LFC owner John Henry answers questions from fans
One of the first pledges that new Liverpool FC owner John Henry made to fans was that he would listen to them and engage with them. On Friday, he took his first steps towards honouring this promise. After receiving a list of questions from Reds supporters on redandwhitekop.com, Henry sent back some interesting answers...
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.
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.
It's naive 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.
How have NESV funded the ã300m acquisition?
This simple answer is that we paid cash for LFC and left ã37 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 ã40 million per annum.
Is there a contractual commitment that non of the acquisition debt will be placed on the club?
No, none was needed.
How does NESV intend to extract money to make a profit on this transaction?
That's a good question. With the club struggling, I can't foresee any profits being "extracted." Hopefully someday LFC will be worth more than it is today.
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.
What are your key milestones for the next three years?
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.
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.
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I wish someone had asked when he was thinking of sacking roy and will it be sooner rather than later. ASAP would be fantastic...
I am not one to get on the bandwagon of a newly appointed Manager, however Roy Hodgson is a nice guy but not a Liverpool Manager. He's too quiet and softly spoken and his record is not impressive!
Liverpool Owners need to act now in appointing someone who will spend what transfer money is available for January and steady the team until then.
Martin O'Neil is twiddling his thumbs at the moment not doing anything! he'd be ideal for Liverpool. He doesn't suffer fools lightly and will ditch the garbage fringe players we have!
He will also be able to bring the likes of Ashley Young and Gabby Agbonlahor to Anfield. Agbonlahor would be the perfect foil for Torres!
I really wish people would get off the backs of the players and manager. Do they honestly beleive they can influence the powers that be by showing how ignorant they are. We now are 5 points behind spurs in 5th, we are seeing shoots of growth in players, we have money to spend in the transfer windows. So see where we are at Christmas and if were still in the same place then maybe drastic action is needed, until then the doubters should go and buy a Man Utd shirt!
A man utd shirt. Wtf are u talking about. We replace a top class manager with an average manager who buys average players. We always talk about the league being our bread and butter. we hire a manager whose highest league placing was 7th. How many of the 10 players bought by him would make the chelsea team. Christmas is too late. Get Pellegrini or a top class manager. We deserve one after Rafa. Thanks Rafa you brought me some great highs as a manager and were greatly undervalued.
Paul
Since when did being 5 point behind 5th place be deemed as a good thing for Liverpool?
I presume you didn't see the game against Bolton. We are a mess, no leadership, no quality no cutting edge. Its the worst Liverpool team I have ever seen, and yet we have a world class goalkeeper, one of the best centre forwards in the world and one of the best midfielders.
I am afraid Paul your seriously deluded if you think hanging on to Roy Hodgson until Christmas is a good thing.
Roy should be fired.I bet he was thinking up of excuses for the result against bolton
fortunately maxi scored and that saved him.
The guy should be fired.
It's like you're on a miisosn to save me time and money!