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On October 15, 2010, New England Sports Ventures, the investment company chaired by John Henry (and now called the Fenway Sports Group), completed its purchase of Liverpool FC from George N. Gillett, Jr. and Tom Hicks. Henry’s purchase of the club, which was concluded despite the protests of Hicks and Gillett (who believed that the club was worth far more than the £300 million Henry paid), brought a close to one of the most controversial periods in the history of Liverpool FC, both on and off the field. In 2005, two years before Hicks and Gillett bought the club for £218.9 million, Liverpool had been crowned European champions, having defeated AC Milan on penalty kicks in a thrilling final. Only a few months after they bought the club in February 2007, Liverpool once again appeared in the final of the Champions League, this time losing to AC Milan. However, by the end of Hicks’s and Gillett’s tenure as owners, Liverpool had receded to the depths of the English Premier League, residing in 18th place (out of 20 teams) when John Henry completed the purchase of the Merseyside club.
How had Liverpool, one of England’s most storied franchises and winner of eighteen English top-flight championships (second all-time to Manchester United), fallen into such disarray? The answer is certainly complicated, but a large share of the blame lies in the ownership of Hicks (and to a lesser extent, Gillett), as well as how the two men came to purchase the club to begin with. In order to complete their acquisition of the club in February 2007, Hicks and Gillett promised to invest an additional £200 million in the future of the club, including the building of a new stadium at Anfield, a promise which has gone unfulfilled. In order to complete the purchase, the duo borrowed £185 million from the Royal Bank of Scotland. This initial debt had to be refinanced multiple times and, in April 2010, it was revealed that the club was saddled with £2.5 million in weekly penalties from the RBS, with an additional £60 million penalty if the club was not sold by October 6th. If this had occurred and the club had gone into administration (the UK equivalent to bankruptcy), the team would have been docked nine points in the standings (comparable to changing three wins to losses). Hicks and Gillett put the club up for sale, and they spent the summer looking for investments to buy out their RBS debt, hoping to extend their control of the club. They were unsuccessful in their attempts, and the club’s creditors took Hicks and Gillett to court in order to force a sale of the club. The courts ruled in favor of the creditors, which led to the Liverpool board voting 3-2 on October 6, 2010 in favor of accepting John Henry’s bid to purchase the club, leaving Hicks and Gillett on the hook for more than £144 million in debt. The team was still without a new stadium.
While these movements were happening behind the scenes, Liverpool’s play on the pitch was surprisingly successful in the first two seasons under the ownership of Hicks and Gillett. The team finished fourth in the 2007-2008 Premier League (the first full season under Hicks’s and Gillett’s ownership) and second the following season, ending the year with 86 points, their most points ever earned in the Premier League era. During the 2009-2010 season, however, the train came off the tracks, as the club finished seventh in the Premier League and was bounced from the Champions League in the group stage. Liverpool also failed to advance past the fourth round of either domestic cup (the Carling Cup and the FA Cup). Hicks argued with manager Rafael Benitez over transfer policy, inciting turmoil and unrest in the squad. Xabi Alonso, arguably the team’s best player, asked for and was granted a transfer to Real Madrid the summer before the season, and his absence played a large role in the season’s disappointment.
The 2010-2011 season started off poorly before a single game was played, as Javier Mascherano was transferred to Barcelona, Rafael Benitez left the team and Roy Hodgson took over as manager. Hodgson was an unpopular choice among the fans, and a slow start to the season left Hodgson without much support. The team was in a battle to avoid relegation to the second tier of English soccer (the Football League Championship), and the lack of wins pressed John Henry to change the leadership when he took control of the team in October of that year.
In the 10 months since John Henry has become owner of the club, Liverpool has undergone a massive overhaul of talent, both in terms of the club’s coaching staff and its players. Henry’s first move was to replace manager Roy Hodgson with Kenny Dalglish on January 8, 2011, only a week into the winter transfer window. The club had resided in the lower half of the table for most of the season, and Henry thought it time to make a change, saying “We are grateful for Roy’s efforts over the past six months, but both parties thought it in the best interests of the club that he stand down from his position as team manager.”
Dalglish, one of the most successful managers in Liverpool’s history, was called upon to right the ship, although his tenure began inauspiciously as Fernando Torres, the team’s leading goal scorer and, when in form, one of the top strikers in the Premier League, handed in a transfer request. He had been unhappy at Liverpool for some time, and, despite a change in ownership and coaching, the sides were unable to reconcile their differences. Torres was eventually sold to Chelsea for £50 million. This money was immediately reinvested in the team, as Luis Suarez (£22.8m) and Andy Carroll (£35m) were bought for a combined £57.8 million. While the two strikers only scored six goals for Liverpool following their transfers, they are both young (Suarez is 24, Carroll 22) and appear to be the club’s strikers of the future. Dalglish took his new signees, as well as the many holdovers, and led the club to a 6th place finish in the Premier League, removing the threat of relegation and nearly securing a spot in the Europa League. He earned a contract extension in the process, signing on for three more years on May 12,2011.
This summer, the second potential transfer period under Henry’s ownership, saw another influx of talent. Midfielders Charlie Adam (£7.5m), Jordan Henderson (£20m), and Stewart Downing (£20m) were signed, along with defender Jose Enrique (£6m) and backup goalkeeper Doni (free). The transfer market doesn’t close until August 31st, so the team still has time to make moves, with a particular need for defenders and (possibly) a goalkeeper to challenge the ever-shaky Pepe Reina. If the club can sell midfielder Alberto Aquilani, who is rumored to be on top of Milan’s wish list after a loan spell in Italy last season, they will have more money to fill out the rest of the roster.
All the recent additions have contributed to Liverpool’s successful start this season, as the club has a win and a draw in two games so far this year, tying Sunderland 1-1 and beating Arsenal 2-0. Adam, Downing, Henderson, Carroll and Jose Enrique have all started both games. Suarez has one start, although he is being given more rest after having played in the Copa America this summer, leading Uruguay to the championship and scoring four goals in the process. He has the only two goals for Liverpool so far this season (the third goal was an own goal by Arsenal), and while he missed a penalty kick against Sunderland, he is on pace to be this season’s breakout performer in the EPL. Suarez is a constant nuisance for the opposition, forcing teams to adapt to his relentless pressure and tireless effort. He looks to be a future star.
Charlie Adam, Stewart Downing and Jose Enrique have all meshed themselves nicely into Liverpool’s starting eleven. Adam and Downing have played well in the midfield, with Adam distributing the ball well and tracking ball ferociously on defense and Downing penetrating opposing backlines with piercing crosses and strong runs. Jose Enrique has played solidly at left back, both with and without the ball. Carroll and Henderson (the two youngest of the signings at 22 and 21, respectively) are still learning, and while it is apparent neither is ready for a starring role, they are bursting with potential. Carroll netted eleven goals for Newcastle in nineteen games before his midseason transfer last year, and Henderson was named Sunderland’s Young Player of the Year two consecutive seasons before his arrival at Liverpool this summer.
The moves Liverpool has made in the last ten months following the arrival of John Henry have reshaped the team. The vast majority of the key contributors are 28 or younger (only Gerrard and center back Jamie Carragher are older), and there has been a large influx of talent without a large outflow in the past two transfer periods. The starting eleven have the potential to be formidable when everyone returns healthy. Pepe Reina is a good, albeit inconsistent, goalkeeper, and the top four defenders (Glen Johnson, Daniel Agger, Jamie Carragher and Jose Enrique) will form an adequate backline when healthy. Dalglish has an abundance of talent in the midfield, where Gerrard, Adam, Downing, Henderson, Raul Meireles, Lucas, Dirk Kuyt and Maxi Rodriguez can all make an impact. Suarez is developing into one of the best strikers in the EPL, and with Carroll and David N’gog in support, the attack corps looks to be strong as well. If the defense can remain healthy and limit opposing teams,Liverpool will be able to challenge for the Champions League, which John Henry has said is the main goal for the season.
Henry has given the go ahead to build the team and make it more competitive, and he has spent money to do just that. He has said that he wants the team to get even younger (stating that he doesn’t want to sign players of a certain, unnamed, age), and after this initial influx of talent, he is hoping to follow the Arsenal model of selling players high and buying them low, as well as developing the team from within. His ownership has been successful thus far, and, by not saddling the team with debt the way his predecessors had, he has been popular with the fans.
The ownerships of the Hicks/Gillett partnership and that of John Henry could not be more different for Liverpool. Hicks and Gillett placed a large debt burden on the team. This in turn prevented them from purchasing world-class players, which the team desperately needed to stay competitive. As the club began to drop in the standings, the best players on the team saw the writing on the wall, leaving before the team hit rock bottom. Under John Henry, the team has limited its debt obligations, which allowed the ownership to green light the recent spending spree. As a result, the team is younger than it has been in years, and well poised to compete now and in the near future. Henry has also stated he wants the team to develop from within, and he will be patient in the development of some of the club’s young acquisitions (Henderson and Carroll in particular). Henry’s stewardship of the team has been quite successful thus far, and he has set the team up nicely for future success.
Tom Hicks and John Henry could not be more different as owners, both of Liverpool FC and their respective baseball teams. Hicks, who owned the Texas Rangers from 1998 until 2010, has not had success, financially or competitively, with any of the teams he has owned. The Rangers filed for Chapter 11 Bankruptcy in 2009, with Hicks owing several lenders a total of $500 million. This mismanagement spilled out onto the field, where the Rangers only made the playoffs twice under Hicks’s ownership. Conversely, John Henry and the Fenway Sports Group have had continual success, both on and off the field, with the Boston Red Sox. The Red Sox have won two World Series and have never finished with a losing record under Henry. Additionally, the team has been a successful investment, as revenues are large ($266 million in 2009) and Forbes places the team as the second most valuable in baseball. Based on their track records, it is no wonder that Hicks failed in his ownership of Liverpool FC, while John Henry looks set to succeed. The future is bright for Liverpool, as stable ownership and impressive talent have both arrived at Anfield in the last ten months. Merseyside fans hope both are here to stay.