SBD/September 5, 2012/Franchises

Liverpool Owner John Henry Admits Mistakes By Fenway Sports Group in Open Letter

Henry says FSG overspent on inflated transfer fees and unrealistic wages
EPL club Liverpool Owner John Henry said in an open letter that “there had been mistakes during Fenway Sports Group’s ‘difficult’ two years of ownership” and the company “overspent on inflated transfer fees and unrealistic wages,” according to Ian Herbert of the London INDEPENDENT. Henry said a turnaround "will not happen overnight." Henry “did not reveal in his letter who in the Liverpool hierarchy decided” that the proposed US$11.1M price to acquire Fulham MF Clint Dempsey was too high, “though he did hint at FSG's aversion to signing older players.” Henry: "Our ambitions do not lie in cementing a mid-table place with expensive, short-term quick fixes that will only contribute for a couple of years.” Henry’s statement “did bear out the sense of FSG as owners with an enlightened financial philosophy to ‘buy prudently and cleverly and never again waste resources on inflated transfer fees and unrealistic wages.’” The letter also “provided the latest of many Henry communications about the club's determination to adhere to UEFA's Financial Fair Play (FFP) regime.” Herbert wrote, “The owners are willing to accept a mid-table position for Liverpool this season, as the price for adhering to their philosophy” (London INDEPENDENT, 9/4).

GUARDED PESSIMISM: The GUARDIAN’s Andy Hunter noted that Henry “reiterated claims that FSG are still dealing with the fallout from the near-ruinous Liverpool ownership of Tom Hicks and George Gillett.” But Henry “accepts that FSG has itself erred in the transfer market, sanctioning a [US$191M] outlay on new players under the former manager Kenny Dalglish and the ex-director of football Damien Comolli only to sack Dalglish after one full season in charge” (GUARDIAN, 9/3). The GUARDIAN’s David Conn wrote Henry and FSG are “not even concerned about finishing as high as mid-table this season, as long as the right youngsters have been signed for the future.” Conn wrote there is "little doubt that Henry was referring to paying an outlandish" US$55.7M for Andy Carroll in Henry's "first flush of arrival into soccer in January 2011” by referring to "our own mistakes" in the letter. Now, Henry “apparently acknowledges that the Moneyball men paid way too much.” Much of the recently closed transfer window “was spent undoing the deals FSG did during its honeymoon period.” While FSG “may not want profit in terms of taking cash out” of the team, “without question it is motivated by wanting the value of the club, its property, to increase.” Henry and FSG co-Chair Tom Werner “resolved they were not going to get burned again in football which, lifelong baseball fans, they knew nothing about when they took over.” These “clever men from Boston … are still on a learning curve” (GUARDIAN, 9/3). In N.Y., Rob Hughes wrote Henry's letter was designed to "to bridge an ocean of distance between running a baseball franchise in New England and one of the oldest soccer teams in dear old England." But Liverpool fans "question whether the owners across the Pond really know the peculiar aspects of team building in soccer." Hughes: "It is clear that the learning process that Henry admits to, and that his predecessors Hicks and Gillett never mastered, has some ruinous consequences" (N.Y. TIMES, 9/4).

ZERO-SUM GAME: The WALL STREET JOURNAL’s Gabriele Marcotti wrote nearly two years after FSG’s takeover “it might be harsh to suggest that Liverpool still finds itself at square one, but progress has been slower than expected.” One of the bigger concerns “ought to be the 180-degree turn the owners made at the start of the summer, when they abandoned the two-pronged model they had introduced for a structure which concentrated power with the new manager, Brendan Rodgers.” Having “chosen the ‘coach-plus-general manager’ model less than two years ago, then abandoning it entirely -- rather than simply changing the personnel -- raises questions about the clarity of FSG's thinking.” Marcotti: “It is impossible to know whether the absence of a director of football directly led to Liverpool's somewhat puzzling transfer activity. But what appears clear is that, having ditched one model for another in little more than 18 months, it's just about Year Zero once again at Anfield” (WALL STREET JOURNAL, 9/3).
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