‘It is coming’ – FSG wait on ‘huge’ revenue opportunity as Liverpool investment search continues

While the Premier League ‘bubble’ has been predicted to burst for some years, world football’s most lucrative and most watched domestic competition continues to grow.

Last week, analysis from Deloitte revealed that the Premier League’s revenue for 2021/22 reached £5.5bn, a figure that was more than both Spain’s La Liga and the German Bundesliga combined. It is a figure almost certain to keep growing, after bumper broadcasting deals negotiated both at home and abroad, and the continued commercial success of the Premier League and its member clubs.

The success of the English top flight has seen plenty of interest from abroad, with US hedge funds and sovereign wealth funds having taken ownership of clubs over the past two years, while Manchester United could find themselves under new ownership soon, with Qatar’s Sheikh Jassim bin Hamad Al-Thani leading the race.

Valuations, so long having trailed the price stickers on NFL and NBA teams in the US due the greater cost certainty, have soared in recent seasons. Those soaring valuations prompted Liverpool owners Fenway Sports Group to test the water as they formalised an investment search, with a figure of more than £4bn placed on the club. United’s owners, the Glazer family, are seeking £6bn plus for their asset.

READ MORE: Jurgen Klopp has quietly made Thiago Alcantara masterstroke before final year at Liverpool

READ MORE: Why Liverpool want to make Khephren Thuram their next midfield signing

FSG’s own investment search continues after the initial process determined potential partners, although there are no defined timescales on when that could come to fruition. John Henry and Co acquired the Reds for £300m in 2010, and with a valuation 13 times more of that now, the present was seen as a good time to recapitalise the business.

There is a reason why there is major interest in Premier League football clubs and why they sell for a premium. And there is a reason why FSG decided that they didn’t want to part ways with Liverpool, why the Glazers are still mulling over a deal that keeps them involved in some way, and why the Saudi Arabian Public Investment Fund were willing to push so hard and be patient over acquiring Newcastle United.

Speaking on the ECHO’s Bottom Line Podcast, head of commercial strategy at global sports firm Octagon, Daniel Haddad, said: “If you look at the trend for investment into football clubs and where that investment is coming from, hedge fund-backed investments or nation states etc, it hints that there is a large degree of confidence outside of the UK and at a global level that the football industry still has a long way to grow in terms of total economic size. You wouldn’t be seeing the kind of bidding we’ve seen with Chelsea and Manchester United otherwise.”

Liverpool were one of the key drivers behind the failed plot to launch the breakaway European Super League back in 2021. It was move that ended in abject failure, collapsing within 48 hours and seeing nine of the 12 club that had been ‘founders’ row back on their decision and forced into making apologies to their supporters as the plans were widely panned by fans, leagues, governing bodies and even governments.

Central to the idea behind the ESL was the ability for the biggest clubs in Europe to have a greater say over broadcasting rights, with the current broadcasting model seeing leagues sell their rights bundles on three or six-year cycles to multiple broadcasters. In the case of the Premier League, the broadcasting model currently yields more than £10bn over the recently renewed cycle, a figure that means the financial clout of England’s top sides far outstrips that of their competitors from around the globe.

Haddad said: “The market confidence is there. If you look back to the whole concept of the Super League it was hinting at two things. Definitely at some point, and it has been talked about to death, a breakaway from the traditional broadcasting model that still restricts football’s ability to monetise. We talk about sponsorship, and it still has a massive role to play, but it is a more traditional and transactional relationship whereas a more ad-led solution around content is funding media and content across verticals outside of football.

“I still think that there is a point where the broadcasting scenario changes, which means that the ability to monetise football content changes as well. Why I mention the Super League is that if you look through the articles of association and the memorandums that were released around that, one of the key elements was that the founding member clubs wanted to retain a lot of the broadcasting rights themselves. They either wanted to stream the game themselves, experiment with new technologies etc. One of the things that drove the Super League conversations was that if they could do it themselves they wouldn’t have to sell the rights to BT Sport, Sky or whoever, they could put it on their own platforms and monetise.

“It is coming at some point. Whether that is through a collective, such as the Premier League, or whether that is done through individual clubs or collective of clubs, that is something that will be coming and when it does, of the technology is right and it is made accessible enough there is a huge revenue opportunity through selling more digital and programmatic led advertising through the global stream.

“Let’s say 20 million people watched Liverpool and Manchester United globally. You could think around monetising that through audiences subscribing and buying passes to watch, but also the advertising around that. I think that is one area where there is a big upside somewhere in the future. The sports industry is trying to navigate that the guaranteed paychecks right now are so big that they are hard to leave behind and there would have to be a period of transition. But that kind of business opportunity is there and at some point it is unforeseeable that it doesn’t change.”

Liverpool have been clear in the stance that the ESL and their participation in it is dead. But while a new breakaway competition may not arrive with the Reds as competitors, changing competition formats will almost certainly be heading down the tracks. The Champions League moves to the ‘Swiss Model’ in 2024, where more games and greater revenue opportunities through that mean that FSG will have to do what they can to facilitate a return to European football’s elite knockout competition after a fifth-placed finish in the Premier League last season means the club they own miss out next season. Another factor they will be considering is competitive performance being strong enough to allow for access to the FIFA Club World Cup’s expanded and more lucrative plans in the coming years.

“One of the reasons the Super League was mooted was because by changing competition structures the clubs could see a way of creating more value,” explained Haddad. “That is why the FIFA Club World Cup, or the extension of that, is a pretty good idea as it fits a slot outside of the regular season, it isn’t going to be every year and, actually, you’re going to get a lot of global interest with teams from the MLS, Saudi Arabia and China too.

“You are going to get a lot of new competition formats mooted. The Champions League is changing for at least one cycle, so who knows where that ends up in the future. I think we need to look at indicators of long term what is happening in football and see what that is saying in terms of revenue opportunities rather than short term things like individual sectors investing in sponsorship. That will always change but there is a very clear ceiling in terms of revenue potential from sponsorship whereas advertising and media rights, these elements, there is huge growth potential out there.”

READ NEXT: