There was little fanfare as the owners of Liverpool – FSG – announced a “strategic alliance” with Gerry Cardinale and his RedBird Capital Partners organisation on Wednesday.
Behind the predictable (and depressing) business speak of “active pursuit of growth opportunities” and “strategic acquisitions in sports, including teams and venues” in a “more accelerated way”, the facts are simple enough.
Cardinale has paid more than £530m for a stake of slightly less than 11 per cent, valuing the overall group – which includes the Boston Red Sox baseball franchise – at around £5.35bn.
For the owners, Fenway, it means getting the expertise of Cardinale, who is one of America’s most successful investors in the business of sport, on board, and also a significant cash injection.
(Image: RedBird Capital)
Before fans get carried away though, that money doesn’t necessarily go straight into the business…technically it is payment to the partners of FSG, who are effectively losing a slice of their own company.
In practice, those partners – who include principal owner John Henry and his wife Linda, chairman Tom Werner, president (and key Liverpool executive) Mike Gordon, LeBron James, Maverick Carter and former Red Sox president Larry Luchino – will use some of the cash to pay down debts, and allow their clubs to get through the financial crisis that the Covid pandemic has wreaked on sport.
Fans though, want to know what it means for Liverpool in particular, and here, it gets interesting – and potentially exciting – for the club in the medium to long term future.
There will be no huge cash sums invested into the club as a direct result of the sale of this stake, so while the links with Kylian Mbappe remain (and Jurgen Klopp is an obvious admirer of the France international) he will not be bought with Cardinale’s money. Not directly, anyway.
But that doesn’t mean the American investor will have no impact. Far from it. In the statement released by FSG on Tuesday evening, there was a significant sentence, which read:
(Image: Mirror)
“The partnership with RedBird will enhance the company’s ability to develop and launch new businesses modeled (on) successful growth companies built by Gerry Cardinale and RedBird.”
Again, business speak which brings little clarity to the average fan, but what it actually means is that Cardinale will not be a silent partner with no influence over the Liverpool club he has bought into.
FSG like what they see in Cardinale’s ambitious business plans for a sporting franchise, and intend to use his blueprint, and his knowledge, to expand significantly. And this is where it could get really exciting for Liverpool supporters.
Most observers with an understanding of how he operates are sure Cardinale has gone into this partnership because of Liverpool, and the potential the club possesses.
People close to the deal have suggested that not only is he aware of that potential, but that he now wants to own a prestigious European football club, and attempt to implement plans he says he has been developing over 30 years.
There are those close to Liverpool who believe he will inevitably, one day, increase his stake in Anfield – and perhaps even become the owner of Liverpool Football Club, buying the business out of the FSG umbrella.
(Image: 2019 Michael Zagaris)
The question is, if Cardinale (as he surely will) takes a hands-on role at Anfield, or indeed, becomes the owner, what will the future look like for Liverpool.
The answers lie in some carefully placed interviews over the past 12 months, with obscure, but well respected sports business media, where he detailed his desire to become an owner.
In a recent interview with a well regarded sports business podcast, he spoke about becoming a “rights holder” in European football, and how much that prospect excited him.
There are less restrictions than in American sports, he explained, and owning the rights to a significant player in the global football market – the most watched sport on the planet – is a huge thing, with vast potential for still untapped profit, he said.
But he has done his homework. He has worked for 30 years with some of the biggest “rights holders” in American sports, some of the most influential owners in the country’s sporting history.
He knows what is successful and what isn’t. He is aware that another American, James Pallotta, bought Italian club Roma with the same idea and same plans, and merely found a yawning money pit that never brought profit. Pallotta has sold up with his tail between his legs.
(Image: PAUL ELLIS/AFP via Getty Images)
Liverpool is different though. They are a marque brand, a globally recognised name perhaps only behind Real Madrid and Manchester United, so a world player. But they don’t have the resources of those two, nor the ability to compete financially with clubs owned by nations like Manchester City and PSG.
In several interviews over the past year, Cardinale outlined just how he would take a big player in world football and create a giant…and by then, he already had Liverpool very much in mind.
The first thing he will do is bring his business practices to the club, so maximising profits by increasing revenue streams.
His philosophy can be put simply – bring huge sums of money into the club, to pay the wages and transfer fees to “put the best players on the field”. But it is far more sophisticated than that, and will not rely solely on having the biggest wallet, though he knows it helps.
He wants Liverpool to get ahead of the competition. How he will do that will revolve around two key areas: first, revolutionising the way the sport is consumed…which means the way that people, especially younger people, watch football.
The second is to get an edge on all their rivals in finding ways to identify talent and bring it to Liverpool, without necessarily paying the superstar fees that require a risky financial commitment, like Juventus and before them Real Madrid found to such cost in recent years.
(Image: Getty Images)
Cardinale has already invested in several sports analytics businesses, and data companies, and he has a partnership with Billy Beane of Moneyball fame. He is also exploring the role data processing and computer modelling can play in sports, a so far untapped resource.
In both these areas, he may already have a key advantage. He is a major stakeholder in the Yes group, which owns the rights to broadcast the games of the New York Yankees. And one of his partners in the business is Amazon.
The connection is obvious, with Amazon now putting a toe in the football tv rights market. But significantly too, outside China, Amazon probably has the largest artificial intelligence capacity of any global company. And when it comes to computer modelling, they are groundbreaking.
So we could one day soon see real time analysis of Liverpool games, identifying their strengths and the opponents weaknesses in games, with instructions passed from the analytics team to the field as the games go on.
It doesn’t stop there either. In their statement FSG said they would use Cardinale to expand their business, and the Mirror understands they want to buy another European football club.
Cardinale himself already owns Toulouse in France’s Ligue A, and it is likely they will form a football group with clubs around the world…and Liverpool at the summit of the pyramid.
The advantages are obvious. Talent can be identified frighteningly early, nurtured at feeder clubs and then moved to Liverpool when ready. Eventually, if the analytics are as groundbreaking as they hope, they may never have the need to make superstar signings again.
On the tv side, Cardinale has spoken about changing the way people, especially young people, view the sport, and he no doubt hopes Liverpool will be able to use his expertise with the Yankees to sell some of their own rights in various packages.
The former Goldman Sachs banker has spoken of the need for the original leagues to continue to exist, for the big players to nurture the smaller clubs to allow the real competition and excitement of the underdog concept in sport.
But he has also hinted that a European Super-League – with the teams owning their own tv rights – is likely. And if that happens, it will take those involved to another level in terms of finance.
It is a far-reaching, ambitious and as yet untried plan. But it has been long in the making for Cardinale, who admitted recently that he has “got religion” over European football after studying it for so long.
And he believes there is huge money to be made, once the Covid-related losses have been ridden out. In the short term, his money will allow Liverpool to do that. In the medium to long term, it will put them in a healthier position than virtually all their rivals to grasp the future of football and shape it themselves.
And if it requires the purchase of an Mbappe, then Gerry Cardinale has indicated he is prepared to do it, if it makes complete business sense.
