Archive for the ‘Finance’ Category

Moving On?

Posted: May 20, 2012 by mcdonaldtaf in Business, Finance, Liverpool FC, Manager Talk
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In a bizarre twist of events our club finds itself on, what appears, a sound financial footing yet still tearing itself to pieces. Maybe that’s too strong a term, for what could well be the over exuberant and noisy minority? Although, it still appears there is this clique bitching about that clique, while frustration continues to surface. Maybe frustration will remain until performances match the very high expectations we demand (and the word is demand) from our club. Are we really only able to stand together when we are riding high or on the precipice of destruction?

The negative reaction to FSG’s swift culling of senior figures at the club seems to have come too early. Perhaps proving that the scars left by the club’s previous Amercian owners remain. Itching and irritating from time to time, making us sensitive and likely to react at the first signs of more pain. In fact, while I don’t agree with some decisions, I’d go as far to say that it’s refreshing to see such definite action delivered with respect. Who wouldn’t be up in arms had it transpired that FSG had talked to other managers over the past few months? They said that decisions would be made at the end of the season and that is what has happened. Their need to maintain the respect those senior individuals deserved (befitting of the Liverpool way of old) means that a delay will be incurred. This should be applauded rather than the frantic search for a panic button.

The key decision was clearly whether or not Dalglish should have survived to manage the club next season. Personally I think he’d done enough to warrant another season at the helm – but I don’t have millions (or tens of millions) of pounds resting on the finishing position of the club. There had been signs of the potential, which was simmering away, being delivered. But for every boiling point we mustered (usually against the bigger clubs) the old habit of going tepid against smaller sides continued to plague us.

So we have a fresh start from next season and maybe that’s what we really need after the past few seasons. Finally, in many different ways, a line can finally be drawn and we can turn a new page. Even the new retro warrior kit has a real ‘fresh’ feel to it (despite some mis-handling at launch). It can sometimes be the small changes which makethe difference, particularly when a cultural and/or structural change is required. Culture is a strange animal to manage in any organisation, never mind one where the culture is of such importance to all those connected to the club.

This fresh start is I assume one of the hurdles in seeing the return of Rafa Benitez to Anfield. The majority of the kop would back such a move from FSG, I feel. Elsewhere in the ground I’m sure an increasing number would still be holding their lack of faith in Benitez as a reason to express their dis-satisfaction. This would be despite Benitez’s success prior to and during his stay at Anfield.

In many ways I think what Benitez brings should fit FSG down to the ground. Despite the ludicrous levels of mis-information,which even persists today, he had a successful transfer record at Anfield. Not only in the way he took us so close to the title with financial restraints (compared to others) but also in the value he created from players he signed in terms of both performance while they played and cold hard cash once they left. Unless there is Man City type money locked in the Anfield safe we’re not being told about, then this type of value can play a pivotal role in club success.

Benitez’s ability to take players and improve them on a (generally) consistent basis is too often overlooked. Instead his detractors will point to players like Ryan Babel who never quite made the grade. Especially when other managers never got it wrong  – Veron anyone? There is no point pulling out all the figures again. If you’re not convinced that Benitez’s signings made a profit overall for the club then you’ll never be convinced – black and white clearly not being black and white enough for you.

You can probably tell who I’d go for. That said I do accept that such a move could be seen as a backwards step; when the club is desperately trying to gain momentum moving forwards on all fronts. To some Benitez also became a divisive figure towards the end of his tenure; although his working conditions left him with an unfair and inhospitable environment within which to operate – and thus unfair to judge him on. To be fair I think he often got caught in the middle of things and became a focal point because of his love for the club. Is this a bad thing?

I suspect that Rafa won’t get another try, this time round. Indeed his next opportunity may only arrive at Anfield once he’s found success elsewhere. At which point I’m sure some will be banging on FSG’s email inbox asking why they didn’t take him when they had the chance.

Because, as in life, FSG (unless we have immediate success) will be damned whichever way they go. We’ve become very good at showing our dis-pleasure – perhaps a little too good? We can share views and opinions immediately and we can also shape opinions through the explosion of social media.

Personally I think it’s time to just let things crinkle out for a while and give FSG some breathing space to make decisions. We have after all only just finished the season.

I’ve seen that some individuals have been singled out for having direct contact with the club. I’m a little bemused as to why. I find it refreshing that views are being sought from outside the confines of the board room. Views which shouldn’t just be restricted to those delivered from the supporters committee – as good an idea as the committee is. I can only assume there is some dis-satisfaction with who is and (perhaps more importantly) isn’t being contacted. If I owned the club I’d want views from far and wide, but we all know I could never take on board views from everybody. I hope those who were singled out do not withdraw from any involvement (as minor as it may be) with the club. Then the majority lose out, for the sake of the few.

From a management perspective I see nothing to be worried about at this juncture. If we’re two weeks from the start of next season with key people missing then we can start to bang the drums. Let’s face it if the club announced all new appointments today we’d start shouting about them rushing things. Once, not so long ago, there was a time for action. That time has gone and hopefully will not return. Now there is a time for a more dignified unison from the club’s supporters. That time should start… now!

Coming soon… full review of 2011 LFC accounts (subscribe on the left to be notified once published) 

Coming Soon… Blogging

Posted: July 5, 2011 by mcdonaldtaf in Business, Finance, Site News
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New job, relocating, close season and only one contributor to this site means only one thing – no posts! Apologies for my lack of posts and tweets and everything else. Normal service will resume when the new season kicks off (or shortly before). I’m looking forward to getting settled and writing again if the truth be told.

So just one quick LFC snippet for you to think about. I read an excellent piece about LFC and UEFA financial fair play rules on The Tomkins Times by Dan Kennett. There is one thing that concerns me about the whole thing though. That is while other clubs may find a way to navigate the rules in one way or another we’ll use it as a reason/excuse for tightening the purse strings.  Given the importance of top 4 football and the financial strength of the opposition there could be worrying times ahead. UEFA’s new initiative may well ensure the financial viability of the top clubs in the league. Whether they will be robust enough to stop the steroid like financial injections into club’s balance sheets is yet to be seen.

I’ll keep pondering on it. No doubt, more soon!

Liverpool FC Accounts

Posted: May 6, 2011 by mcdonaldtaf in Business, Finance, Liverpool FC
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You’ll be able to catch my thoughts on the accounts either at The Tomkins Times or in the next issue of Well Red Magazine. In the meantime though, following some requests, the accounts are available for download here:

LFC Annual Accounts 2010

Warrior Going On About?

Posted: April 22, 2011 by mcdonaldtaf in Business, Finance, Liverpool FC
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This morning’s news that we’re on the verge of securing a new kit deal sparked a few twitter conversations and debates. Mainly because most people were wondering who the hell Warrior actually were. They may be better known in America; but over here a lot of people were sat scratching their heads.

Now the goods news is that, from a financial perspective, the deal looks to be very good. £25m per year blows away Manchester United and Nike’s record deal and will certainly help fill the coffers as Anfield. Coffers which may soon have the additional pressure of no European football, for at least one season.

If you look at the deal from a brand perspective though, it looks like a better deal for Warrior. They may be paying for the privilege, but I imagine they are quietly patting themselves on the back at such a coup. Attracting a joint venture with a brand as big as Liverpool FC.

I’m confident that FSG and the club know what they are doing. It is entirely plausible this is the right deal for the club, at the right time. The need to increase revenues outweighing the potential damage to the club’s brand. You see what we have is a match which doesn’t quite look right. Imagine Prince William marrying one of those daughters from my big fat gypsy wedding next week. Ok, maybe I’m being a little harsh. But the fact remains that Warrior have had to pay some big money to have the privilege of supplying our kits. (I’m sure if the Gypsy folk had the money they’d of tried tapping Wills up.)

When it comes to the leading marques in sport, even Warrior’s owners New Balance look like the poor relations. According to Wikipedia New Balance’s revenues total $1.55bn with 4,000 employees. Quite a sum, but when compared to Nike ($19bn and 34,000 employees) and Adidas ($12bn 42,000 employees) the gulf becomes very evident. In fairness New Balance’s figures were from 2006; but unless they doubled every year they’ll still be miles behind. [Update: I’m reliably informed New Balance’s current revenues are $1.65bn]

Then consider the branding work undertaken by the likes of Nike and Adidas. The flashy adverts, sponsorship deals and other brand associations place them clearly at the pinnacle of the sporting good manufacturers. The question is, should we be accepting an association with a company most reds had never heard of until this morning?

I’ve seen the comments of ‘who cares about branding’. To the core of the reds support based in the UK who makes the kit is not as important. But our world wide appeal is very important to the club’s future. There is also those casual kit buyers, of which I am one. If I see a nice Barcelona kit I buy it and it’s the same for international kits. Will we sell as many kits in the UK? Quite possibly. Are we likely to see a reduction in the number of kits sold abroad, especially if they don’t get the design right? Quite possibly.

Flagship brands have to associate themselves with other flagship brands. If they don’t then they run the risk of damaging their own brand.

Arsenal F.C. – O2 and Nike
Manchester United – AON and Nike
Chelsea – Samsung and Adidas
Liverpool – Standard Chartered and Warrior

Which name looks like the odd one out?

All may not be lost though. In much the same way as I said FSG should bring a fresh approach to Liverpool FC, maybe Warrior should bring a new approach to kit design. An approach which will see the fans more involved in the actual design of the kit. It has always puzzled me why the design of such a standard commodity as a football shirt has to be kept under cover and designed by a closed group.

It’s not an idea of my own, as Gareth Roberts (@robbohuyton) of Well Red Magazine first put the thought in my head. But maybe the new fans committee, which will branch out to large groups of fans, could play a key role in the design of the new kits. With a majority of fans having the final say when presented with a range of kits. The technology exists and the club already runs polls. Why can’t FSG (with Warrior) again take a different approach?

This is not a major disaster and like I say it is quite possibly the right decision, in the current circumstances. However it also feels like a downgrading of our kit supplier to me, even if we’re getting more money for that downgrading. The best should associate themselves with the best, this deal does not do that.

One of this site’s readers made a comment about how NESV (now FSG) have raised ticket prices tremendously at Fenway Park following their investments into the Red Sox’ infrastructure and team. I must confess it is an area that concerns me in regards to Liverpool Football Club. So I decided to take a look at what the situation was before and since NESV’s takeover. But before I continue let me provide two caveats:

1. I know very little of Major League Baseball (MLB). During my research I became aware of a fans’ index, run by a website, which provides financial data on the average costs of going to a game. In short they take the total cost of a family’s tickets, beverages and other costs for a single game every year. It is this ‘fan costs index’ I have used for my research and it is used in good faith.

2. I am not saying that what has happened in America will or will not happen at Liverpool FC. I am simply studying NESV’s methods stateside which may (or may not) provide an indicator as to how they operate in this sensitive area of the business.

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As I classed Andy Carroll as the marmite footballer, it would appear my last post was a marmite post. I believe it fell down 50/50 between those who agreed with what I was saying, and others who felt I was being overly negative. The most astounding responses I received though (on twitter mainly) were from people who were just happy we were ‘spending money again’. It would appear that to some, any climbing up the league table is secondary to ‘keeping up with the Joneses’. I find this mentality of ‘potentially wasting money being ok, as long as we’re spending it’ quite baffling to be honest.

I understand some of the logic behind it. Following the years of the ‘sell to buy’ and then ‘sell to survive’ policies of Hicks and Gillett it was indeed good to see the money coming in being used on the squad, and not interest payments. I was merely questioning the way in which the money was being used on a largely unproven striker. I also pointed out that I could well be proved wrong, but at this moment in time I do not see where the value is coming from. Andy Carroll was a risk and with risk comes the potential for reward or loss. Which way it falls is anyone’s guess at this moment in time.

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Trust. Such an important word and yet so often trodden all over in the pursuit of personal interest or greed.

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During the past year I’ve researched, read about, analysed and written about football till my fingers went numb. The key message which keeps coming back is that fans are becoming increasingly restless with where the sport is going. This is manifesting itself in two ways. The first is a general rise in apathy among fan bases and the second is genuine dis-satisfaction. Both represent an increasing risk to the sport as we know it.

Indeed my research into our club uncovered that 4% of fans had stopped going to the game, or watching it on television. While another 14% had stopped buying merchandise. Now it should be noted that I conducted the research at the peak of the Hicks and Gillett saga, but even now I sense a continuing apathy from fans. It’s almost like the sport is turning them off (and I don’t think it’s all down to Roy Hodgson).

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ad·vent
n.

1. The liturgical period preceding Christmas,  beginning in Western churches on the fourth Sunday before Christmas and in Eastern churches in mid-November.
2. The coming or arrival, especially of something extremely important.

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Such a fitting word for Liverpool fans isn’t it? Advent. We are currently in the 21st Christmas advent since our club last won the league title.  So for many of us it feels like we are in a continuing period of advent all year round, with no end in sight. Indeed some would question whether we have ever been further away from the league title, having come so close in the 2008/9 season. Others will try and point out that the core of that 2008/9 season squad is in tact; a new manager is all it will take they’ll tell you.

Maybe they’re right. To my mind though football has become more competitive, technical and complicated – against a backdrop of forever increasing transfer budgets for some managers. Can you buy guaranteed success? No. Are some teams at a clear advantage with their squad depths and deep pockets? Yes – no doubt. In time things will no doubt equalise themselves out. Albeit I think the tiers of teams will remain, and those tiers will be largely determined by either the financial prowess or power of the clubs in each tier.

Personally I have been through quite a journey over the short life of my blogging. I came to the blogging community in October last year as someone who promoted the idea that business had to play a key component in football, for the good of the sport. After a year of writing, researching and contemplating I have done a complete U-turn. I’m a realist and accept that to remain competitive we are now in a situation where business has to play a key role. That does not alter the fact though that business has also taken something from the game. It has come close to destroying some clubs and damaging those communities. Is it sport anymore?

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When is enough, enough?

Posted: December 2, 2010 by mcdonaldtaf in Business, Finance, Liverpool FC
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I’m sure there are plenty of posts like the following scattered throughout the Internet. However, with news relatively quiet on the Liverpool front I thought I’d turn my attention to a broader issue. Once I’ve settled in fully at Bristol I will take the time to run some proper calculations on the following post, but in the meantime I think there is enough ‘meat on the bone’ for you to get the gist.

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