Thursday, October 14, 2010


Something aimed at a more English audience than ours, but here's what I wrote for yesterday. It was a sort of response to another opinion piece on the site that criticized the NESV purchase, but I tried not to sound petty by just rebutting what the other guy said. So it stands on its own. Here it is:

Liverpool supporters are going to like NESV. The only reason I don't say love is that supporters don't usually identify with their clubs' owners in such a tight way. As owners go, however, Liverpool fans will like this one.

John Henry led NESV's purchase of the Red Sox in 2002. He came from a successful commodities-trading and hedge fund career, and although he was a lifelong baseball fan, he had limited experience in that particular business so far. In fact, his four years as the Florida Marlins owner were relatively forgettable.

Despite this disposition, NESV's ownership of the Red Sox has been a solid hit, in terms of both baseball success and financial discipline. They've made the playoffs in five of the last seven years, including two league titles and a dramatic semifinal loss. They've also had one of the highest payorlls in the league year in and year out, while simultaneously coming good on their goal when they took over to turn the farm (youth) system from one of the worst to one of the best in the league. These days, Red Sox fans ahve come to expect to see the team leaders be home-grown. That last point especially is something we never saw before NESV bought the team.

Why did the genesis of NESV result in such a successful ownership in Boston? An important thing to remember is that, whereas Henry personally owned the Marline, NESV is more than just John Henry. Per temporary Liverpool chairman Marin Broughton, whom we all know by now, NESV is "a serious investor" with seventeen "serious investors in it."

When asked what separated NESV from the other finalist bidder of similar monetary value, Broughton harped about its track record before stopping abruptly to conclude, "They're going to add a lot of value to Liverpool Football Club." This diversity of experience is what makes NESV such an attractive owner.

The group has already proven to be adaptable. Although it has never owned a professional soccer club, it has successfully owned a NASCAR team, a television network, and various sports marketing projects.

One of NESV's strengths is its ability to put the right people in the right positions. For example, Henry himself is not the hands-on manager at Roush Fenway that he is with the Red Sox. In his words, "I'm simply not nearly as involved with Roush Fenway as I am with baseball. [Co-owner] Jack [Roush] knows what he's doing, and I'm sort of there as a resource for Jack."

Even with the Red Sox, where Henry is especially involved, the team's success has come largely from the person Henry put in the most powerful baseball operations position, the president and general manager, Theo Epstein. The ability to intelligently allocate charges will be another valuable asset when NESV enters another business that's new to them.

Not that Liverpool supporters are unanimously excited by this group's imminent arrival. In fact, most of them that I've heard are cynical about it (which is why I'm writing this piece). The most audible trepidation in the media is that John Henry is from the United States.

Well so am I, first of all. While I'm slightly offended by some of the commentary I've been reading and listening to, it's understandable that Liverpool supporters would be reluctant to give NESV the benefit of the doubt, having been burned almost to the ground by two of the least-successful sports club owners in recent American memory.

However, the view that American owners of English clubs always fail is inaccurate. Manchester United have won three out of five league titles and a Champions League title since Malcolm Glazer became the owner. And in financial terms, if the rejection of Pini Zahavi's 1 billion pound bid for the club earlier this year is any indication of its value, it's not in nearly as much trouble as Liverpool is, which is about to sell for about three tenths that amount.

You can also look to Sunderland's owner Ellis Short, who brought over Steve Bruce immediately after buying the club, and has provided funds for major player purchases such as Darren Bent, Kenwyne Jones, and Asamoah Gyan. Sunderland are currently 11th in the league, and have drawn both Arsenal and Manchester United at home this season.

Even Randy Lerner has been a successful owner at Aston Villa. His sales of Milner and Barry, and the departure of Martin O'Neill, are due to lack of ambition, not a misunderstanding of the English Premier League. It's worth mentioning that both Lerner and Short have been Premier League fans since they went to school in England.

Please do not condemn NESV just because they're American. IN addition to what I've already written, consider some other qualities that may explain the difference between NESV and the Hicks-Gillett tandem.

Hicks is in the process of losing his Major League Baseball team, the Texas Rangers. It ended in federal bankruptcy court, and it happened that a second bid (a higher bid) was made while the court case was going on. Hicks tried, unsuccessfully thus far, to accept the late offer instead, due absolutely to its higher monetary value. Sound familar? As he is trying to hold onto Liverpool under threat of administration in search of a higher price, so he is fighting tooth and claw to sell the Rangers to the deliverer of the improved-- late-- bid in that case.

Here's another nugget. In 2009, Sports Illustrated ranked NESV the best ownership group in the league. Hicks was second to last. Are you starting to get a better picture of the difference between the two owners?

For those of you concerned about the abuse of debt financing, don't worry. Again, appeal to Broughton, the most highly qualified authority on the sale given his position and resume: "If you look at Hicks and Gillett, they've leveraged up lots of their different businesses. That's what the nature of the game was as far as they were concerned."

Their failure at Liverpool, therefore, is possibly due not to their country of origin, but rather to their financial indiscipline, which has made them incompetent at owning professional sports clubs generally.

On NESV, however, Broughton explains, "That's not their track record...These are not leveraged people. NESV is not a leveraged entity." Therefore, do not clump NESV, Hicks, and Gillett under the same umbrella just because they are all from the United States; NESV is very different from the other two in the way it operates.

For those of you who watched Martin Broughton's interview on BBC or SkySports, to which I've repeated alluded, you'll remember his caution to Liverpool supporters, which he relayed from NESV itself: no hostages to fortune. In other words, NESV did nto make any promises on which the sale hinges, like you hear from candidates in football club presidential elections in Spain and in other countries. This group knows too well, from experience, that titles can be decided by paper-thin margins (so do you, Liverpool supporters from 2005).

It also knows one final thing: the future is unpredictable. Just because you haven't seen something before doesn't mean it can't happen. NESV bought the Red Sox because they didn't believe inthe Curse of the Bambino; instead, they believed in facts. Science. There are actual reasons the team hadn't won a league championship since 1918. Just because Liverpool haven't seen an American owner succeed at their club-- and indeed have seen two spectacularly fail-- doesn't mean an American owner can't succeed.

John Henry, in particular, is bold. He said in an interview in 2007, when asked about the future of the economy, "The only thing I can tell you about the future, I believe, is that it's going to be surprising...Events occur that radically change the world. I subscribe to that theory." NESV changed the baseball word, and many people's lives, believe it or not, in 2004. They might do it again with Liverpool.

I'm not saying that Liverpool will win the league next season. Or in the next five. You'd never suddenly expect that due solely to an ownership change. But don't be cynical before you give the new group a chance. I think a good state of mind is optimistic. While the group doesn't represent the endless pockets experienced at Chelsea and Manchester City, it possesses something possibly even more valuable: really smart people.

1 comment:

  1. This has all turned into quite a saga. The only winners are the lawyers!