Fenway Sports Group Is Selling Liverpool FC
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Fenway Sports Group Is Selling Liverpool FC
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Hey Friends,
The demand for blue-chip English football clubs is off the charts.
For example, when Russian billionaire Roman Abramovich was sanctioned by the UK government earlier this year and forced to put Chelsea on the market, the club received 250 inquiries from proposed purchasers, held discussions with more than 100 individuals and entities, received 12 credible bids, and 3 last-and-final offers.
It was historical demand for a sports asset and pushed the club’s final price north of $3.2 billion — the highest price ever paid for a sports team at the time.
Of course, there are many reasons why individuals, entities, and even Gulf states, are interested in purchasing top-flight English football clubs. For starters, these assets are typically “cheaper” than their counterparts in the NFL, NBA, and MLB. They have a track record of value appreciation, and soccer is a global which has plenty of room to grow in the United States, the world’s largest economy (think TV rights).
Average Team Value Across Major Sports Leagues
And it looks like that demand is about to be tested again, with David Ornstein at The Athletic reporting yesterday that Fenway Sports Group is looking to sell its Premier League club Liverpool FC.
The American-based investment firm has retained Goldman Sachs and Morgan Stanley to lead the sales process, and they are in line to make a hefty profit.
For example, in 2010, FSG purchased Liverpool from George Gillett Jr. and Tom Hicks for ~$400 million in a forced sale by the club’s lenders after it almost went bankrupt.
And the club’s valuation now? About $4.5 billion, according to Forbes, which represents a ~7x multiple on Liverpool’s $654 million in estimated revenue over the past year.
Liverpool FC Valuation
2010: $400 million
2022: $4.5 billion (+1,025% or a CAGR of 22.35%)
Although, I would argue Liverpool supporters should be just as happy as FSG.
FSG saved the club from its previous owners and has built up a global audience (Liverpool is the most popular Premier League club in the US). They have won titles on the pitch (Premier League, Champions League, FA Cup, etc.) and invested in the club off the pitch ($300M in stadium/training renovations).
Liverpool FC Titles Under FSG
EPL: Won their first PL title (and first championship in 30 years) in 2019-20
Champions League: Won in 2018-19
FA Cup: Won in 2021-22
EFL Cup: Won in 2011-12 and 2021-22
FSG Investments In Liverpool FC
Anfield: Renovated Main Stand that opened in 2016 with ~$150 million in upgrades and is in the middle of renovating its Road Stand with ~$90 million in upgrades, which will be finished next summer and increase capacity to 61,000.
Training facility: Spent ~$65 million on a new training facility in Kirkby after moving from the club’s old facility in Melwood.
But the more interesting part of this news (for me at least!) was the timing — why would FSG want to sell a blue-chip asset in a space that is primed for growth and currently being flooded by institutional capital and oil-rich Gulf states?
Of course, part of this might be driven by the salary inflation that we are currently seeing across top-flight soccer. Oil-rich Gulf States now own clubs like Manchester City, Paris Saint-Germain, and Newcastle United, and maybe FSG sees where this is heading and doesn’t want to get into an arms race for talent to keep Liverpool competitive.
But I could also be easily convinced this has something to do with the NBA. For example, rumors have been circulating for months that Fenway Sports Group is preparing a bid for an NBA expansion team (when the NBA inevitably expands).
This would probably cost somewhere between $4 billion to $5 billion. So if you’re FSG, why not sell an asset at a massive gain when there is an excess of demand, take some chips off the table, and prepare for your next big, multi-billion-dollar bet?
Remember, NBA media rights are soon up for renewal, and I would be surprised if franchise valuations don’t double (again) over the next five to seven years.
Have a great day. I’ll talk to everyone tomorrow.
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