For Liverpool, unlocking new commercial avenues and growing revenue streams takes on greater significance than it possibly does at some of their rivals.
The Reds, under the ownership of Fenway Sports Group, have long followed the mantra of spending within their means, something that has come to challenge the patience of some fans in more recent times given the relentless spend of some of those clubs with whom they battle for silverware.
Record revenues of £594m were posted for the most recent financial year, 2021/22, although the costs involved with the running of a club that operates at the top level domestically and on the continent were demonstrated by the fact that the profit before tax was just £7.5m, following a major wage rise of £54m - taking it to £366m - that swallowed up a large chunk of cash.
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FSG are, at present, looking to bring in investment into the football club, selling part of their stake in order to recapitalise the business at a time when there are significant financial needs that need to be met, most pointedly having the capital available to aid a rebuild of the Liverpool squad this coming summer
And next season the club might not have Champions League money to rely on given the very real prospect of Jurgen Klopp's side missing out on the top four. But one area of the balance sheet next year that should show a continued rise is that of commercial revenue, given the size of some of the deals that have been inked over the past financial year, including a considerable value rise in those with Standard Chartered and Expedia.
The collaboration between the Reds and basketball legend, and FSG partner, LeBron James, is also likely to have an impact over the next 18 months. That is due to the way that Nike’s deal with Liverpool is structured, with the club receiving a 20 per cent cut on the sale of Nike/LFC merchandise.
But aside from the obvious pursuit of ever-increasing commercial deals and aiming to grow the volume of sales when it comes to club merchandise, finding ways to keep the commercial revenue on an upward trajectory is a challenge that every club faces, but one that Liverpool seem well positioned to meet given the simpatico nature of some of their pre-existing relationships.
For the Premier League, the big cash cow has always been the value of the media rights. Now worth a combined £10bn over the current cycle, the international rights have outstripped the domestic rights for the very first time as the league’s brand has exploded in recent years.
There will be a change in the way that fans consume live Premier League games in the coming years, too. In the US, Apple’s streaming-only deal for the Major League Soccer rights that was inked last year gave rise to the idea once more that the Premier League could launch their own direct-to-consumer offering, with the idea of ‘Premflix’ something that has been kicked around for more than three years.
But given the start-up costs and the logistics of such a move, the Premier League is only likely to pursue such a course of action when the value of broadcast rights start to slump, something that isn’t predicted to occur any time soon.
Club owners in the Premier League would love to have an even bigger slice of the pie and a greater share of the say and rights, but clubs owning and distributing their own live match streaming of domestic or European games isn’t something that will be arriving any time soon, nor is it something that the gatekeepers of England’s elite competition would want to see.
But in and around live content and direct to consumer offerings lies opportunity, particularly for clubs such as the Reds, who have a global presence and a legion of fans that goes deep into the hundreds of millions. Being a rights holder or partnering with rights holders is a sure-fire way to maximise the value proposition.
In recent years there have been a plethora of sports documentaries, from the ‘All or Nothing’ Amazon offerings to Netflix’s ‘Drive to Survive’, the latter having been credited with bringing about something of a renaissance when it comes to Formula One and its international appeal.
Those have been ratings wins for both Amazon and Netflix and landed the clubs and sporting bodies who have been involved in the production a welcome financial boost of millions. But owning the content and being the rights holder has the potential to take things to a new level.
Liverpool owners FSG have a partnership with James that is set to endure. The 38-year-old, along with his long-time friend and business partner Maverick Carter, became one per cent stakeholders in FSG back in March 2021 after James accreted his two per cent holding in Liverpool. That deal was struck at the same time that RedBird Capital Partners came on board as 11 per cent shareholders in FSG following a $750m deal.
In the months following, FSG, RedBird, Nike and the makers of Fortnite, Epic Games, all took part ownership stakes in James and Carter’s ‘culture and media’ company SpringHill Entertainment.
Liverpool chairman Tom Werner hinted in 2021 that SpringHill, who produced the Space Jam: A New Legacy movie starring James himself, as well as the Netflix film ‘Hustle’ with Adam Sandler, could partner with the Reds on projects in the future.
It’s also worth noting that RedBird have a media stake themselves, making an initial $275m ‘strategic investment’ play in Skydance Media, the company most recently responsible for the enormously successful 'Top Gun: Maverick' movie.
Having pre-existing relationships with rights holders and major companies that could aid such a content push, however it may be approached in the future, gives Liverpool a position of leverage that few major sports teams can lean on.
“We’ve been asked in the past about whether it is the case that individual Premier League teams are trying to wage war on the league itself to own their own media rights,” said Neil Joyce, CEO of the CLV Group, a firm that works with sports teams to help them unlock value in their wider fan bases.
“That argument has gone round many cycles. One of those was the European Super League, the two-headed monster that they put in front of that problem to try and move it. We know where that one landed.
“Someone like Manchester United, for instance, have been investing in their own different levels of content resources in their business. Similar with what you have with Amazon and Netflix with their own content streams, the tracks are being laid.
“So, for Liverpool now it would be what kind of collaboration around content could they do with LeBron James? I know that they have looked at collaborations in that area but they should look for affinity that they have with other sports as well and whether there are affiliations that exist where they could create content packages that aren’t necessarily around the live event.
“You have to create content and packages that fans see value in. What do fans want and how do they consume content? Could Liverpool put together something on the mobile app where there are interviews with someone famous who loves Liverpool and is watching it, so second screen? That is going to be important moving forward.”
One area that Joyce believes could be exploited is in bringing together football with another major sport in a key market to tap into a new audience.
FSG partner RedBird acquired Italian giants AC Milan in September last year and moved quickly to align themselves with the New York Yankees baseball team, through both merchandise and content.
Milan merchandise is sold in New York and vice versa, while RedBird, part owners of the regional sports network YES, which broadcasts Yankee games, also agreed a deal for a weekly magazine programme on Milan to be broadcast to millions of households in the New York area.
Liverpool have obvious connections to basketball through James, but also have significant links to both baseball and ice hockey through FSG’s ownership of the Boston Red Sox in the MLB and the Pittsburgh Penguins in the NHL.
“In terms of the wider theme of innovation and bringing two sports together to create new ways of connecting fandoms, there are some interesting themes around all of that,” said Joyce.
“What is specific is that we believe cross-sport pollination across fandoms are not only good ways to show innovation around the physical stadium and maximising revenues around it, but also by unlocking new audiences in new markets.
“Within our FRI (Fan Relationship Index) report we saw that 70 per cent of NBA fans have a high affinity for European football teams. So, if you were looking to grow the presence of NBA franchises in Europe then European football clubs would be a good starting point to do that, and vice versa.
“What about the younger audience who loves Liverpool but also loves the NBA? What are the opportunities there to open up those new audiences.The way that younger people consume content is very different to the way that you or I may consume content more traditionally.”
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