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FSG

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In terms of its very existence, football has never faced a crisis so deep as now.

Even the biggest clubs, the likes of Barcelona, Real Madrid, Juventus, Milan, and to a lesser extent, Liverpool, Tottenham, even Manchester United - all those clubs not owned by countries or oligarchs - are facing a financial reckoning

Lower down the pyramid, most clubs are worried about their very survival. It is a bleak picture of a financial model ripped up by the Covid pandemic, amid a fundamental reassessment of the sports core product: the live event.

Yet even with dire warnings of the likes of Barca facing the unthinkable if fans don’t return to stadiums soon, and one in two English clubs outside the Premier League at threat of folding, sport is still considered THE most attractive business investment, outside the great masters of art.

Emphasising the point, Gerry Cardinale’s Redbird Capital Partners has just agreed to pay more than £550m for what is believed to be an 11 per cent stake in the Fenway Sports Group, whose chief assets are the Boston Red Sox and Liverpool Football Club.

That values the group at £5.5bn, staggering in these times, and places Liverpool amongst the most expensive sports franchises in the world...which given they have posted huge losses over the past year, begs the question, why?

Cardinale himself answered the question a few months ago, when he was still negotiating the deal. And interestingly, it appears - strongly - that his investment in FSG is powered more by the chance to take a stake in Liverpool, than the Red Sox.

The American is an investment banker, formerly with Goldman Sachs, who has a wide portfolio of companies and partners with his RedBird group, but has a specialism in investing in sports, and related businesses.

In an interview with a popular sports business podcast recently, he spoke about European football in particular, and his attempts to understand the ‘market’ there. He revealed he had been studying it for years because that is “the next real focus for me, and for Redbird”.

The question is why football, and why Europe, when he knows the American sports market inside out? The answer lies in becoming a ‘rights holder’ and being able to control the tv and merchandising rights.

Cardinale has long worked with the New York Yankees in setting up - and then buying back after selling to the Murdoch empire - the YES network, which is the number one regional sports network in the United States, and broadcasts all of the Yankees games, and those of MLS side New York City.

So he knows about tv rights. And he also knows that in European football, there are far fewer rules around buying a club and becoming a rights holder than in the US. He knows that means it is far easier to influence the direction of the sport.

“I have been looking at European football now for the past four years, and I have been learning and studying and watching,” he explained.

“And the difference for me in Europe, is that I can tweak my investment model, and become the rights holder myself. In America the rules make it harder to become the rights holder.

“In Europe, those rules don’t exist and (that means) I can come in and do everything I’ve done successfully for the last 30 years on the business side of sports, but then I can also vertically integrate to be the rights holder.”

That is all business speak of course, which will mean little to the average fan. But Cardinale has a vision for the way a huge, global franchise - such as Liverpool - can adapt to the changing market and become an even bigger success.

He knows Covid has dealt a savage blow to European football, but states confidently: “The sport is in a challenging time right now, but it has never been better positioned, it will be ultimately very resilient and it is the best content that human kind has created.”

Fundamentally, he wants to change the face of football forever, by first changing the way people watch the sport. He has teamed with Amazon at the Yes Network, as he recognises they will play a big part in the broadcast of sports in the future.

But he also recognises that young people watch in 30 second soundbites, not hours long viewing. His plan is to become one of the first sports team to make real money from that sort of future ‘content consumption’.

He also wants to bring his speciality in business management, and analytics, to make his European clubs - he already owns Toulouse and wants more - financially lean (suggesting a Red Bull style group of clubs, who use their scale for economic value), to make much bigger profits to invest in players.

“I want to take our approach and integrate it into player performance and onfield performance,” he explained. “I have close to three decades of apprenticing with some of the best sports owners in America as their partner.

“Now it excites me that we have the opportunity to put it all together. We can be team owner, we have a real view on how we can enhance player performance and team performance through analytics.

“And then being able to do what I do on the business side, will feed into better cash flow management, which feeds into having more liquidity and resources to put the best players on the field, that’s very interesting to me.”

He can’t do that at Toulouse of course, but he can at Liverpool. And many observers believe his investment in FSG is a gateway to eventually attempting to buy the English club outright.

So what would that mean for the Liverpool fans? Well, Cardinale has been planning this for years, and believes he has a model that can make a European football team financially successful...and dominant.

Some of his ideas include a European Super League, but not at the expense of the smaller clubs, or the national competitions.

“The momentum for a super league competition, that will only happen if it doesn’t come too much at the expense of the smaller market teams...there has to be a balance,” he said.

Even more importantly, perhaps, is his desire to adapt to the changing face of technology and the way the tv content is consumed, especially by a younger audience.

He has gone on record in saying that the Yankees will lead the way that others will follow, and it is clear now he wants Liverpool to do the same - by access to the live content on many different platforms in many different packages.

Owning the tv rights individually, as the Yankees and the Red Sox do, is another natural progression. But one that will take years, not months.

In the short term then, that doesn’t mean his investment will be used to go out and buy Kylian Mbappe this summer, for instance...though it is entirely possible that could happen.

But the smart money is on Cardinale taking a bigger stake in Liverpool in the near future, and a much bigger role in the club. And that would see his visionary ideas for sports management put into practice at a club already one of the biggest in the world.

In business terms, he stated: “The asset values, there is still very much intrinsic value and very much a flaw in those asset values that can be substantiated.”

For you and I, the fan, that means simply, he believes football clubs are still undervalued, and can make bigger profits and offer bigger returns for investors in the future.

And he recognises that is based on clubs like Liverpool ‘monitising’ their fanbase even further,
to generate funds to find the best players in the world, and make them dominant.

It is an intriguing concept given some of the competition has the wealth of a country backing them...but one he believes his vision can deliver. Liverpool fans will wait expectantly.

edit...
Please note the token binnying of the post for the pleasure of @letallacwizard
 
Is it wrong to hope he fails and loses money? Can we spunk it all on mbappe then tell him to fuck off with most of those ideas.
I like him, I dont mind the chelsea owner, but city ans psg are a fucking virus, becausw of state ownership, and so is R.Madrid to some extent.
 
But he also recognises that young people watch in 30 second soundbites, not hours long viewing. His plan is to become one of the first sports team to make real money from that sort of future ‘content consumption’.

That spells NFTs to me.

It's coming. Watch this space.

#chiliz #ethernitynetwork
 
Redsox worth over $4bn now. However, they're top 10 earners make between $10m and $31m per season
 
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