By Sam Jones
WHEN FSG, or NESV as they were at the time, took over Liverpool Football Club it was widely reported that having the funds to build a new stadium was a prerequisite for a new owner. A non negotiable, said Martin Broughton.
2 years later we seem no closer. Ever since Rick Parry said the club needed to build a new ground to compete with the likes of Manchester United, as we fell behind in matchday revenue, the prevailing narrative has been exactly that. We must get a new ground built, as soon as possible. We need it to be competitive. Without it we can’t bridge the gap. This has been repeated consistently for nigh on ten years now.
It is repeated so often that it is accepted as fact. Without a new ground Manchester United get an extra million pounds per home game, so we must build a new ground, or we’ll be left behind. There is a difference in matchday revenue, of course there is. About 41 million for Liverpool in 2010/11, compared to Manchester United’s 109 million. Quite a gap.
Such a gap, in fact, that you would have to wonder if it can actually be closed. They have the advantage of not just a bigger ground, but also a bigger city, more accessible through better transport links. More businesses, both big and small are based nearby. Whilst we could build a bigger ground, we can’t influence the latter factors, which must surely limit our ambitions, especially for the corporate market. Let’s be honest, Chelsea and Arsenal enjoy these advantages as well, as do Spurs and Manchester City. I know where I’d rather live, but that’s not the issue. The issue is the ground. Revenue.
FSG themselves have expressed concerns over the financing of a new stadium, with significant effort being put into a so far fruitless search for a naming rights partner, and cast doubt on the club’s ability to match the revenues enjoyed by other clubs using the “average revenue per seat” measure.
That being the case, you would have to wonder if recent developments have had an impact on the likelihood of anything happening with the stadium at all.
In June the Premier League renegotiated its TV deal. The value of that deal rose by 70%, to a massive 3 billion pounds over 3 years, for domestic rights alone. In 2010/11 Liverpool earned 65 million from TV. This without the champions league, which would add, conservatively another 20 million or so. It is likely that as a consequence of the TV deal we would earn an additional 25 or 30 million, without even an improved league performance.
Andy Heaton’s article http://www.theanfieldwrap.com/2012/07/dear-john/ posited a 65,000 seater stadium delivering an extra 38 million, at a cost, obviously. Sky have just given us that for free.
The upshot of this is that the need to increase our revenues is less pressing. The TV deal is returning all the benefits to the bottom line that a new ground would, and more. Also, the percentage increase a new stadium would bring is obviously smaller if the revenue has increased through a new TV deal. That 38 million from a ground would be a rise of 20% on our 2010/11 turnover, post new TV deal it’s more like 16%, get back in the champions league and we’re down to 14% or so.
Let’s be clear, this increase in TV money is massive. To put it in perspective, Spain’s third richest club, Valencia, turned over 116 million Euros in total in 2010/11. One hundred million pounds, give or take. After the new TV deal, the bottom club in the Premiership can expect to bring in almost 60 million pounds in TV money alone. This will make even mid table English clubs serious players on the European stage, financially at least.
There may be a point at which FSG decide it simply isn’t worth it, and that the ongoing debt burden of funding a new stadium isn’t the way to go. This is especially so given that 38 million of turnover a stadium may bring has an annual cost attached, so is by no means extra money in the kitty. It’s something for the long term. When the mortgage is paid the money is ours, not before. Faced with the jump in TV revenue the returns on further increases in revenue will diminish.
This wouldn’t be the first time that an increase in TV revenue had a big impact on our owners. The last rise was amongst the things that attracted Hicks and Gillett, and probably also kept them here by providing the means to pay the interest on their loans.
The last American owners were helped out of a hole by a TV windfall, maybe it’s now the turn of the new ones.
All of this depends, of course, on their long terms plans. If, in fact, they don’t actually have any long term plans then a club with healthy revenues, a sensible wage bill and reasonable performance may suit them fine. If they’re here for the short term don’t be surprised if the current indecision about what is happening with the ground continues, and is actually the bait for the next owners – the one area left where there is scope to move forward. Build a new ground and grow revenues. Not now, but for the next twenty or thirty years.
If you can fund it, that is. That should probably be a non negotiable.