As Fenway Sports Group continue to assess their position as Liverpool owners, there will be several options for them to consider.
Ever since The Athletic first revealed last month that FSG were open to offers for the Reds, there have been numerous links made with potential bidders, from sovereign wealth funds to US private equity.
The FSG position, well-placed US sources informed the ECHO, is that their move to open themselves up to expressions of interest in a full takeover was explorative, with the the club having been searching for outside investment through major American banks Goldman Sachs and Morgan Stanley for more than a year.
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Sources told the ECHO that a "strategic partner" remained the preferred outcome, something that would involve FSG selling an equity stake in the club. The same sources said that there wasn't a strong desire from FSG principal John W. Henry to sell the club, while some other minority partners such as RedBird Capital Partners, the US investment fund that paid $750m for an 11 per cent stake in FSG's empire back in March 2021, also view strategic investment as the best-case scenario given the relative infancy of their investment.
FSG remain open to selling the club if they receive a premium price, with anything under $4bn (£3.3bn) unlikely to pique the interest and spark serious conversations.
It is understood that no serious talks have taken place as yet with any kind of strategic partner, and while there has been interest from both the US and Middle East, the ECHO have also been told there is nothing that has travelled far down the line when it comes to talks, with any interest from parties remaining in the early stages.
But what might a "strategic partner" mean, and why would such a move have benefits?
While Henry isn't in any rush to part with Liverpool, the ECHO understands that there are some minority partners who may be keen to exit. FSG is made up of 30 partners, the majority being individuals. The largest shareholdings are held by Henry, who holds around 40 per cent, with Mike Gordon, who had until recently been the eyes and ears of FSG on Merseyside and someone who had built a strong rapport with Reds boss Jurgen Klopp, owing around 12 per cent. RedBird own 11 per cent while no other shareholder holds more than a 10 per cent stake.
Any final decision on a sale would be made my the majority shareholder, which is Henry, although he would seek the council of his fellow investors before embarking on such a decision.
At this point it seems unlikely that FSG will seek to engage a private equity fund to provide capital, at least likely not a passive investor. Should minority investment arrive it will likely be in the form of an active partner willing to lend not only capital but expertise to aid further growth.
A strategic partner, such as the investment arm of a media and entertainment or technology company would appeal, the kind of partnership that would allow for their expertise to be utilised to help FSG continue to scale Liverpool as a business and open up new avenues of revenue. They may come in and clear out anyone who wishes to cash in their investment and take a shareholding through those means.
Sports team valuations have risen massively in recent years and those who got in early will have seen enormous returns on their investments, FSG among them. Valuations are showing signs of slowing, but while there is growth and perceived growth opportunity, with some US investors feeling that the Premier League is far behind North American sports when it comes to how to monetise teams, the live event and content, there is some runway left to travel, which is why it has attracted private equity. To some, what the capital provided is used for is immaterial, it is the entry price and exit fee that is key to where their returns lie.
Gerry Cardinale, the founder and managing partner of 11 per cent FSG stakeholder RedBird, said in an interview with Sportico in December of 2020: "Making an investment is easy, what’s not so easy is owning these things well. What we really look for in what we do is owning it well.
"I look at these teams like mini Disneys. They are multinational conglomerates, the trouble is they didn’t start that way and technology has both enabled it and challenged it and it has to keep evolving.
"You have to run these great pieces of intellectual property like Disneys. I admire what they did and they went out and were ahead of the curve and bought other forms of intellectual property and plugged them in to an infrastructure that monetises them and doing that very accretively. I look at sports teams the same way and they have got to keep doing that.
"The teams I have worked with have all done that and they are going to keep on doing that."
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