John Henry likely had a sense of deja vu as the transfer window closed on Tuesday evening.
Liverpool owners Fenway Sports Group incurred the ire of some Reds fans for their lack of business in January, their failures to add to the deficiencies that are perceived to lie in midfield and the need to breathe some new life into a faltering campaign were not well received among many Reds.
Liverpool were actually out of the blocks quickly in January as they landed Dutch forward Cody Gakpo from PSV Eindhoven for a guaranteed sum of around £37m, but any hope that deal would be added to with further signings for Jurgen Klopp's side dissipated before all hope was gone as the clock ticked down on the final day of the window. It shouldn't have been a surprise, really, with Klopp himself having said numerous times that there would likely be no new arrivals.
Chelsea, on the other hand, have been burning through a boatload of cash under the co-ownership of Todd Boehly and Clearlake Capital, spending big and placing their chips on long contracts for young players that will result in smaller annual amortisation charges on the books being the best route to success while flying under the radar of Financial Fair Play regulations. It is a big bet that they have made, one that has its pitfalls if success does not materialise, but one that could pay dividends if the squad that they have spent so much money to assemble turns out to be a dominant force.
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By the time that January came to end, as the ink was still wet on the contract of £105m man Enzo Fernandez after he arrived to smash the British transfer record that had been held by Manchester City's 2021 move for Jack Grealish for £100m, the total spend that Chelsea had committed to their eight new additions stood at more than £320m. That figure was higher than the combined spend of La Liga, Serie A, Ligue 1 and the Bundesliga.
The approach to spending has changed the landscape, and the pace that it happened saw UEFA urged to step in and put a stop to the handing out of long contracts, a normal tactic in the North American sports which Boehly and Clearlake Capital founders Behdad Eghbali have significant investments. From next season the limit will be five years on the length of deal that can be offered to players, but by that time Chelsea will have completed their rebuilding mission.
Liverpool's approach under FSG, always a divisive topic, has remained consistent throughout their tenure. Raise revenues to reinvest in the team in a sustainable manner and sell players no longer required at top market prices to prop up spending in the transfer market. I While Manchester City may have spent big money in the pre-FFP years to build their own foundations to success, and where they have been able to add major talent at key times, they have started to pivot towards a model where spend is backed up to a greater extent by revenue and their ability to trade players at high prices.
Chelsea is a different beast right now. Football hasn't seen a play such as theirs before and it is one that is impossible to call on just how it will play out in the long run. For all the headline spend the reality is that there will need to be a return on that investment at some point given that Clearlake and Boehly are committing capital from investors to their Chelsea project right now. They believe that can reach revenues of £1bn in time as new opportunities emerge through new markets, new technologies being able to reach a global audience and a broadcast landscape that will pivot from its traditional home to a new one that will involve more direct to consumer opportunities for clubs moving forward.
For Henry, the moves being made by Boehly probably bring back some not so happy memories.
In 2020 FSG's principal owner was something akin to public enemy number one in Boston. Mookie Betts, the star player for the FSG-owned Boston Red Sox baseball team, a player who fans wanted to see the long-term future of the ball club built around to build on their 2018 World Series success, was traded.
Betts had a year left on his deal and Boston had sought to re-engage him on a longer-term deal but couldn't get to the numbers that he wanted. Faced with the prospect of losing him at the end of his contract to free agency and getting nothing in return for a generational player they traded to the Los Angeles Dodgers, a team that Boehly co-owns. Fast forward to the end of the 2020 MLB season and the Dodgers won the World Series with Betts while the Red Sox finished dead last in the American League East.
To land Betts the Dodgers were willing to go big. They offered him a 12-year deal worth $365m, a deal that made it the second most expensive contract in MLB history. It was a statement of intent and one that led to great anger back in Boston, anger that Henry and FSG had to face publicly.
In a statement at the time, Henry wrote: "The baseball organizations we compete against have become much more strategic and thoughtful about how and where they spend their resources in their quest for titles. We cannot shy away from tough decisions required to aggressively compete for World Series. That is what led to this trade.
"Free agency plays into many decisions clubs like ours have to make. Today’s players spend years in the minor and major leagues earning the right to be paid in a free market, earning the right to make choices. They make significant sacrifices to get there and they deserve what they receive.
"Clubs also have choices to make as well in this economic system.
"It’s a system that has a few imbalances as all economic systems do, but it is a system overall thathas led to labor peace and an amazing market for our best players. It is not the system’s fault that the Red Sox ended up in this position. We were faced with a difficult choice. You can talk about dollars. You can talk about metrics and value. But in the end, even though we are consistently among the highest spending clubs in baseball – with this year being no exception – we have to make hard judgments about competing for the future as well as the present."
Henry, a man who was an enthusiastic adopter of data analytics and the 'Moneyball' method when he took over the Red Sox in 2002, managed to find ways of getting his teams to compete without haemorrhaging cash and engaging in the rat race. Four World Series at Boston and a Champions League and Premier League in Liverpool, as well a host of other trophies to boot, saw success delivered. But it has become harder to go to that well consistently and at present there is a dynamic on both sides of the Atlantic where the Reds owners know that they will have to find some kind of happy medium at least in order to maintain a challenge for honours. Being successful is core to the ownership group's ability to continue to raise revenues and make their assets even more valuable.
Boehly, Clearlake and Chelsea have changed the market conditions once more, to the point where league chiefs such as La Liga's Javier Tebas have delivered a warning over the growing chasm that exists between the Premier League and the rest of Europe.
The change isn't a welcome one for FSG as what has happened is prices in the market have been inflated further due to the last in, first out policy that exists. The tone of the most recent deals sets the tone of what comes next, and that means it is going to get more expensive for everyone.
FSG are open to selling their shareholding in Liverpool, but in order for someone to be successful in that endeavour they would have to go above and beyond the $4bn-plus valuation that is placed on the team. But they are also searching for investment via an equity sale, something that would provide capital and allow them to bring on board some new expertise to help them navigate this changing landscape.
February and March are likely to see some expressions of concrete interest sent the way of FSG, something that hasn't been forthcoming yet. There are interested parties from across the globe, including the kind of private equity and institutional investment that has propelled Chelsea's spend.
Whether or not Chelsea deliver success through their model is almost irrelevant. For the rest the goalposts have been moved once again and clubs will need to react accordingly.
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