Fenway Sports Group think Liverpool, as a global football super-brand, should be earning much more from the Premier League’s central TV money pot, says football finance expert Kieran Maguire.
Liverpool earned £175m in prize money in last season’s title-winning campaign. This time around, with last night’s defeat to Wolves leaving them in a dogfight for the Champions League spots, it will be less.
Currently, the Premier League distributes money based on where a team finishes in the league. The only exception is ‘facility fees’, which are worth about £1m and paid to clubs every time they are on TV domestically. That leads to a financial model which is, broadly, a meritocracy.
The financial gaps between a member of the Premier League aristocracy like Liverpool and a proletarian club like, say, Wolves emerge, however, because of discrepancies in commercial and matchday income. Wolves’ total non-TV revenue last season was around £45m; Liverpool’s was £444m.
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Higher core revenues beget higher playing budgets, which more often than not begets European football, which begets huge prize money and even bigger playing budgets. It’s a virtuous cycle – for the elite, at least – which has served FSG well since they bought the club in 2010.
John Henry and his posse, which now includes about 35 individual FSG shareholders, have made Liverpool financially self-sufficient where other owners – Arsenal’s Stan Kroenke and Man City’s Sheikh Mansour, for example – have injected hundreds of millions if not billions. For that, they deserve credit.
As a result of this self-funding approach, raising revenue is more important to them than many of their peer group. And the Premier League’s announcement of a new direct-to-consumer streaming platform – launching in Singapore as trial run for a potential worldwide service – could be the next revenue panacea.
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The direct-to-consumer, or ‘D2C’ approach as it’s known in the biz, involves cutting out the middle man and selling streaming passes direct to fans. Domestically, the middle man is Sky Sports and TNT. Globally, the Premier League will be paid £6.7bn by middle men in the current rights cycle, so moving away from that model would clearly be a roll of the dice.
But should the Premier League adopt this model, the question is whether they would retain the same distribution system. Clubs like Liverpool, who Nielsen data says were the most watched Premier League team last year, argue that they should be given a bigger cut.
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However, after spending nearly £250m net on superstar signings in the summer and ramping up the annual wage bill to somewhere around £450m, is Reds’ implicit advantage over the Premier League’s middle and lower classes not significant enough?
Not according to FSG, say University of Liverpool football finance lecturer Kieran Maguire, who is well connected in club ownership circles. Speaking exclusively to Rousing The Kop, Maguire said: “The irony is that you have American owners who are involved in franchise sports in the US where collective bargaining is very much the done thing, and it’s something they are quite happy to protect because their teams don’t necessarily have the biggest and best brands.
“But because they have one of the biggest brands in world football with Liverpool, they want to go direct to that fanbase as opposed to collectively bargaining through the Premier League.”
As well as Liverpool, FSG own Major League Baseball’s Boston Red Sox, NASCAR’s RFK Racing and Boston Common Golf outright, as well as stakes in the PGA Tour and NHL outfit Pittsburgh Penguins. They have also been consistently linked with acquiring an NBA franchise.
To varying degrees, each of those businesses benefit from closed-shop league systems, flat financial distribution systems and built-in spending caps which all but guarantee profits.
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“The devil will be in the detail,” Maguire continues, musing on how the money from a D2C platform might be distributed among clubs.
“If Singapore is successful, Liverpool will be able to say ‘look, you have the data now for how many people watch Liverpool matches – we are being underpaid, because we are delivering the biggest number of viewers, so we’ll only sign up for the broadcast deal if there is a change in the way that Premier League TV money is distributed.’
“This will increase the already significant lack of competitive balance when it comes to revenue in the Premier League.”
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