The deal
Fenway Sports Group (FSG), the US owner of English soccer giants Liverpool, announced they have sold a minority stake in the club to US private equity firm Dynasty Equity.
Go deeper with GlobalData
The deal is understood to be worth in the region of $100 million to $200 million, which represents a minority investment of between 1.9% and 3.8%.
FSG said the cash injection will be used to reduce the debt the club incurred during the pandemic and through acquisitions made during the transfer window, as well as the repurchase of the men’s Melwood training ground.
It will also be used to cover the cost of several projects, including the new Anfield Road stand in the stadium and the new AXA training center for the Liverpool women’s team.
The company has been clear that the investment will not go towards any transfer spending, ending fans' hopes of an incoming ‘war chest’ to bolster the squad.
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By GlobalDataThe club’s debt before repurchasing Melwood and its recent transfer spending stood at around £150 million ($188 million), an amount FSG was said to be uncomfortable with, leading the company to seek outside investment to service it.
Why it matters
When FSG, which is owned by billionaire John W. Henry, announced in November that it was inviting offers for the club and that it had retained global investment banks Goldman Sachs and Morgan Stanley to assist with the process, it seemingly marked the end of the US group’s reign over one of the biggest soccer brands in the world.
The most recent sale of a Premier League team saw Chelsea acquired by a consortium led by American billionaire Todd Boehly for around £2.5 billion. A sale of Liverpool FC, however, could have seen a far higher figure.
However, in securing minority investment from Dynasty Equity, FSG has climbed down from its initial desire to sell and reiterated its wish to retain the club for now. In a statement, FSG president Mike Gordon clarified that Dynasty Equity’s acquisition does not represent the first step towards a sale.
Commenting on the deal, GlobalData’s head of analysis Conrad Wiacek said: “When Liverpool were put on the market last year, I predicted that they could feasibly look to sell for up to $5 billion based on valuations of other sports teams, especially those in the US.
“However, the market shifted considerably weeks later when it was announced the Glazer family were looking to sell rivals Manchester United. This led to a period of uncertainty and the lack of interest in Liverpool meant that FSG had to considerably shift its expectations, with the owners then declaring they would consider investment as opposed to a full sale.
“Dynasty Equity has since stepped in to provide funding to clear debts and provide funding for structural improvements, potentially freeing up resources for FSG to explore options in the US sports market, with the NBA likely to approve the expansion of the NBA following their next media rights deal.
“FSG have long been rumored to be front runners for the ownership of a new NBA franchise in Las Vegas. The investment from Dynasty Equity into Liverpool positions them to benefit from any potential future sale, as well as establishing a working relationship with FSG ahead of their potential entry into the NBA.”
The detail
Dynasty is an investment firm specializing in acquiring minority stakes in sports franchises and is run by co-founders Jonathan Nelson (executive chairman) and K. Don Cornwell (chief executive).
FSG, which also owns the Boston Red Sox of North America’s Major League Baseball, acquired Liverpool from US pair Tom Hicks and George Gillet in October 2010 in a deal valued at around £300 million (then $493 million).
Last year, FSG sold an 11% stake to RedBird Capital Partners, the US investment firm, for $750 million and also acquired the NHL ice hockey team the Pittsburgh Penguins in a deal valued at around $900 million.
Under the tenure of the US owners, Liverpool have won every major trophy, including their first league title in 30 years in the 2019-20 season, as well as the UEFA Champions League, FA Cup, and Carabao Cup.
The club narrowly missed qualification for the UEFA Champions League at the end of the 2022-23 season and currently sits fourth in the English Premier League.
However, FSG has also come under fire from supporters in recent years, most notably for its decision to form the failed breakaway European Super League (ESL).
The objection of fans to the ESL meant it was unlikely that FSG could turn Liverpool into the cash cow they hoped it could become and compete with the likes of Abu Dhabi-owned Manchester City, Saudi-backed Newcastle United, and the commercial dominance of rivals Manchester United is likely behind their original decision to cash out.
Further reading
The Business of the Premier League 2023-24
Potential new owners for Liverpool FC have fans concerned about the sport’s direction
Multi-club ownership gives investors the chance for the biggest returns
