Liverpool's owners battle boom and bust after Boston Red Sox stumbleThe Boston Red Sox success story came crashing down last month but John W Henry and Fenway Sports Group believe the same approach can benefit LiverpoolFor the owners of Liverpool Football Club – John W Henry, Tom Werner and their partners in Fenway Sports Group – the honeymoon is over. After a calamitous run of results, the group famed for shrewd-value "moneyball" player signings are accused of wastefully overspending, fans are in uproar, the manager has departed. The owners, on the defensive, are accused for the first time of having their focus diverted by the other club they own across the Atlantic.
This is not some nightmare future scenario for Liverpool, which Henry and his partners have owned, to mostly positive approval, for exactly a year this Saturday, when Liverpool face the club's modern nemesis, Manchester United, at Anfield. It is a crisis unravelling right now at the other major sports club Fenway owns and which, in reality, consumes much more of its focus: the Boston Red Sox baseball team. After the most catastrophic collapse in the final month of a season in baseball history, the Red Sox blew a nine-game lead in September to be pipped for the "wild card" – second‑place qualification for the post-season play-offs – by the much less financially resourced Tampa Bay Rays. In America, this is a huge sporting story, yet in Britain it has barely registered, despite the Liverpool connection.
Terry Francona, the manager of eight years who won World Series in 2004 and 2007, has gone, the general manager, Theo Epstein, has reportedly signed a deal this week to join the Chicago Cubs, and, with criticism of the players' physical fitness rampant, Henry has promised: "The organisation will have a self‑critical examination."
Last month, with Liverpool due to play Tottenham Hotspur at White Hart Lane – they would be crushed 4-0 – and the Red Sox playing four successive games against the Rays, Henry granted the Guardian three days' exclusive access and interviews in Boston, with him, the Liverpool and Fenway chairman, Werner, and key senior executives at Fenway Park, home of the Red Sox. Watching the games with him, and talking at length, afforded the most revealing insight yet into Henry, his and his partners' careers and approach to owning sports clubs, and their motivations for buying Liverpool in that bitter court battle against Tom Hicks and George Gillett, the previous American owners, 12 months ago.
Henry confessed that before he bought them he knew "virtually nothing about Liverpool Football Club nor EPL". That is the abbreviation Americans use for the English Premier League, in a country where the major sports leagues are the NFL, MLB, NBA and NHL. Werner said he, too, had barely heard of the club: "I had been in sports so I was aware of the EPL and its strength globally," Werner said. "But I didn't know the inner workings of it. I certainly knew about Manchester United."
It adds up to the most revealing picture of any of the US buyers, who come from a country still largely oblivious to football yet who have somehow become owners of five of the English game's most prestigious clubs: Liverpool, Manchester United, Arsenal, Aston Villa and Sunderland. Henry and his colleagues explained they were drawn to Liverpool by the challenge of restoring a great sports club to winning ways and solving its stadium conundrum, as they did for the Red Sox in Boston. But it was also clear they were attracted, centrally, by learning about the huge support the Premier League and Liverpool have on television and the internet worldwide, compared to American sports whose following remains mostly restricted to the US. The prospect of being able to make huge money from media and sponsorship with that global reach led them to buy Liverpool.
Henry, though, is clearly keenly worried about a backlash from fans at both clubs, who may accuse the owners of concentrating too much on the other – a reaction that erupted in Boston last week with vitriolic press criticism of Fenway's "dysfunctional" organisation and Henry's involvement with Liverpool. He suggests he and his partners, contrary to their image of frugal, statistics-based player signings, in fact sanctioned major spending partly to allay that concern. The Red Sox spent $300m (Ł190m) on "payroll" – wage commitments – before this season on two left-arm hitters: Carl Crawford, signed for $140m wages over seven years, and Adrian Gonzalez, $154m. Kenny Dalglish, since being appointed Liverpool manager in January, has paid Ł110.5m in transfer fees alone for Andy Carroll (Ł35m), Luis Suárez (Ł22m), Jordan Henderson (Ł20m), Stewart Downing (Ł20m), Charlie Adam (Ł7.5m) and José Enrique (Ł6m).
"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 said. "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."
In the proud, cultured city of Boston, this is Fenway's first crisis in a story of previously shining success since Henry, Werner and partners bought the Red Sox in 2002, and hired Epstein, a protege of the chief executive, Larry Lucchino, to overhaul player recruitment. They inherited expensive plans for a new stadium but ripped them up, opting instead to refurbish Fenway Park, the grand, original, 1912 inner-city ballpark. (They do not use the word stadium, Lucchino firmly explained, just as they have trained themselves with admirable discipline not to refer to Liverpool as a franchise or football as soccer.)
Henry said from the beginning they always wanted to stay at the renowned old place: "Why would you leave a beautiful, historic ballpark unless you absolutely had to? The previous ownership believed the best way to compete with the New York Yankees was to build a brand-new ballpark, which would have generated tremendous revenue. We chose to refurbish Fenway Park because after a great deal of study we were able to determine it was, in fact, doable."
The group has asked that same question at Liverpool, where it inherited designs for a prohibitively expensive new stadium on Stanley Park, but it has found the legal planning obstacles to redeveloping Anfield, still its preferred option, so far intractable. At Fenway Park, with more of the expansiveness of a cricket ground than a football stadium, it was able to develop gradually, make good money from relatively cheap improvements, and invest the income back into another upgrade, until the group completed a splendid refurbishment, costing $285m since 2002, all with reinvested income.
The renovation has generated a great deal more income, partly from increased ticket prices. The first move, Henry recalled, was to introduce two new front rows of seats, for which fans pay a high premium. They later added extra tiers, the Coca-Cola Corner and Budweiser Deck, where a party of 20 can sit at tables for $22,000. Corporate boxes, overhauled, sell for $250,000 a season. Some fans can still stand in one row at the back of stands for $25 or $30; the seats in front of them cost $90. The 274 seats installed in the Green Monster, the famous wall above the scoreboard, are favourites, costing $165.
At these prices, the crowd at games appears comfortably middle class and is overwhelmingly white, largely missing the age group also substantially priced out of Premier League matches: young people in their late teens and early 20s. It is, though, striking how many girls and women there are, and baseball is clearly a date, young couples snuggling closer as night draws in. David Ginsberg, a former hedge fund financier, now the Fenway partner who spends most time in Liverpool – "Around a week a month," he said – smiled, watching families on the Budweiser Deck guzzle beer, Coke, hotdogs, popcorn, peanuts, ice cream, chips. "I wondered why there were so few women at Anfield. But it's more social here, isn't it?"
For the English visitor abroad in Boston and innocent of the weighty expectations riding on the games, baseball at Fenway Park is a lovely sporting experience, a privilege. The early autumn sun setting golden over the ballpark, the game's attractive geometry, the well-catered-for crowd hugging the action … Fenway Park weaves a seductive appeal. If you are watching sport at a level on which the very rules must be explained, you can enjoy the spectacle detached from emotional investment in the result. With The Star Spangled Banner sung before the game by the pure young voices of Scouts or glee clubs, the baseball frames an idealised vision of how much of middle America would like to see their country. To the English eye, the Red Sox fans, agreeable enough even in defeat, seem a world away from a sporting passion that anybody could possibly describe as more important than life and death.
Henry watches from his owner's box above the hitter's plate, present, with his wife, Linda, at almost all the games at Fenway. The volume of matches, 162 a season, and the work required in the "offseason" mean, Henry said, he can be at Liverpool matches only rarely. "There is a rhythm of nightly baseball games. I couldn't give that up," he said. "And I love that. I'm rarely at Liverpool matches. If I had two lives I would spend one in Europe, but I don't."
In the agonies of defeats to the fitter and more united-looking Rays, Henry was an optimist to the last, a foil to Werner's nervy exasperation. With two men out in the ninth inning and the Red Sox 8‑5 down, Henry still saw possible salvation from the last man standing: "OK, we need a home run." Yet watching hitters striking out or fielders fumbling, at times he swept his fingers through his hair, whispering to himself: "That is unbelievable."
Werner, a celebrated Los Angeles TV producer of series including Roseanne and The Cosby Show, is more a pacer and shouter: "Come on!" he yelled in frustration. They came together with Lucchino and 16 other partners to pay $700m for the Red Sox, and the baseball franchise's truly lucrative arm, the pay-TV station New England Sports Network, which has the rights to show the games regionally.
Baseball has always had owners; the teams were commercial ventures from the beginning, not formed as member associations, like most football clubs here, where for 100 years shareholders were prohibited from taking money out. The teams are literally franchises, licensed by Major League Baseball, which tries to ensure a level playing field between high-earning big city teams and smaller ones. All clubs' income is taxed, then shared out, a system Lucchino described, drily and without obvious enthusiasm, as "very socialistic". Werner was quite open that, as a richer franchise, Fenway resents how much money it is taxed, which is not publicly disclosed. "It is a balance," he acknowledged. "We realise we are part of a league, but we feel the burden on the top is higher than appropriate. We feel we deserve the fruits of our labour."
It became quickly clear, talking to them, that a prime attraction to the Americans of buying English football clubs is that in the Premier League the clubs keep all the money they make, from everything except television rights. So it was no surprise that the managing director they appointed, Ian Ayre, talked this week about beginning the break-up of even that, the collective TV deal. "That is the difference with the EPL," Werner said. "If we can generate interest in Liverpool here and around the world, we will benefit from that."
Henry still talks about baseball as a passion rather than a financial investment, but it is clear the 19 Fenway partners expect to make money out of it. Ed Weiss, Fenway's general counsel – in-house lawyer – explained the approach of the partners, who have never so far taken a cash profit out: "If you were interested in pure financial return, sport would not be your path, because it is not liquid. That said, everybody would want to make some return for their investment." The one partner whose financial figures are public, because it is listed on the stock exchange, is the New York Times Company. It paid $75m to become 17.75% owners in the original 2002 takeover. Last year it sold a small stake for a reported $14m. Three months ago it sold around 10%, for $117m – that makes $131m realised, a $41m profit, and still the company retains a 7% stake.
The Fenway partners made their money in diverse fields before they invested in baseball. Henry grew up on an isolated Arkansas farm, his father seriously ill for much of John's childhood, and baseball was an escape that became a lifelong passion. Listening to the St Louis Cardinals on radio commentary, he said, "filled my room with players and magic". Gentle in manner behind thick glasses he has needed all his life, and famously softly spoken, Henry played in rock bands and, in his early 20s, was a professional gambler in Las Vegas, using a mathematical approach for the casino game of 21. Inheriting his father's farms, he moved into grain trading, where he developed an analytical system based on identifying long-term trends, which led him to the fortunes he ultimately made trading for major financial firms.
His first baseball stake was in the New York Yankees, baseball's giant whose rivalry with the Red Sox parallels Manchester United's with Liverpool. He described buying into baseball as "a great stress reduction", not primarily an investment. American sports owners move around; they are not tied by support to a particular club. In 1998 Henry bought the Florida Marlins, stayed for three years, then left after he was unable to get a new stadium approved and paid for with public money by the Florida senate. Werner was a partner in the San Diego Padres, where Lucchino was chief executive. In dizzying multiple trades, Werner sold the Padres, Henry sold the Marlins to the owners of the Montreal Expos, that group sold the Expos to MLB, which scrapped the Canadian franchise and turned it into the Washington Nationals, and Henry's partnership, freed up, bought the Red Sox.
The Boston team is, to use that evocative American word, "storied", meaning the Red Sox have heritage, stories. The most renowned, of course, was that the team had not won a World Series, the equivalent of the Premier League championship, since 1918, when the legendary hitter Babe Ruth was sold to the New York Yankees. Lore has it that the sale, and subsequent long-time "curse of the Bambino", was due to the financial motivations of the owner, Harry Frazee, who sold Ruth because he wanted to take money out to invest in a Broadway play.
Henry and his partners, of course, wrote a new story, staying triumphantly at Fenway Park and winning the World Series, in 2004, breaking the 86‑year curse, and 2007. Famously too, they became associated with the sabermetrics, statistical approach, as used by the arguably overachieving small team Oakland Athletics and chronicled in the book Moneyball by Michael Lewis, now romanticised into a film starring Brad Pitt as the As' manager, Billy Beane.
The Moneyball concept has become both simplified and overblown in discussion, and even Henry says its significance is exaggerated. The Oakland As did not become successful because they suddenly started using statistics to assess players to sign. Baseball has always been bedecked in statistics; the game manufactures numbers. Moneyball told the story of a hobby statistician, Bill James, who concluded that some data, such as the number of times a hitter makes it, workaday, to first base, were in fact more important to a match than crowd-pleasing, eye-catching but rare feats such as hitting glorious home runs. Sceptics, however, argue that the Oakland As did so well because they had three outstanding, star pitchers, Mark Mulder, Barry Zito and Tim Hudson, in a sport where the pitcher is key – hitting a ball thrown at 80-95mph with a thin bat is extremely difficult, even for players on $154m wages.
Henry, keen to accrue any potential advantage and being, with his ostensible gentleness, a consummate networker, made contact with James and Beane. He offered Beane the job of general manager then, when Beane declined for family reasons, hired Epstein instead. The World Series victories were ascribed to sabermetrics, but Henry explained it was down to all-round rigour. "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. In short, we are determined to outwork everyone else and hopefully be smarter every year." That was before the September collapse that plunged the Red Sox organisation into, as Henry put it, "critical self‑examination".
They came to buy Liverpool a year ago when, despite missing the play-offs, their record was still glowing, Fenway's income was around $1bn, and Henry was considering expanding into some other American sporting venture. His interest was sparked by an employee in corporate sales at Fenway Park, Joe Januszewski, who was, somehow, a Liverpool fan. With Liverpool staggering under the debts Hicks and Gillett had loaded on to the club, he emailed Henry: "Please save my club." Henry admits he had reached the age of 60, a lifelong American sports fan, knowing "virtually nothing" of football, or the Anfield club that have won 18 League championships and five European Cups. But he was intrigued, and fixed a meeting with Inner Circle Sports, New York bankers who became Fenway's financial advisers on the deal.
Werner, recalling that meeting, at which Inner Circle's Philip Hall presented Liverpool's prospects, smiled. "I wasn't paying too much attention," the current Liverpool chairman said. "Frankly I was on my BlackBerry, dealing with more pressing issues. I thought there was no way John was going to drag us into that one."
Part Two of David Conn's series with the Boston Red Sox and Liverpool owners will be on guardian.co.uk on Thursdayhttp://www.guardian.co.uk/football/blog/2011/oct/12/liverpool-boston-red-sox-henry?CMP=twt_gu
