Liverpool Echo: Cost control and revenue building

A report has emerged from England documenting what has been learned about RedBird Capital from their one year of involvement with Liverpool.

The Liverpool Echo Write how RedBird Capital moved into the European football market in the summer of 2020 by acquiring a majority stake in Toulouse in France’s Ligue 2. They were in chaos at the time and in need of a rebuild, and last month they got back into Ligue 1.

RedBird bought shares in Indian Premier League T20 cricket side Rajasthan Royals and also in Spanish second division club Malaga. Following that, they bought an 11 per cent stake in Liverpool owners FSG for a $750m sum.

Gerry Cardinale’s fund have teamed up with Dwayne Johnson for the relaunch of the XFL in the USA – an American football for the NFL offseason – and FSG have invested in the NHL’s Pittsburgh Penguins ice hockey team, buying then for over $900m ‘take the total value of their empire past the $10bn mark’.

Earlier in June RedBird made their biggest splash yet by agreeing a €1.3bn deal to buy Milan, aiming to move to ‘the very forefront of football investment’ with ‘the scope to grow a brand that they believe can expand far beyond its current state’ .

RedBird are described in the report as ‘business builders’ who use their vast experience with American sports to grow revenue streams among clubs in Europe, building the globally brand and increasing cash flow of the business, hence the emphasis on media and entertainment.

When considering how FSG have run Liverpool and what RedBird has learned, they do not think it is wise to ‘use capital to prop up transfer spend on players’ and while silverware is great, ‘winning trophies are something like an espresso shot to clubs’ by giving ‘a shorter term boost while not truly addressing the issue of how they generate those kind of revenues year on year’.

Essentially, the focus is on growing and maximizing revenues that can then be invested in new players to create trophy success that can happen more regularly and sustainably, from the money they generated as a business.

The report mentions how Sam Kennedy – the president of the Boston Red Sox and one of the FSG’s most influential partners – told US sports business website Sportico last year how RedBird’s investment ‘super-sized’ the ambitions of the Liverpool owners.

Through the close links FSG have with LeBron James, their next big ambition is to have an NBA team Las Vegas in the coming years and that is a project that RedBird ‘will be involved with’.

The Echo adds that RedBird’s position is to aid FSG’s pursuit of ‘growth opportunities that provide greater value for the Reds owners and that enable them to commit capital expenditures to infrastructure projects that can directly impact revenues at team level’.

Cardinale now have the Rossoneri to manage and one of their priorities is a new stadium that ‘can become Italy’s premier outdoor arena’. They also plan to use Milan’s status as a fashion capital by increasing revenue streams through reaching new demographics with Milan branded merchandise, like Paris Saint-Germain have done with their Air Jordan collaboration.

RedBird will operate Milan more like ‘how FSG operate at Liverpool than what QSI do at PSG’ meaning there will be ‘cost control and a desire to be net positive eventually when it comes to transfer spend’.

Sources have told the Echo that RedBird’s investment into Milan is something for the long-term and there is not plan to sell for quick profit, and interest there is also no conflict of regarding their involvement with Liverpool. Moreover, being a multi-club platform like City Football Group or Red Bull isn’t desired.