Amid the fanfare of Michael Edwards’ appointment as Fenway Sports Group’s (FSG) chief executive of football on Tuesday was an acceptance that Liverpool need to change.
A new era without Jurgen Klopp will now be crafted by Edwards, Liverpool’s former sporting director, and included in the plans are the ambitions to invest in a partner club.
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The multi-club ownership model is coming to Anfield, with Edwards believing Liverpool have little choice but to expand if they are to “remain competitive” in the Premier League and beyond.
It is a clear shift in strategy for Liverpool, a club that has so far gone it alone in contrast to many of their big rivals. The Athletic analyses the key questions it poses.
What exactly is FSG proposing?
Falling in line with the Premier League crowd, effectively. Well over half of the 20 English top-flight clubs now have relationships with at least one other European club and the pattern has been extended in the past 12 months.
This is Liverpool having to keep up with the Joneses, as Mike Gordon outlined in an email to staff yesterday.
“Global football has changed immensely over the past several years, becoming increasingly sophisticated and creating myriad challenges,” Gordon wrote.
“To remain competitive, we must identify every avenue available to us to gain an edge. To this end, Michael (Edwards) will use every tool at his disposal and has already identified the acquisition of another club as one channel that will help fortify our overall operation and drive our competitive ambitions.”
Liverpool had previously resisted the trend set by Manchester City’s ownership, who have amassed 13 clubs around the globe under the City Football Group (CFG) banner — including Girona in Spain, Palermo in Italy and New York City in the U.S. – but there is an acceptance that the advantages of a multi-club model cannot be overlooked.
“This in no way takes away from the focus, attention, care and, most importantly, the investment in Liverpool,” added Gordon. “In fact, we see it as a path that will help strengthen our club for the future.”
Is this all linked to rehiring Edwards – or was FSG planning to do this anyway?
It has long been mooted that FSG was open to buying another football club to run alongside Liverpool. There were links to as many as four Brazilian clubs – Cruzeiro, Botafogo, Athletico Paranaense and Internacional – but Billy Hogan, Liverpool’s CEO, suggested last summer that it had ceased to be a priority.
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“For certain clubs, (multi-club ownership) makes sense,” Hogan said during the SportsPro Media APAC conference in Singapore. “But from our perspective, at the time being we’re focused on what Liverpool is doing.”
The door was never closed, but Edwards’ return presents an opportune moment for Liverpool to press ahead with a strategy that undoubtedly appealed to the ambitions of FSG’s new man. The chance to expand the FSG stable was a factor in quietening Edwards’ initial reticence over a Liverpool return.
“It was vital for me that, if I did return, it had to be with renewed vigour and energy,” Edwards said in an FSG statement yesterday. “In practice, this means having fresh challenges and opportunities.
“As such, one of the biggest factors in my decision is the commitment to acquire and oversee an additional club, growing this area of their organisation. I believe that to remain competitive, investment and expansion of the current football portfolio is necessary.”
That last word is key. For Liverpool, this is no longer a strategic choice, but essential.
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What kind of club is likely to be targeted and where?
There is a pattern to the clubs targeted by those in the Premier League seeking expansion: big enough to compete in the top division of a domestic competition without costing the earth to buy.
Liverpool are unlikely to break that trend and will seek a club willing to buy into their long-term vision.
The South American market, particularly Brazil, has already been assessed by FSG, but the preference for this first step will likely be a European club.
The United Kingdom’s vote to withdraw from the European Union in 2016 has led to complications in recruitment, with Brexit making it more difficult for overseas players to obtain a work permit to join English clubs.
Owning a European club helps circumvent those rules, presenting the chance for a player to build up his qualification criteria in another league. It could also give a temporary home to promising under-18s from the continent, who are no longer eligible to sign for English clubs. The push to form partnerships with European clubs in the past five years has not been a coincidence.
What are the possible benefits to Liverpool?
It is not a term any executive likes to use — not when it is so disparaging to those lower down a multi-club pyramid — but the chance to use others as ‘feeder clubs’ has an increasing appeal to those in the Premier League.
As well as the edge it can offer in the recruitment of youngsters, it also gives a chance to develop Liverpool’s own talent. There is greater control over a youngster’s progression when sent to a partner club, with the multi-club model typically asking all its teams to play in the same style.
Chelsea owner Todd Boehly summed up the motives well enough. “Our goal is to make sure we can show pathways for our young superstars to get onto the Chelsea pitch while getting them real game time,” he said last year.
Youngsters can be loaned out knowing they will get opportunities and minutes at a competitive level, something that cannot always be taken for granted. That might not lead to that player enjoying a career with the biggest club in the stable, but it will likely see them build up a greater residual value. In these times of tightened profit and sustainability rules (PSR), these are the gains that can make a difference.
There is also the opportunity to share scouting analysis and data when part of a multi-club model, casting the net wider and further, as the Red Bull group, featuring Leipzig and Salzburg, has done so impressively. This all leads back to Gordon’s spoken ambition to strengthen Liverpool.
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And what are the drawbacks?
It is not always sweetness and light, as Chelsea have discovered owning French club Strasbourg this season. They are in danger of relegation from Ligue 1, with supporters growing restless about their role in the bigger picture.
There have also been protests at Lyon against John Textor’s Eagle Football Group, as well as at Lorient, where Bournemouth owner Bill Foley’s Black Knight Football Entertainment has a stake. 777 Partners, currently attempting to complete a protracted takeover of Liverpool’s city neighbours Everton, has had issues with clubs in its stable.
Others have also run into problems when two clubs from the same group have ended up in European competitions together.
UEFA prohibits partner clubs from facing one another and that ruling threw up problems ahead of this season when Brighton & Hove Albion and Belgian club Royal Union Saint-Gilloise both qualified for the Europa League. Brighton were eventually able to feature after UEFA were persuaded that owner Tony Bloom did not have decisive influence at Union.
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Aston Villa had the same issue and their Portuguese partner club, Vitoria, joined them in the Europa Conference League this season. Villa’s owners, Nassef Sawiris and Wes Edens, were eventually forced to reduce their stake in Vitoria to comply.
Liverpool, by extension, also saw problems encountered by AC Milan and Toulouse. RedBird Capital Partners, which owns an 11 per cent stake in FSG, has control of both European clubs but was able to convince UEFA both ought to be able to compete. Included in UEFA’s conditions on all those cases was that no partner club could transfer players between one another until after this summer’s window.
Will this be the same model used by City and Chelsea, and will more clubs be added?
The premise will be the same: to form beneficial partnerships and reap the competitive advantages they bring. Replicating Manchester City’s model, however, would take enormous resources and time.
City have been at this for over a decade, planting roots in North America, South America, Australia, Asia and Europe. Their influence spreads far and wide under the CFC umbrella.
City’s approach is being imitated, but no one has shown a willingness to replicate its breadth and FSG, an organisation conscious of its financial limits, is not expected to try.
Chelsea embarked on their multi-club mission last summer when buying Strasbourg and more are expected to join the BlueCo — the consortium that owns Chelsea — stable.
Liverpool are yet to indicate how ambitious their plans for a multi-club model will be, but Edwards has returned believing expansion is a must.
(Top photo, from left: FSG executives Billy Hogan, John W Henry and Tom Werner; by Andrew Powell/Liverpool FC via Getty Images)