Over the last 2 decades, we have seen football clubs emerge as an important investment avenue for businessmen worldwide. One club that has drawn a lot of attention in the last few days is Liverpool Football Club, who are currently owned by the Fenway Sports Group, LLC, an American sports investment company.
Having rescued the club from going into administration in 2010 when they purchased the club from previous owners George Gillett and Tom Hicks, the owners are now believed to be in talks with Chinese conglomerate China Everbright, a state-backed unit, to eke out a deal which could see the mentioned group gain a minority stake in the club.
Who are the suitors?
China Everbright Limited is a financial management company primarily involved in direct investment, asset management, investment banking, and brokerage in mainland China and Hong Kong. A subsidiary of the China Everbright Group, the company operates under the direct supervision of the Chinese government.
The group’s net worth is believed to be 31 times that of current Manchester City owners and should they acquire a stake in the club, it could lead to a change in the fortunes of the club, an entity that has largely trailed behind the likes of Manchester United, Manchester City and Chelsea in financial terms in recent times.
Amanda Staveley, a businesswoman, who has previously engineered a number of high profile investments in England by Middle Eastern units, including the takeover of Manchester City by Sheik Mansour, is believed to be involved in the deal.
Does it make sense for Liverpool to part ways with a minority share?
Despite having refuted their intentions to sell the club, the news that the club’s owners are ready to sell a minority share is gaining speed. Does it make sense for them to do so?
Kieran Maguire, a Football finance expert believes the deal makes sense from a business point of view, given Liverpool’s fame, despite them not having had the best time on the pitch in recent times.
If reports from various news agencies are to be believed, the Chinese consortium values the club at £800 million, a significant rise from the £300 million that FSG forked out for the club in 2010.
Even if the owners part ways with the rumoured 20% of the stake in the club, they would recoup a cool £160 million from their initial investment for a relatively small stake in the club.
Additionally, an exposure to the Chinese economy, the fastest growing in the world, would have a positive effect on the revenues of the club, thus driving its value even further.
For the Chinese entity, a stake in one of the biggest clubs in England would be a huge statement of intent. There is growing investment in football in China, with an influx of a number of superstars into their Chinese Super League.
Additionally, we have seen Chinese businessmen take control of clubs across Europe in the form of AC Milan, Auxerre, and West Bromwich Albion and this deal, should it materialise, could prove to be the cherry on the top of the cake for China.
A decision to sell a minority stake at the club could prove to be a win-win situation for both the parties mentioned, with Liverpool gaining access to the riches of the Chinese economy and the Chinese consortium gaining a piece of English football.
Given that there is no external mechanism to ensure that the deal should be closed before a certain timeframe, the final decision will take a fair amount of time, especially with a government body involved.
Nevertheless, it finally presents the Merseysiders to make the leap from being another club with rich owners to being a club owned by mega rich owners - a move that would immediately benefit the club’s financial standing.
