Dynasty Invests in the Pool

[localny]

FSG sells minority stake in Liverpool and ends search for investment.

• US private equity firm Dynasty Equity pays about $100m-$200m
• Money used to pay off debt and will not go into January transfers

Fenway Sports Group has sold a minority stake in Liverpool to the US PE Firm Dynasty . The deal ends FSG’s search for investment and will be used to pay off debts. FSG and Dynasty, an investment firm that specializes in buying minority stakes in sports franchises, have not revealed the financial details of the deal but it is in the region of $100m-$200m (£82m-£164m). The investment does not equate to a “transfer war chest” for the manager, Jürgen Klopp. It will pay down bank debt incurred during the pandemic, capital expenditure on the new Anfield Road stand, the new Axa training centre and the repurchase of Melwood training ground, and acquisitions in the recent transfer window.


Liverpool’s debt before the repurchase of Melwood and this summer’s transfer spend was about £150m. FSG is uncomfortable carrying that amount of debt and began considering outside investment after the pandemic. The appointment of two investment banks to lead that search, Morgan Stanley and Goldman Sachs, prompted inaccurate reports in November 2022 that FSG was looking to sell Liverpool.

The club’s owner, however, wanted a minority investor and held talks with several interested groups before reaching a deal with Dynasty. Its involvement is said to be small and passive, and does not affect the operation of the club or represent the first step towards a sale. In the long term, Dynasty and FSG will explore further growth opportunities for Liverpool.
FSG’s president, Mike Gordon, said: “Our long-term commitment to Liverpool remains as strong as ever. We have always said that if there is an investment partner that is right for Liverpool then we would pursue the opportunity to help ensure the club’s long-term financial resiliency and future growth. We look forward to building upon the longstanding relationship with Dynasty to further strengthen the club’s financial position and sustain our ambitions for continued success on and off the pitch.”

Dynasty is run by its co-founders, Jonathan Nelson and K. Don Cornwell. The pair were experienced investors in sports and entertainment before establishing the company, including through collaborations with leagues and franchises.

“We are honoured to partner with FSG and support the remarkable legacy of Liverpool in a strategic partnership that builds upon mutual respect and deep relationships among our respective teams,” said Nelson, Dynasty’s executive chairman.

From the Athletic

Liverpool owner Fenway Sports Group (FSG) has sold a small stake in the club to American sports investment firm Dynasty Equity.

The deal is worth between $100million (£82m) and $200m (£164m). Based on Forbes’ $5.3billion (£4.3bn) valuation of Liverpool, that represents a minority investment of between 1.9 per cent and 3.8 per cent.

The influx of cash will be used by FSG to heavily reduce bank debt and cover the cost of projects such as the Anfield Road Stand redevelopment and the repurchasing of the Melwood training ground for the club’s women’s team.

It will not result in a significantly enhanced transfer kitty for manager Jurgen Klopp.
Senior FSG figures insist this is about managing the financial health of the club and it brings to an end their long search for fresh investment. They are adamant this is not a stepping stone towards selling the club.

The Athletic revealed last November that the Boston-based group, who bought Liverpool for around £300m in 2010, were open to offers with a full sales presentation produced for interested parties.

However, by January it became clear that selling a minority stake rather than a full takeover was their favoured option and they held talks with a range of interested parties before deciding to link up with Dynasty Equity. Morgan Stanley and Goldman Sachs served as financial advisors to FSG on the transaction.

“Our long-term commitment to Liverpool remains as strong as ever,” said FSG president Mike Gordon.

“We have always said that if there is an investment partner that is right for Liverpool then we would pursue the opportunity to help ensure the club’s long-term financial resiliency and future growth.

“We look forward to building upon the long-standing relationship with Dynasty to further strengthen the club’s financial position and sustain our ambitions for continued success on and off the pitch.”
New York-based Dynasty Equity was co-founded by Jonathan M. Nelson and K. Don Cornwell last year and this is their first major sports investment. David Ginsberg, who is vice-chairman of FSG, is also a senior advisor at Dynasty.

“We are honoured to partner with FSG and support the remarkable legacy of Liverpool in a strategic partnership that builds upon mutual respect and deep relationships among our respective teams,” said Dynasty executive chairman Nelson.

Dynasty CEO Cornwell added: “Liverpool is one of the most iconic football clubs in the world with a passionate fanbase and significant global reach. Dynasty is privileged to support the club and work alongside FSG to execute on the tremendous growth opportunities ahead.”

 

[Squiggles]

After all the drama we sold less than 4% for what cost FSG 50% when they purchased us.

Roll on another ten years of FSG's penny-pinching. I still maintain it beats being owned by the gulf states.

 

[localny]

After all the drama we sold less than 4% for what cost FSG 50% when they purchased us.

Roll on another ten years of FSG's penny-pinching. I still maintain it beats being owned by the gulf states.

The cautionary tale of Chelsea will sadly reinforce that view. (penny pinching). Not sure I could support the club if it was owned by a nation-state of any kind.

 

[Atlas]

Only really interested if this'll take us to the top of the debt free league. And, I'm not just talkin in the Prem we now need to be competing globally, to be debt free.
We sold Melwood, only to buy it back? lolz

 

[Donavan Ried]

Where as the debt come from??
FSG has only spent money on re development of Anfield. I thought that was paid for by the Club
Nothing directly put into the club, so where is the debt coming from...?

 

[Woland]

Liverpool will owe money to the parent co FSG. FSG will also have cash debt facilities it can access to so that they don't have to worry about finding liquid assets when they move in the transfer market etc.

 

[johnj147]

prefered dallas tbh ..

 

[LeTallecWiz]

Preferred a team, MacGyver, air wolf and knight rider if we're talking about 80s classics

 

[Hyena]

Where as the debt come from??
FSG has only spent money on re development of Anfield. I thought that was paid for by the Club
Nothing directly put into the club, so where is the debt coming from...?

It is the Club's debt, in the form of bank loans taken on for redevelopment, that is being paid off.

The shares are either being issued by the the Club, with money channeled directly to the club, or it is a condition of the purchase that the purchase price paid to FSG be used to settle the club's debts.

 

[binomial]

Meh.

 

[StevieM]

Surely this is great news - passive minority investment, debts paid off with no significant capital investment in the stadium planned.

This means we don’t have to sell to rebuild the defence.

 

[moron]

Surely this is great news - passive minority investment, debts paid off with no significant capital investment in the stadium planned.

This means we don’t have to sell to rebuild the defence.

Yes of course its great news "Top Top Top" Red, you must be partying like crazy right now.

 

[StevieM]

Yes of course its great news "Top Top Top" Red, you must be partying like crazy right now.

Have I been levelled up again???

I’m happy for you to explain why it’s not good news and why we should be miserable.

I thought you’d be happy - less chance of selling Curtis to fund a new CB now.

 

[StevieM]

And if trying 2 different types of “small produced marmalade” on my “artisan bakery” sourdough for Brekkie is partying it up - then I’m tearing it a new one.

Seville orange marmalade on one slice and clementine mandarin marmalade on the other, in case you wondered - they’re both quite delicious and subtly different.

 

[rubans]

To be fair, FSG have rarely ever sold an asset to fund another unless it was the player’s preference to leave. Can only think of one, Raul Meireles?

 

[moron]

Have I been levelled up again???

I’m happy for you to explain why it’s not good news and why we should be miserable.

I thought you’d be happy - less chance of selling Curtis to fund a new CB now.

Sell Curtis ? - don't fucking swear at me !!!! No ones selling Curtis , and Yes I am happy but I do wonder what FSG strategy is long term selling us off at 2% at a time, if they keep doing this as they cannot provide the necessary funding - then in 20 years time 22% of our team will be owned by 22 other funds. Eventually when we cannot purchase players there will be no one we can blame. They'll make a film out of us titled "Who the fuck owns Liverpool ?" - it won't be an Amazon documentary - it will be on C4 Despatches.

 

[StevieM]

Sell Curtis ? - don't fucking swear at me !!!! No ones selling Curtis , and Yes I am happy but I do wonder what FSG strategy is long term selling us off at 2% at a time, if they keep doing this as they cannot provide the necessary funding - then in 20 years time 22% of our team will be owned by 22 other funds. Eventually when we cannot purchase players there will be no one we can blame. They'll make a film out of us titled "Who the fuck owns Liverpool ?" - it won't be an Amazon documentary - it will be on C4 Despatches.

Maybe….. they’re not selling us off 2% at a time and we seem ti be able to buy the players we need every now and then.

Besides… that documentary still wouldn’t be the worst documentary about Liverpool we’ve ever seen!!!

 

[Dreambeliever]

Preferred a team, MacGyver, air wolf and knight rider if we're talking about 80s classics

A-Team

 

[rurikbird]

I used to watch “Dynasty” every Sunday at my grandmother’s. It all seemed so foreign and distant then; I had no idea I’d be living in this country some day!

 

[localny]

I used to watch “Dynasty” every Sunday at my grandmother’s. It all seemed so foreign and distant then; I had no idea I’d be living in this country some day!

brilliant ^

 

[bluebell]

Surely this is great news - passive minority investment, debts paid off with no significant capital investment in the stadium planned.

This means we don’t have to sell to rebuild the defence.

There was talk about selling 10-20% but then they only managed to sell less than 5%. $100m covers FSGs debt to the club, and we were only paying £7-10m a year for that.
The huge drawdown we took out during covid, that won't be covered and nor will the Anfield Road expansion. If its $200m, is that enough to cover Anfield Road expansion too?
Hopefully @Beamrider being the exemplary figure he is reading the correct articles and will break it down for us, if he has time.

 

[moron]

I used to watch “Dynasty” every Sunday at my grandmother’s. It all seemed so foreign and distant then; I had no idea I’d be living in this country some day!

I loved both Dallas and Dynasty - my mum got me into Dallas, and we started both following Dynasty after that. Back in the day - it was for many people around the world seen as a glimpse into Western lifestyle, but the problem with Dynasty was that everyone was sleeping with everyone, in Dallas it was always JR who was sleeping with any female that moved. Looking back - I can't believe both those shows were before 9pm on BBC.

 

[Beamrider]

Deep breath...
The articles talk about LFC paying down debt, arising from the training ground expansion, the Annie Road and covid.
I think this is slightly disingenuous. Firstly, the training ground was paid for by reduced transfer spending - basically in 2020 our net spend (accounting basis, not cash) was £61k in-flow - this would have eased transfer cash flow over the next two years as there would be no net instalments on 2020 trading.
I was somewhat surprised by the level of our transfer spending in subsequent years - I expected it to be lower, given the spending commitments for the Anfield Road and the effects of covid, but we still spent on a comparable level with normal years.
So in effect, there's an argument that the debt that is there is a consequence of transfer spending, not the other factors - they were already committed, and in the case of covid, unavoidable. It was our decision to spend on the squad (necessary from a footballing perspective, but discretionary from a financial perspective) that tipped us into debt.
As for how much debt, well I can only comment with certainty on the position at May 2022. At that time, our key "debt" balances were:

[xtable=border:0|cellpadding:0|cellspacing:0|420x@]
{colgroup}
{col=317x@}{/col}{col=103x@}{/col}
{/colgroup}
{tbody}
{tr}
{td=317x19}Debt levels{/td}
{td=103x@} £{/td}
{/tr}
{tr}
{td=@x19} Bank{/td}
{td=right}

(87,133,000)​

{/td}
{/tr}
{tr}
{td=@x19} FSG (interest free){/td}
{td=right}

(71,400,000)​

{/td}
{/tr}
{tr}
{td=@x19} Transfers > 1 yr{/td}
{td=right}

(37,664,000)​

{/td}
{/tr}
{tr}
{td=@x19} {/td}
{td} {/td}
{/tr}
{tr}
{td=@x19}Total{/td}
{td=right}

(196,197,000)​

{/td}
{/tr}
{tr}
{td=@x19} {/td}
{td} {/td}
{/tr}
{tr}
{td=@x19}Cash{/td}
{td=right}

13,541,000​

{/td}
{/tr}
{tr}
{td=@x19} {/td}
{td} {/td}
{/tr}
{tr}
{td=@x19}Net debt{/td}
{td=right}

182,656,000​

{/td}
{/tr}
{tr}
{td=@x19}Net bank debt{/td}
{td=right}

73,592,000​

{/td}
{/tr}
{/tbody}
[/xtable]

I've included transfer debt here as it can be viewed as a form of funding (this is 3rd instalments, likely due in Jan / July 2024).
And for context, the overall debt level of £196.2m is lower than in any of the previous 5 years.
The overall debt will have gone up with further spending on the Annie Road and since that was being funded from LFC funds, it possibly puts a pinch on the bank facility (which was capped at £200m, so £127m spare capacity at the end of May 2022). It's worth pointing out at this point that the bank debt levels will vary massively during the year due to the lumpy cash flow profile of the business - e.g. a lot of season ticket / hospitality money will come in at the end of May, a lot of sponsorship income in June, transfer payments in July/August/January, and the media money at various points in the year (so clubs need to have overdrafts to fund their outgoings whilst waiting for periodic media payments).
Looking at the transaction itself, it's not clear how this is structured. Given the stated aims, the easiest (but not necessarily best) way to do it would be by a share injection - i.e. Dynasty subscribes for new shares in LFC, LFC gets the money immediately. But they may have bought shares off FSG and then FSG will need to put the money in. This would be more sensible from FSG's perspective - get the proceeds of sale, then lend the money into LFC - so shareholder loan goes up, other debt goes down. This gives them a means to pull out cash in future if they want to, and also gives us something (more) that we can convert to equity further down the line if we need to dig ourselves out of an FFP hole. I've talked about this in the past.
It's likely we'll get some indication on this in the coming weeks - when the transaction is implemented, there will need to be filings at Companies House if there's an issue of shares. If there's no filing, unless that's an oversight by the club, it would suggest sale and loan of proceeds from FSG.
FSG will also need to find some cash to pay a tax bill for the FSG shareholders as the sale of this small stake will trigger US tax liabilities, and it's probably mostly taxable gain in their hands, taxed at up to 25% including state taxes.
So I think the message they're trying to send out is that there isn't a £200m transfer war chest for January (they don't want fans to expect a mad spending spree and they don't want selling clubs to fleece us) but in truth the easing of the burden of external debt means we have more flexibility in every area, including transfers. We've also undermined our position with the Caicedo bid - we signalled that we had a lot of cash to spend, or else that we were engaged in an elaborate bluff. Neither is a good position to be in.
So I reckon that if there's a player Klopp wants in January, and we're well placed in the League, he'll be given the money to get the deal done.
In other respects, this money just clears the decks and gives us a clean slate. It's being presented as if Dynasty has paid for our infrastructure upgrades, and I can kind of see that, but you could also argue it's enabled us to continue spending on transfers whilst we we're doing those works.

 

[StevieM]

I used to watch “Dynasty” every Sunday at my grandmother’s. It all seemed so foreign and distant then; I had no idea I’d be living in this country some day!

Mate…. I feel the same about Neighbours!!!!

I even went and got a missus called Charlene!!!!

 

[bluebell]

Deep breath...
The articles talk about LFC paying down debt, arising from the training ground expansion, the Annie Road and covid.
I think this is slightly disingenuous. Firstly, the training ground was paid for by reduced transfer spending - basically in 2020 our net spend (accounting basis, not cash) was £61k in-flow - this would have eased transfer cash flow over the next two years as there would be no net instalments on 2020 trading.
I was somewhat surprised by the level of our transfer spending in subsequent years - I expected it to be lower, given the spending commitments for the Anfield Road and the effects of covid, but we still spent on a comparable level with normal years.
So in effect, there's an argument that the debt that is there is a consequence of transfer spending, not the other factors - they were already committed, and in the case of covid, unavoidable. It was our decision to spend on the squad (necessary from a footballing perspective, but discretionary from a financial perspective) that tipped us into debt.
As for how much debt, well I can only comment with certainty on the position at May 2022. At that time, our key "debt" balances were:


[xtable=skin1|border:0|cellpadding:0|cellspacing:0|420x@]
{colgroup}
{col=317x@}{/col}
{/colgroup}{colgroup}
{col=103x@}{/col}
{/colgroup}
{tbody}
{tr}
{td=317x19}Debt levels{/td}
{td=103x@}£{/td}
{/tr}
{tr}
{td=@x19}Bank{/td}
{td=right}

(87,133,000)​

{/td}
{/tr}
{tr}
{td=@x19}FSG (interest free){/td}
{td=right}

(71,400,000)​

{/td}
{/tr}
{tr}
{td=@x19}Transfers > 1 yr{/td}
{td=right}

(37,664,000)​

{/td}
{/tr}
{tr}
{td=@x19} {/td}
{td} {/td}
{/tr}
{tr}
{td=@x19}Total{/td}
{td=right}

(196,197,000)​

{/td}
{/tr}
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{td=@x19} {/td}
{td} {/td}
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{td=@x19}Cash{/td}
{td=right}

13,541,000​

{/td}
{/tr}
{tr}
{td=@x19} {/td}
{td} {/td}
{/tr}
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{td=@x19}Net debt{/td}
{td=right}

182,656,000​

{/td}
{/tr}
{tr}
{td=@x19}Net bank debt{/td}
{td=right}

73,592,000​

{/td}
{/tr}
{/tbody}
[/xtable]
I've included transfer debt here as it can be viewed as a form of funding (this is 3rd instalments, likely due in Jan / July 2024).
And for context, the overall debt level of £196.2m is lower than in any of the previous 5 years.
The overall debt will have gone up with further spending on the Annie Road and since that was being funded from LFC funds, it possibly puts a pinch on the bank facility (which was capped at £200m, so £127m spare capacity at the end of May 2022). It's worth pointing out at this point that the bank debt levels will vary massively during the year due to the lumpy cash flow profile of the business - e.g. a lot of season ticket / hospitality money will come in at the end of May, a lot of sponsorship income in June, transfer payments in July/August/January, and the media money at various points in the year (so clubs need to have overdrafts to fund their outgoings whilst waiting for periodic media payments).
Looking at the transaction itself, it's not clear how this is structured. Given the stated aims, the easiest (but not necessarily best) way to do it would be by a share injection - i.e. Dynasty subscribes for new shares in LFC, LFC gets the money immediately. But they may have bought shares off FSG and then FSG will need to put the money in. This would be more sensible from FSG's perspective - get the proceeds of sale, then lend the money into LFC - so shareholder loan goes up, other debt goes down. This gives them a means to pull out cash in future if they want to, and also gives us something (more) that we can convert to equity further down the line if we need to dig ourselves out of an FFP hole. I've talked about this in the past.
It's likely we'll get some indication on this in the coming weeks - when the transaction is implemented, there will need to be filings at Companies House if there's an issue of shares. If there's no filing, unless that's an oversight by the club, it would suggest sale and loan of proceeds from FSG.
FSG will also need to find some cash to pay a tax bill for the FSG shareholders as the sale of this small stake will trigger US tax liabilities, and it's probably mostly taxable gain in their hands, taxed at up to 25% including state taxes.
So I think the message they're trying to send out is that there isn't a £200m transfer war chest for January (they don't want fans to expect a mad spending spree and they don't want selling clubs to fleece us) but in truth the easing of the burden of external debt means we have more flexibility in every area, including transfers. We've also undermined our position with the Caicedo bid - we signalled that we had a lot of cash to spend, or else that we were engaged in an elaborate bluff. Neither is a good position to be in.
So I reckon that if there's a player Klopp wants in January, and we're well placed in the League, he'll be given the money to get the deal done.
In other respects, this money just clears the decks and gives us a clean slate. It's being presented as if Dynasty has paid for our infrastructure upgrades, and I can kind of see that, but you could also argue it's enabled us to continue spending on transfers whilst we we're doing those works.

Why do you think the press is giving out a range in the form of $100-200m rather than an exact figure?
Let's say its $100m, that would just clear the FSG loan, which wasn't really limiting us, but FSG wanted it off their books in which case does that give that "flexibility"?

 

[Beamrider]

Why do you think the press is giving out a range in the form of $100-200m rather than an exact figure?
Let's say its $100m, that would just clear the FSG loan, which wasn't really limiting us, but FSG wanted it off their books in which case does that give that "flexibility"?

They've been coy about what the value is, the range quoted seems to come from the Athletic article and I expect they've just asked around and managed to get some pointers.
I think FSG/LFC would use the money to pay off the external debt in priority, I'm not sure to what extent they'll pay off their own debt (that would be difficult to do within the terms of the external bank facility as they would require bank consent to do it - difficult, but not impossible). If I were in FSG's position, wanting repayment of the debt (or at least cash to the same value), I would sell shares (rather than have Dynasty subscribe for new ones) and then only put in enough cash for LFC to repay the external debt. I'd then keep the remaining cash and leave the debt in place as it would allow me to pull out further cash in future (where a dividend might not be possible) and also to plug possible FFP holes by capitalising part of it into shares.

 

[Woland]

Bit mad that they've given up equity for less than the value of Salah