Before the horrendous refereeing decisions were on display in London this past weekend, Liverpool were involved in some positive news. Stories emerged last week that Dynasty Equity had acquired a minority stake in the club in the region of $100-200 million investment.
November 2022 is when news broke that FSG were looking for investors and nearly 12 months on, the American business group have aligned itself with a smaller similar business based in New York. It is believed the investment will look to cover some of the costs of the Anfield Road expansion, the summer transfer business and potential Covid-related issues.
Throughout their tenure at Anfield, FSG have always proved their business prowess. Taking over the club when it was in dire need and turning it into a multi-billion pound asset. Jurgen Klopp has also helped move the club in this direction with his managerial qualities, but it was the Americans who were quick to act, relieving Brendan Rodgers of his duties before employing the German.
This week on the Expert Insight Show, Dan Clubbe spoke with football business expert, Kieran Maguire, on the impact of the sale and a closer look at the deal.
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Kieran said:
“I think given FSG’s background, it’s no surprise they have gone for another American investor. An organisation that probably aligns with FSG’s position with regards to sport, i.e. they are not football fans, they are very good at running businesses and their view is that you can do both at the same time. The success of Liverpool has increased the demand for people to get to Anfield and see the team and FSG, to a certain extent, have delivered that with the ongoing stadium expansion. FSG don’t like to borrow a lot of money in an ideal world with interest rates high so this is a way of giving away a slice of Liverpool to somebody else, but with the view that FSG have now got 90% of a bigger cake than a 100% of a smaller one. They will feel overall they are probably in a better position as will be the finances of the club going forward.
“What you normally try to do in business, is you try to align spending with borrowing or spending with funding. So what we have here is that there are some significant infrastructure costs at Liverpool that will be a long-term benefit. So if you are looking for long-term funding, you have two options: you can borrow from a bank, but ultimately pay interest or you can attract fresh investment in the form of fresh shareholders and they see the benefits straight away because they will see reduced interest costs that will flow through to higher profits that will increase the value of the business. You’ve got higher income streams off the back of this with an expanded Anfield and it is a logical thing to do. What you don’t like to see is people borrowing just to sure up the short-term position. Even as Liverpool fans you don’t want to see Everton suffer, you can’t live rivalries without rivals and the position that they’re in is to take short-term borrowings to pay the wages, the next set of transfer instalments. That is not how you would normally advise it. Liverpool and FSG have been very canny and very forensic in their approach to the finances. They are very savvy from a business point of view, but that does come at a cost. You end up alienating the hardcore fanbase, you don’t necessarily align with the values.”
Speaking on Dynasty Equity, Kieran said:
“If I’d set up a new business and want to make a statement, then you align yourselves with one of the biggest brands in the industry. That is what they have done, everybody is now talking about them. It gives Dynasty a chance to raise their profile, the people involved are good at what they do.”
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The investment is probably not what some fans had hoped for with the likes of Qatar, Saudi Arabia and the UAE slowly moving further into football. There is the fear that Liverpool could be left behind given the astronomical funds other teams have at their disposal. However, any investment into the club must be viewed as a positive.
FSG are notoriously known for their smart business and this seems like another move that will only benefit Liverpool. However, further down the road, the questions will still come surrounding whether the Americans have taken the club as far as they can.
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