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The John W Henry Interview - Part One

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Veinticinco de Mayo:
A week or so ago some of you contributed questions that you would like to ask our new owner.  Thanks to all of you who took time to do so, there were some great questions in there. So much so that the number of questions we sent over to him jumped from about ten to a rather weighty 23. 

Anyway, he has now been kind enough to send us the first batch of answers.  However, along with your questions a lot of you had things that you said that you would like to tell him. I passed many of these on.  The next post is the preamble to the questions along with your feedback.

Veinticinco de Mayo:
For the interview, we asked users to contribute questions that they would like to ask you if they got chance.  Many users also took the opportunity to leave feedback for you as well.  I have included some of the feed back below and then listed some of the more interesting questions.  Please feel free to answer as many or as few as you want and also feel free to use the reply to pass on any message that you might have for the fans, or ask any questions you might have for us.  Anyway to start us off here are some messages from fans:

"With modern football, in the UK at least, being ruled by owners with the deepest pockets, does he know that most level headed Liverpool supporters were looking for someone like him in charge, not necessarily the richest owner, but someone who, on first impressions, seems to be a quiet man, not willing to make crazy promises and grand statements about how we will be the biggest club in world football in 4 years?"

"I'd like him to know that most level headed Liverpool fans want an owner who allows the club to breathe, who slowly creates success on the pitch, which in turn creates success off it."

"I think I would respectfully ask if he can do his upmost to find another Sir John Smith to act as Chairman once Martin Broughton leaves.  The departure of Sir John; and his replacement by David Moores has lead us directly to the place we now are: stability comes from the very top - and that top man needs to be someone who is sufficiently distant from the players and management to make the impartial judgments that will be needed to turn the club around."
"I don't want any grand gestures early on, I want him acknowledging that he has some serious work to do. So far he's making all the right noises for me."

"I can't word it as a question, but I really would like to emphasise to him how important it would be to involve Kenny in our future in some capacity. He is the most precious human resource available to us."

"Please don't act like the previous owners and let us move forward into hopefully a few decades of success.  Don't underestimate the power of our support as fans."

"Please don't take your cues from the media. They are clueless and it will lead to our downfall."
"I hope it works out for you. If you are succesful here you will have some of the greatest nights of your life. "
"It's not a question that i want to put to him, it's a way for them to go about things.  And that's with respect. Respect us, the fans, respect our opinion, respect   our history (and with it, both the good times and the darkest of tragedies), respect our tradition, respect the city. If you can do that, the respect that we show you in return will be astronomical."

"Liverpool Football Club, above all else, has been built on excellence on the football pitch.  We don't care who you employ, where they come from, what language they speak - just make sure they're the best - chief executive, chairman, manager, players, coaches, tea ladies."

Veinticinco de Mayo:
So on to the questions, all these have come directly from fans on the site.  I have tried to group them into themed areas to make things easier.  I guess the first theme is Why Liverpool?

1. Given that financially there are far more reliable investments. What motivates you to invest in and buy sports clubs?
We are an organization filled with people who are driven to compete at the highest level.  There certainly are better investments than sports   clubs, but we know that everything we do has meaning to large numbers of   people.  And what we do has meaning for us.  We wake up every day   thinking about what we can do improve our chances of winning a championship.  It’s incredibly interesting and we really enjoy working together toward a common goal.

2. What was your motivation, individually and as a company, for buying Liverpool FC?  Was there one thing that sold the club to you?
We kept seeing the similarities to purchasing the Red Sox in 2002.    They’ve been recounted in the media.  But the most important issue for us was the ability to compete at the highest level in the world’s biggest sport.  Liverpool FC provides that opportunity.  I believe almost any sports fan would purchase a club, if they had the means.  We had the means – both financially and with regard to organizational   strength - to run one of the most coveted sports clubs in the world.    It’s a privilege.

3. It's naiive to think you made the decision to buy Liverpool FC without the input of any "football people". Care to name-drop those who   advised you during your due dilligence?
We did our own due diligence.  We don’t know English football, but we do know the sports business.  It’s been a very steep learning curve – but one that has been rewarding and interesting.  The structure of football in Europe is totally different from what we are used to.  It’s fascinating and challenging.  Now we are lucky enough to be meeting football people who can give us input.  Our biggest responsibility is to bring in the right people to the club on and off the field.


The next group of questions are unfortunately your inheritance from the previous owners.

4.  How have NESV funded the 300m acquisition?
This simple answer is that we paid cash for LFC and left 37 million of stadium debt in place – even though there is no stadium in place – just a lot of expensive plans etc.  We view stadiums as separate from clubs.  They are separate entities.

We have some very successful partners – some of whom are big EPL fans – and we are well-financed internally.  But NESV has always had debt from the first day we purchased the Red Sox.  We have some partners who look at   Internal Rate of Return and almost demand that we have debt as a consequence.  Debt increases IRR.

I recently read the New York Yankees have $3.5 billion of debt, but I’ve never heard a Yankee fan complain about it.  I’ve never heard a Red Sox fan complain about the usage of credit.  Credit is probably more acceptable in American   culture than elsewhere.  But you have some people that are good at borrowing money and poor at investing beyond that.  There are others – and we feel we are in this camp – have lines of credit etc., that are good at running businesses prudently and invest in those businesses.

In nine years of operation our partnership has yet to make a profit distribution.  We’ve only made tax distributions.  We’ve invested a quarter of a billion dollars into Fenway Park.  We’ve invested in players – second among thirty MLB clubs – over the last nine years.  We’re invested now in LFC and there is work to be done on the stadium front there as well. Other than the stadium debt mentioned above, there is no debt on LFC.  This   has greatly reduced interest payments which I believe were running close   to 40 million per annum.

5.  Is there a contractual commitment that non of the acquisition debt will be placed on the club?
No, none was needed.

6.  How does NESV intend to extract money to make a profit on this transaction?
That’s a good question.  With the club struggling, money I can’t foresee any profits being “extracted.”  Hopefully someday LFC will be worth more than it is today.

7.  What is the capital structure and cashflow of NESV, and how does it service its debt?
It’s a private company and we do not release financial information.  LFC, however, does release financial information annually.


The next batch are all about your plans for the club now that you have your feet under the desk...

8.  All of the questions I would want answered are to do with things he really needs to reflect on awhile. I'd be interested at this stage however, to know what his five key milestones for the next three years would be.
We are focused on getting the club positioned to win trophies within the Financial Fair Play rules that are being imposed next year.  That means off the field we are intent on increasing LFC revenues worldwide.  On the field we have to be smarter.  Arsenal and ManU have depth that is young and capable.  We do not.  We have a lot of work to do there.  A lot of work.  And we will, but we have to be smart about it.

9.  Liverpool FC needs a sustained period of stability.  Liverpool supporters will be patient as long as we can sense that we are moving in the right direction. How long are you planning on staying? Are we a long-term (10 years+) or a shorter term project?
Long-term.  Everything we do is for the long-term.

10.  Mr. Henry & co. - Liverpool Football Club has one of the largest fanbases in the world with passionate Reds in every corner of the globe. With the greatest of respect, the sport of baseball in which your team has achieved great success is a major sport in Northern America but is not comparable to Liverpool Football Club or the Premier League in terms of fanbase / viewing figures etc etc.  How do you plan to market the club globally and expand and enhance the club's profile worldwide in the future?
This requires a long answer.  Perhaps I should take a break and answer this and the other questions in the next installment.

  RAWK and SaveLFC 2010

Veinticinco de Mayo:
Clearly we will post up the answers to the remaining questions as soon as we have them. 

I would however like to publicly thanks John W Henry for taking the time to come up with those honest answers to the first nine questions.  I would also like to thank Smithdown Andy once again for keeping the channels of communication open. 

Hazell:
Thanks for that. Good to have him engaging with the fans (I know he's done it in other ways as well).

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