new cash cow to billionaires around the world.
Ever Growing Value
Like the housing market, the value of football clubs may fluctuate. However in the long run, prices go up. At the rate it is climbing now, why would any business be looking to get out of the football game? If we compare the performance of the NASDAQ 100, an index based on 100 of the biggest companies, we can see why billionaires want to own football clubs. In 10 years, the NASDAQ 100 offered less than half of the return that purchasing Liverpool has provided FSG in seven years.
If an owner invests wisely, the potential financial rewards are astronomical. What makes this sickening for fans is that success on the pitch is not necessary. Yes, a team must keep its coveted Premier League spot. However, with Liverpool, maintaining a place in the top tier is as safe a bet as possible. Yet, the team that finished twentieth in the top flight last season received more money than Sevilla, the team that finished fourth in La Liga. Where is the motivation for owners of Premier League clubs to invest vast sums of money to speculate on winning trophies?
Mega-rich clubs
There are the obvious exceptions to this. The finances ploughed into Manchester City recently show that there are still owners willing to invest to chase success. Yet, these are more pet projects than financial investments. If we look at the model of Chelsea, even Roman Abramovich has stopped investing his own money. He doesn’t need to. The brand of Chelsea and the money from the television deals is enough for them to invest nearly £120m after player sales on new players.
How Much is Liverpool Worth?
The name Liverpool is a powerful marketing tool around the world. A never-ending flow of sponsorship deals has come through the door over the last seven years. The loss of star players such as Luis Suarez and Steven Gerrard hasn’t halted this. This shows it is the Liverpool brand which is the real star.
Liverpool is now able to be run profitably with no additional investment required by the owners. Projects to increase the capacity and develop the stadium are only adding value to the investment. Likewise, the plans for the development of training facilities at Kirkby will make Liverpool a more attractive prospect to future buyers.
With TV rights negotiations due soon, another huge jump in money could be on the way. Analysits currently predict at least a 40% rise in the previous £4.2bn deal. Yet, if one of the big internet companies such as Facebook or Google become involved in the bidding, the scope for the price to jump even more is always there.
Summary
With all this in mind, it is understandable why the current owners would reject an offer so large. If Liverpool sustain success, the price of the club they got for a bargain will just keep going up. In Jurgen Klopp, Liverpool have a manager with a record of working with a small budget and developing players. Increased profits on FSG’s initial investment are more or less guaranteed. It would, therefore, take a ludicrous offer to get FSG to sell. For businessmen, this makes perfect sense, but for supporters, this means further frustration and limited investment on the pitch.
Main Photo