For most businesses globally, the past few months have been one of the hardest bitter pills to swallow.
The effects of the COVID-19 pandemic, which continues to be devastating, have been felt in almost every sector – and sport is one of those sports that really find it difficult to see.
For Liverpool owner Fenway Sports Group, they had to cope with a hit on each side of the Atlantic.
Coronavirus will affect Liverpool’s finances, which is no doubt, although they’ve managed to position themselves in a way that can weather the storm some better.
But it was in the United States that the FSG had actually seen first-hand how the pandemic was hurting finances, its Boston Red Sox baseball franchise suffered immense losses, a thing seen in Major League Baseball.
Trying to raise business capital at large losses can be difficult, and when you own two sports organizations that want to be ahead of the race in their respective fields despite the financial obstacles that hinder them, The fight will have two sides.
That̵7;s why the potential deal between FSG and special purchasing consulting firm (SPAC) RedBall Acquisitions, led by American billionaire financier Gerry Cardinale and baseball and statistics analyst Billy Beane is on the agenda.
This deal, which allows RedBall to take about a 20% stake in the FSG and put the company on the stock market, will allow the FSG to refinance its business to support Liverpool, Red Sox and Roush Fenway Racing, their NASCAR team.
The impetus for RedBall is to gain a foothold in the European football market and build plans to add to the portfolio of clubs, just as Red Bull and City Football Group do for Leipzig and Manchester City, to increase value for business.
As for the FSG, Covid has pushed them to push the button on a new approach.
Economist Andrew Zimbalist, a lecturer at Smith University in Boston, Massachusetts, explains: “The FSG has a dynamic now that they didn’t have a year or two ago and it’s the very significant impact that Covid had. have been there towards their finances “who have followed the FSG’s approach in recent years.
“I don’t know the details of Liverpool’s earnings report, but the kind of figures given around for Red Sox and the other Professional Baseball League baseball teams are between 70 million and 100 million dollars.
“It’s a huge boost for any business, especially one held by few individuals. It’s mainly owned by John Henry but with the cooperation of about 15 or 16 different people. It is difficult to capitalize a math operation when you do that type of typing.
“By selling 20% of their operations to RedBall, they will instantly reap about $ 600 million. It allows them to weather any possible cash crisis created by Covid.
“Covid has opened a door of opportunity and I don’t think that will close immediately as not only has there been a huge financial loss for the teams this year, the Covids effect will go well next year. 2021 and there will be cash flow problems. “
So, getting cash into business at a time of capitalization is extremely difficult in the wake of a pandemic. But how does it benefit Liverpool? Is it merely a tool to make money for someone else or an investment in making sure the Reds are able to maintain a power in the market despite the challenging economic situation?
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Zimbalist sees interest or business, team and fans.
“How does it impact the fandom, I can say it’s very positive,” he told ECHO.
“That means fans of the team can have a direct stake in Liverpool’s success. If I were a Liverpudlian I bought the team stake and now I have two reasons to support the team. The first reason is I am a fan and the second is if Liverpool does well and my stock price goes up.
“That can create more fanaticism and fandom. It’s good for the owner but it can also be good for the fans.
“This allows the owners to refinance their finances and gives them extra money to sign players and can act as a lever to boost the team’s strength. “