09 October 2010

The Pros and Cons of John W. Henry

Roy Evans, the former Liverpool manager and the last of the club's Boot Room managers summed it up for me a few days ago when he raised a note of caution (or warning depending on whatever way you look at it)...

We cant't afford to jump out of the frying pan and into the fire.

Or, if you prefer the more eco-friendly Malay version, Keluar mulut harimau, masuk mulut buaya. Not that Evans would be saying anything like that.

Anyway, within the next few weeks or so, Liverpool face the prospect of kicking out two very unwanted Americans and replacing them with 17...errr...Americans (seemingly the amount of major shareholders in New England Sports Ventures) led by billionaire turn half-a-billionaire-because-of-the-credit-crunch, John W. Henry. So, about a week after Liverpool's probably not-so-legal board accepted NESV's offer, what do we know about the club's potential new owners?

The Pros
  1. Like Hicks and Gillett, NESV also own (or owned in Gillett's case) several American sports franchises and have never been involved in sports outside of North America. Unlike Hicks and Gillett, NESV's franschises have actually been successful (and in the Red Sox case, extremely successful) after having been taken over.
  2. Seemingly, the acquisition will not place any additional debt burden on the club. In fact, it appears that part of the reason the three directors agreed to the sale was because Henry and Co. made a commitment for the complete removal of the acquisition debt associated with Hicks and Gillett's initial purchase. That would save almost GBP800,000 a week on interest payments alone. Or, to put in football terms, a whole bunch of players of the quality of the current First XI. Not bad, eh?
  3. The potential new owners are no newcomers to investing in sports so, they do realise that Liverpool badly need to develop on current facilities to compete with the Premiership's other big clubs, be it an all-new stadium or the re-development of Anfield at its current site. It's blatantly obvious. According to the latest available figures, United earn GBP40-GBP50m more than Liverpool on match day earnings alone. That's like getting two players of Torres' quality on an annual basis. 
The Cons
  1. Like most American investors in the Premiership, NESV lack any experience in sports of any form on the other side of the Atlantic. Henry is well-known to be an ardent baseball fan so, it'd be interesting to see whether the same level of passion would transfer to football and specifically, Liverpool Football Club. Failing that, the new owners would be relying on advisors and that too could easily go pear-shaped depending on who they get on board.
  2. From a technical point of view, even Hicks and Gillett kept to their word and didn't place any debt on the club. Key words here: on the club which, they didn't. But, before you release the lynch mob on me, I do realise that in reality, they did put a mountain of debt on the club's holding company which, has the same negative impact on the club. Who's to say NESV who have promised the same, wouldn't do the same either? Hmmm...
  3. A lot of credit has been given to NESV for the Red Sox's World Series success in 2004 and 2007 but, not being a follower of baseball, I certainly wouldn't be able to confirm whether the Red Sox's success can be directly attributed to NESV. For all I know, it could just be that NESV got lucky and bought the Boston franchise at the right time, when they were already on the up.
Not surprisingly, the pros do cancel out the cons leaving us back at square one. It's definitely still early days but it's heartening to know that at least Broughton, Purslow and Ayre are determined to get rid of the current bunch of Americans, no matter what their motives might be. Good luck to you three in court. Good luck to Liverpool.


Danial Ikhwan Jaafar said...

i'm not reading the cons. =P
im being a hopeful pessimist.

Chip said...

Hahaha...there's one approach to avoid all this madness. Hopefully, it'll be over sooner rather than later.

Ian Yee said...

Hey Chip, I borrowed this post for our blog. Hope you don't mind =) Cheers!

Chip said...

No problem whatsoever Ian!

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