LIVERPOOL fans are on the crest of a wave right now. A newly-expanded Main Stand is finally open. We have one of the best managers in world football signed on a long-term contract and he has the Reds playing scintillating stuff, with Jürgen Klopp’s side now second favourite at the bookies to win the Premier League.
Meanwhile, our big-money signing from Southampton (“Oh no, why are we buying Southampton players?!”) is player of the month.
The vibes are good, no?
So why, in a matter of days, have Ian Ayre and John Henry felt it necessary to kill the buzz?
Ayre and Henry, on opposite sides of the Atlantic, and seemingly without pressure or provocation, are pouring cold water on the likelihood of the Anfield Road end being renovated.
A good time for bad news?
On the face of it what John Henry says makes sense. “I don’t know if there is a next step because ticket prices are an issue in England,” the Principal Owner of Liverpool FC said. “That may foreclose further expansion. We’ll have to see.”
Basic economics, isn’t it? (It’s not by the way — the economics of football obey almost none of the traditional principles of basic economics. Feel free to quote that when people ask that question.)
Several major factors have emerged since the original outline planning permission was obtained to grow the stand’s capacity from 9,074 to 13,860.
Firstly, away tickets in the Premier League have been capped at £30. Previously, away supporters at Anfield were charged premium prices, which now has been limited. So let’s say 25 per cent of the stand’s capacity offers a significantly lower return than the original plan.
Second, is the successful walk-out protest to challenge an extra £2m in ticketing revenue being added through price increases.
The much-vaunted £77 tickets were the focus of the attention but large swathes of the ground were seeing significant price increases. All in the name of adding £2m to the coffers at a time when the Premier League is awash with TV money and Liverpool FC is breaking new ground with eye-watering commercial sponsorship deals.
The club capped season tickets and de-categorised tickets with a maximum ticket price set at £59 rather than £77. The club also introduced some local sales and a £9 restricted view ticket.
Thirdly, the Main Stand is open and while in general it has been well received, the corporate packages on offer have not sold out.
Unconfirmed suggestions posted on the internet claim the packages do not offer good value and allege the club has resorted to sending employees in to sit in the hospitality areas.
All of this makes the commercial case for expanding further much more difficult to contemplate, right? Well, it depends on how fast you want to see a return.
The Main Stand expansion has been funded by an interest-free loan from the owners to the club. Estimates suggest that the club will benefit from a £25m increase in earnings from the expansion. So with an £115m publicly-stated build cost, the loan will have been repaid comfortably within five years and beyond that the club benefits from a higher sales base.
When Liverpool FC increased the capacity of the Main Stand by 8,500 seats, only 3,100 were non-corporate sales — 2,000 went to the closed season-ticket waiting list and 1,100 was made available to those who have paid for the club’s membership scheme.
The same level of corporate offer is not in the plans for the Anfield Road stand, with the vast majority of the additional seats catering for general admission supporters and season ticket holders. Which makes the payback much longer than five years.
Do the stand-offish comments from both Ayre and Henry tell us this is something FSG do not have an appetite for?
Before the club’s back-track after the strong support for the walk-out in the Sunderland game, Ian Ayre had made an appearance in front of the media on dress-down Friday. He said those protesting should “be careful what they wish for”.
Perhaps his cryptic prophecy is coming true?
Liverpool FC has been granted outline planning permission (which expires in September next year) for an increase of 4,800 seats in the Anfield Road end. The designs had little in the way of corporate facility, but the outline drawing indicated some apartments to be built in to the stand.
So the answer in a nutshell appears to be: It doesn’t make enough money quickly enough.
Perhaps then, the arguments for expansion have to be made in other ways.
Liverpool has an ageing fan base in terms of home match attendance. At 42, I look around the ground and I feel relatively young.
With a closed season-ticket waiting list, and little prospect of getting one if you are one of the 26-28,000 rumoured to be on it, how can the next generation of young people get in the habit of supporting their local team?
In 20 years’ time, if I am still lucky to be going to the game I doubt I will be as vocal as I am now (and I am nowhere near as vocal as I was 20 years ago).
Does a baying youthful crowd make a difference on the pitch? Our manager seems to think so — he says it often enough.
In tight seasons like this year, when every point counts, how many more points could a bumper passionate crowd earn us? Another 10?
If FSG are the right custodians of the club they have to look beyond a five-year cycle when determining the long-term interests of the football club.
Expansion should not just be judged against match-day ticket revenue — although if the additional 4,800 seats in the stand were sold as season tickets at the price I pay that would mean an extra £4.1m in league match-only ticket revenue.
More discussion around John W Henry’s comments re Anfield Road development:
More likely is a mix of general admission and season tickets, plus cup games and of course, potentially, Europe. That is approximately £5.5m — before anyone has bought a hot dog, a cup of tea, a programme, a stadium tour or even an apartment!
If the Anfield Road end costs £70m (versus £115m for Main Stand) FSG are looking at a 12-year payback. Throw in naming rights and some level of corporate provision, and the return on improvement improves further.
There are corporate deals available in the Anfield Road end for sale right now — linked with hotels across the city. Just £300 for the Manchester United if anyone is interested. My numbers have no corporate offer in them.
The other way to fund the expansion is through the capital growth of the club. The club’s worth was recently estimated at £1.2billion and FSG paid close to £300m for it. They are sat on a tidy profit.
Perhaps a share issue could create the liquidity to do the project? Maybe the transfer budget deficit could be redeployed to cover some of the costs? Does a sponsor wants to seize the opportunity to be a fans’ advocate in the way that Virgin have done at Southampton? Maybe help bridge the funding gap under the banner of “enabling the next generation of fans to attend Anfield affordably”?
I am not suggesting any of the above is easy — far from it. But it should be within the might of the club to solve these issues.
We have the sixth (soon to be seventh) largest stadium in the Premier League.
We have 28,000 who have paid to continue to be listed on a closed season-ticket waiting list.
We have over 100,000 active members who pay to have access to ticket sales.
We have an incalculable number of people who have given up on the rigmarole of obtaining tickets to Anfield — as it is, frankly, a ball-ache.
Not increasing the capacity solely due to the speed of commercial return is unpalatable enough but from a company sat on £0.9bn of capital gains earned from supporters, it is reprehensible in my opinion.
Furthermore, in an era where clubs are earning more than ever and they are awash with TV money, the very implication that the expansion (of their asset) has been scuppered by fans protesting against cost increases is provocative and insulting.
So back to my original question: Why now? Everyone is broadly happy with things, so why start talking about this right now? Not under pressure from fans groups, or an inquisitive media, so what…why?
It’s genuinely puzzling. Odd. But there will be a reason. Perhaps the one that jumps out is the right one. I hope, as ever, that I am wrong.