(Part one of this interview can be found here).Turns out that wasn't part two, but this is:
John W Henry turns from Red Sox to red shirts for the global gainsIn the second of our exclusive series, the US owners of Liverpool talk about their investment motives, the merits of Kenny Dalglish and the players he signed – and that thorny stadium issueIn his apartment on the 11th floor of Boston's five-star Mandarin Oriental Hotel, Liverpool's principal owner, John W Henry, and chairman, Tom Werner, watched on Fox Soccer Network what could be Liverpool's most significant match of the season, last month's 4-0 demolition by Tottenham Hotspur. For Henry, Werner and their 17 partners in the Boston-based Fenway Sports Group, their takeover of Liverpool, exactly a year ago this Saturday when the team face Manchester United at Anfield, has been marked mostly by progress and feel-good optimism.
The club's £200m bank debt was paid off as Fenway's price of buying the club, Damien Comolli was appointed director of football, the Kop's king, Kenny Dalglish, made manager, £110.5m has been spent on new players. Above all, Henry and Werner are basking in their overwhelming quality, of not being Tom Hicks and George Gillett.
Henry, naturally optimistic as a spectator – constantly believing his Boston Red Sox baseball team would turn games round throughout their record-breaking September collapse – anticipated a win, to launch Liverpool towards the cherished, lucrative, Premier League fourth place. What happened, however, was not in the prospectus: Liverpool froze, Luka Modric scored after five minutes, Charlie Adam was sent off for two bookings, Martin Skrtel followed him, Spurs were comprehensively superior.
Henry watched the Red Sox's 8-5 defeat to the Tampa Bay Devil Rays later that day with quiet but vocal despair and Werner would struggle to contain his angst. But tTheyHenry and Werner greeted the football hammering mostly in affronted silence. When Skrtel crashed into Gareth Bale for his second yellow card, with Bale on the halfway line facing his own goal posing no threat, there was no eruption of fury from Liverpool's owners at so needless a dismissal. Henry, joking, mused: "Well, we played a little better for a while with 10 men, maybe we'll play better with nine." Watching Liverpool crumple and the new, expensively-bought midfield of Adam, Jordan Henderson and Stewart Downing outplayed, Henry and his party, all fans of baseball, a game charted by numbers, seemed to need some statistical handle on it. "How many yellow cards we got?" somebody asked. (Answer: at least four too many.) At the Red Sox baseball games, I had been similar; appreciating the skill and speed, recognising great athleticism and obvious bungles, but still grappling with the rules, so a lifetime short of understanding the sport's pattern and rhythm.
With Liverpool 3-0 down, Henry mused admiringly: "Boy, did you see how far [Andy Carroll] headed that ball?" He seemed to have a touch of Dalglish's propensity to query refereeing decisions, struggling to see why Adam's downward lunge on Parker merited a second yellow. I began to offer an appreciation of the officials' skill, pointing out how an assistant referee was exactly in line with the last defender, to judge the Spurs forward's position precisely when the ball was played – then I suddenly thought: I am watching a match with the owners of Liverpool Football Club, and I am coming perilously close to explaining the offside rule.
Told relentlessly about the Premier League's huge following internationally, and that soccer is breaking through in America, you can believe it – until you actually go there. In Boston, football barely breaks into consciousness. Widely played by schoolchildren, as a spectacle it is drowned out by the giants of American sport: baseball, American football and basketball. Henry believes Americans want regular decisive action, so struggle with a game which can deliver 0-0 draws. Manchester United's 3-1 defeat of Chelsea later that Sunday was the most watched Premier League match ever in the US – just 886,000 people tuned in live, 0.3% among a population of 307m.
Henry acknowledged that, a lifelong American sports fan aged 60, he knew "virtually nothing" of Liverpool or the Premier League before buying the club. That drilled home how extraordinary it is that American businessmen, from the singular huge country with its own sports, still largely oblivious to football, have bought five of English football's greatest clubs, Manchester United, Liverpool (twice), Arsenal, Aston Villa and Sunderland. These owners' collective contribution at the big three has not been positive: £473m drained out of United in interest, fees and bank charges by the Glazers' leveraged United takeover; Hicks and Gillett almost costing Liverpool its solvency; Stan Kroenke paying more than £300m to Arsenal's English shareholders but promising, as an article of faith, no investment in the club.
His interest sparked by an email from a Liverpool-supporting Fenway employee last August, Henry fixed a meeting to hear about the club with Philip Hall, of Inner Circle Sports, New York-based merchant bankers. Inner Circle previously acted for Hicks and Gillett when they bought Liverpool and became Fenway's financial advisers on their Liverpool acquisition. During that meeting, Werner did not pay too much attention, believing he and his quintessential American partners would not venture into English football.
But Henry, as he listened to the club's prospects, found it revelatory. "A number of parallels emerged with the situation that existed in Boston when we arrived," he explained. The Red Sox and Liverpool were both historically successful clubs which had lost their dominance, and both had beloved old grounds not up to modern money-making standards. Henry began to feel Fenway could apply the same strategies at Anfield as they had to winning effect in Boston, and also make an ambitious move into international sport.
There was more to it than just wanting to win. Central to Henry's and Fenway's fascination was English football's, and Liverpool's, huge worldwide support, compared to the US-restricted following for American sports. Several Fenway executives recounted, with awe, that the Super Bowl, American sport's most prestigious event, is watched by only around 20m viewers outside the US, whereas Liverpool's 3-1 defeat of Manchester United last season attracted an estimated 500m global audience.
Hall outlined how United, under the Glazers, have made money via international sponsorships, explaining that Liverpool have room similarly to profit. They found it very attractive that, as Hall explained, in the Premier League, individual clubs keep the money they make from such worldwide sponsorship. In baseball, the teams are franchises, their income is taxed by MLB and shared, to maintain reasonable competition between big city teams like the Red Sox, and smaller teams. Thus the underdog Rays were well-equipped enough this season to dramatically knock the Red Sox out of the World Series play-offs. Werner told the Guardian he resents the amount of money the Red Sox have to share with smaller teams.
Understanding how compelling Fenway found these individual financial arrangements, it is no surprise that Ian Ayre, whom Fenway appointed Liverpool's managing director, said this week they want to break out of the collective overseas TV deal, the only income football shares. Henry, asked if the American owners will ultimately want their clubs to do their own TV deals, as Real Madrid and Barcelona do, replied: "These people [the American owners] understand media and the long-term global implications. They're going to want to reach their fans in the new media landscape. The Premier League was created in response to changing media. Audiences will drive leagues rather than the other way round."
Hall's presentation included a comparison demonstrating that Liverpool, a big "EPL" club with a worldwide following, could be bought for better value than US sports teams, with their "limited global potential". Ed Weiss, Fenway's general counsel (in-house lawyer) who would help mastermind the bloody legal battle which Liverpool's three-man board won, selling the club to Fenway against Hicks' furious opposition, explained Liverpool's appeal: "So much internet clutter competes for mindshare now. Big sports clubs are one of the few things which can cut through and capture mindshare. We have one of the great baseball teams, but its ability is geographically limited. The Liverpool numbers blew us away. We believe there is a significant amount of monetisation we can do, on a worldwide basis, which is not occurring now."
Henry was extremely taken. Just six weeks later, after rapid due diligence and that bitter court battle, he emerged blinking in the media's spotlights outside his London lawyers' offices, having bought Liverpool. Fenway had been forced to increase their price to £200m, due to the higher bid from Singapore businessman Peter Lim. Weiss said before that, they had been planning to leave some debt in. The takeover undoubtedly put Liverpool immediately in a dramatically better position – undoing the previous US takeover's damage, so putting the club almost back to where it had been in February 2007, before any takeover at all.
Fenway, like the Glazers and Kroenke, do not intend to spend their own money freely on Liverpool. Henry is firmly attached to Uefa's financial fair play rules, which require clubs to move towards breaking even, rather than make huge losses bankrolled by indulgent owners such as Chelsea's Roman Abramovich or Manchester City's Sheikh Mansour. "We wouldn't have moved forward on Liverpool except for the passage of FFP," he said. He is worried Uefa will not enforce the rules strictly, so that clubs with investing owners will remain wealthier. Henry and David Ginsberg, the enthusiastic Fenway partner who spends most time in Liverpool – a week a month – say they have put some partnership money into Liverpool, "to help with cash flow", although they would not say how much. Certainly, they clarified, it had not come from the 19 Fenway partners putting more money in, but from the group's existing reserves.
Fenway's significant first move was to appoint Comolli, Tottenham's former director of football, into a similar position at Anfield, working with Roy Hodgson, the manager, who Fenway would replace with Dalglish in January. Henry confirmed there had been no wider recruitment process for this most plum of football jobs; Comolli was appointed following the recommendation of Billy Beane, former general manager of the Oakland Athletics baseball team, with whom Comolli had struck up a friendship. "Billy became passionate about the Premier League and he became my initial adviser about the football side of Liverpool," Henry recalled. "Billy was adamant – 'There is one person who you have to hire – Damien Comolli. He has the same philosophy Theo [Epstein, the Red Sox general manager], you and I share.'"
This was not, as some have simplified it, Comolli's use of player performance statistics, although Henry says Comolli is famous for that; all clubs use such data now, mostly the Prozone analysis. "What Billy meant is we are all dedicated to finding and using every advantage no matter how small," Henry said. "We don't rest. We'll look at stats no one else will look at, employ scouting in a way that has a compelling organisational context, question everything and everyone and ensure we have the best player development curriculum and protocols."
Dalglish, as Ayre enthused this week, was the key appointment which instantly lifted the Anfield mood, embodying for Liverpool fans the "spirit of Shankly" they felt Hicks' and Gillett's misrule drained out. "I wasn't convinced when we arrived that Kenny should be back managing," Henry reflected. "Both Kenny and Damien were calculated gambles. They both have the advantage of being passionate about their work and are both very clever. We didn't feel we had a lot of time to wait, and we hope things turned around."
They did, dramatically, even before the January transfer window in which Liverpool sold Fernando Torres to Chelsea for £50m, signed Luis Suárez for £22m – a high-quality arrival for which Dalglish has credited Comolli – then Carroll, for that £35m Dalglish still finds himself defending, quite impatiently, after every match. In the summer Liverpool spent again, £20m each for Downing and Henderson, £7.5m to Blackpool for Adam, £6m for left-back José Enrique which many believe to be the best deal. Because of Comolli's presence, many have inferred there must be some statistical shrewdness to these signings, but Henry himself said it is not so simple. "Everyone is fixated on Moneyball or sabermetrics [an approach to using baseball statistics, which the book documents]. But football is too dynamic to focus on that. Ultimately you have to rely on your scouting."
Many in football remain staggered that Liverpool, with new owners famed in the US for analytical rigour, paid Newcastle £35m for Carroll who had at the time played just 18 Premier League matches. Some believe that huge fee sent a signal that Liverpool were now flush, and raised the prices for Henderson and Downing, while Adam, a fine playmaker in Blackpool's energetic 4-3-3 last season, faces a challenge adapting in Liverpool's four-man midfield. Asked if Liverpool did overpay for Carroll and the other players, Henry suggested the new owners did, to reassure fans: "There was a lot of criticism in Boston that we weren't going to spend money on the Red Sox after we did the Liverpool transaction," Henry explained. "Then there was the fear we wouldn't spend in Liverpool. Hopefully the fans of both clubs will eventually see what we see clearly – that there is nothing to fear from the existence of the other club."
Asked about Carl Crawford, the expensive Red Sox signing who attracted most criticism for poor performances this season, Henry said Crawford had only "had a bad year". But he then acknowledged: "Choosing players in any sport is an imperfect science. We certainly have been guilty of overspending on some players and that can be tied to an analytical approach that hasn't worked well enough."
At White Hart Lane, the new signings were outclassed principally by Parker, who cost Spurs £5.5m. Liverpool recovered with a 2-1 victory over Wolves at Anfield in which the central midfield again did not dominate, against Karl Henry and Jamie O'Hara. Then against 10-man Everton in the Merseyside derby – Jack Rodwell, who was effectively cancelling out Adam, having been incorrectly sent off – it was still only after Adam and Downing went off (Henderson was not selected), and were replaced by Steven Gerrard and Craig Bellamy that Liverpool finally made their breakthrough, Carroll scoring his first goal of the season. A thorough assessment, of the players signed, Dalglish's return to management and his partnership with Comolli, which Henry said works "remarkably well," has a long way to go.
The same can be said of solving the Anfield stadium conundrum, the reason why the former majority shareholder, David Moores, and then chief executive Rick Parry, said they needed to sell Liverpool in the first place. They disastrously opted for Hicks and Gillett, who made no progress, but whose £174m purchase made Moores £90m personally for his shares. A year on since their takeover, Fenway are not a great deal closer than any Liverpool hierarchy has been in the near 15 years since Moores and Parry decided a new stadium on Stanley Park was the only option. They were terrified of United, slapping extra tiers up at Old Trafford, whose 76,000 capacity Ayre referred to this week.
Fenway arrived, though, saying they wanted to stay at Anfield, believing they could do at Liverpool's home what they did with Fenway Park, a stunningly high quality and shrewdly lucrative refurbishment. Henry is clear that building a new stadium, for perhaps 15,000 more seats than Anfield, at a price currently estimated at £300m, is an expense to be avoided if possible: "If you build a 70,000-seat stadium it will cost much more than double to build than a 35,000-seater. The higher the seat the more expensive it is to construct."
They have, though, been confounded, as their Anfield predecessors were, by the neighbourhood facts: Anfield is hemmed in by houses. Weiss, and Ginsberg, have now understood that expanding would mean Anfield requiring a larger footprint, which would mean acquiring dozens of houses and knocking them down. Not all residents, defiantly maintaining family life in a desperately run-down neighbourhood pockmarked by boarded-up terraces – some, historically, bought by Liverpool and left empty – will want to sell. There is also "right to light", preventing a bigger stadium shutting out its neighbours' light.
Fenway and Liverpool have spent a year "mapping" both alternatives, and are finding the uncertainties, of potentially being stalled at Anfield, great. They seem somehow surprised that English planning laws protect neighbouring residents so firmly; in America, Weiss believes "eminent domain" laws would be more favourable to a top-level sports team, which local authorities are usually desperate to satisfy. "Approvals are needed, and it is much more complicated," said Weiss. "If all the problems of redeveloping Anfield could be made to go away, we could have a different discussion. But we started out thinking we could refurbish, now we think maybe it will have to be done the other way. But at the moment we don't have a path to Stanley Park."
Fenway's multimillionaire partners do not intend to spend their own money building a stadium; they will borrow it and ticket prices will inevitably rise to pay for it. Hence the search, so far unfulfilled, for a naming rights partner, whose sponsorship they hope would pay a substantial chunk of the building costs. "I'd like to tell you how it will play out," said Weiss, "but I can't."
It was, therefore, baffling that Werner last week stated publicly they would not consider a shared stadium, an obvious potential solution, because, he said, fans would not stand for it. With Everton, a mile across the park, also wanting a new ground, the income from two clubs' matches and events, and any contribution Everton might make to the construction, could make the difference. Fenway have conducted no poll of fans, nor boldly set out any arguments for a shared stadium, but based this dismissal mostly on already-fixed opinions on fans websites.
The new American owners, who saved a great club from the last American owners, have unquestionably lifted Liverpool's mood, spent partnership money to ballast the club, appointed Dalglish and sanctioned huge spending on players. But a year on it remains difficult to see quite how Liverpool are better off than in February 2007, before any takeover. Then the club had little debt, was heading to another final of the Champions League which it won in 2005, but faced the same conundrum: how to finance a stadium.
Henry, a disarming money man, softly-spoken, viewing the world through thick spectacles and a lifelong love of baseball, still "rarely" visits Liverpool, given his commitment to the Red Sox. Fenway bridge the Atlantic, he said, by delegating, to Ayre, Dalglish and Comolli, the running of Liverpool, and Fenway do not "override football decisions". Henry knew "virtually nothing" about the world's most popular game before buying one of its greatest names, and he always said it would be a learning curve. He and his partners, dealing with the wreckage of a calamitous September collapse for the Boston Red Sox, must hope buying Liverpool does not turn out to be a curveball.
http://www.guardian.co.uk/football/blog/2011/oct/13/john-w-henry-liverpool-boston?CMP=twt_gu
