INSIDE STORY: FSG's conflicting blueprint for clubs

Steve Brenner 09:49 03/11/2015
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  • Boston Red Sox failed to reach the playoffs after finishing bottom of the American League.

    When news of Brendan Rodgers’ sacking at Liverpool filtered across the Atlantic earlier this month, Boston Red Sox fans with their eyes on the beautiful game simply shrugged their shoulders.

    Both sets of supporters share the same ownership in the shape of the Fenway Sports Group .

    Both are currently harbouring similar feelings of fading grandeur while their management structures are chopped and changed.

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    While an English title was last paraded in front of the Kop in 1990, the second most famous baseball franchise on the planet last bagged the World Series two years ago before slumping into a succession of mediocre campaigns. Yet the men who stride in the corridors of power in Massachusetts and Merseyside are clearly no fools. Those involved in sports business here in America talk of owner John Henry as one of the finest businessmen of his era while co-owner Tom Werner is equally astute.

    Trigger happy? Certainly, they aren’t afraid to make changes. 

    Yet ask most Liverpool fans if , in retrospect, they were unhappy about the dismissals of Kenny Dalglish and Rodgers and a resounding no will come your way.

    At the Red Sox, the managerial roundabout has been spinning at full pelt which has done little to settle the nerves of frustrated followers. Most notably, GM Ben Cherington, who helped create the team which went all the way in 2013, was sacked in August.
    Reds revolution: Liverpool are in their sixth season under FSG ownership.

    With Fenway Park boasting the highest average ticket price, the moans emanating from the bleachers are understandable. The average ticket price of $52.34 is close to double the MLB average.

    There is, however, a striking upside. Boston have reached the post-season in exactly half of the 14 years FSG have been in charge. And, most importantly, just three years after their stewardship began, the 86-year wait for a World Series crown was ended.

    Such is the competitiveness of both the MLB and the Premier League that often the tough decisions which affect matters on, and off, the pitch need to be made. In today’s billion dollar sports business, something has to give. You want star players and trophies? Well, expect to pay more at the ballpark. It’s sporting economics.

    While that may spark chaos, behind the scenes a business plan has been formulated which, it is hoped will benefit in the long run.

    One look at FSG’s portfolio in the US says as much. Following their purchase of the Red Sox in 2001, the New York Yankees have , for once, got a rival in the spending stakes. Their one time ‘little brother’ has grown up.

    At the start of this season, Boston’s wage bill was an eye watering $187,407,202 – the largest in a proud 114-year history. The much vaunted ‘Moneyball’ approach which relied heavily on statistical analysis and the hope of a diamond being plucked from the rough has been placed on the backburner.

    Over at Anfield, huge money has also been spent – Rodgers was the highest spending Kop manager in history lavishing an incredible £312.8m in three years (he also sold Luis Suarez and Raheem Sterling for a combined £105m). While there have been successes, much has been wasted during their five-year tenure. The astonishing £35m for Andy Carroll is one of many questionable, exorbitant transfers under their watch.

    Yet delve behind the scenes and it becomes clear there is a larger picture taking shape. The Red Sox corporate structure isn’t just about baseball or soccer. Marketing deals with NBA star LeBron James and NFL miscreant Jonny Manziel are in place while their own NESN TV network delivers baseball and college sport content to over four million homes. The Roush Fenway Racing team is a force in NASCAR and FSM (Fenway Sports Management) centres on brand awareness and sponsorship, with the PGA Tour a main client.

    Similarly at Anfield, the sponsorship deals struck in the past four years are made with global – not just domestic – riches in mind. A total of nine sponsorship contracts were completed in 2014 with the likes of Garuda Indonesia, Subway, Dunkin’ Donuts and Vauxhall.

    Offices in London and Dublin have been created while merchandise shops are open in Malaysia with Thailand and Indonesia following suit, all pointing to an approach which aims to tap into the club’s vast foreign fanbase, estimated at an incredible 580 million people worldwide.

    Henry and his cohorts are well aware of the importance of nurturing the customer. The Red Sox nation marketing push was a huge success in Boston while the regeneration of the famous Fenway Park, including putting seats on their famous ‘Green Monster’ wall, has worked superbly.

    Sports lawyer Irwin Kishner, head of the corporate department of respected New York law firm Herrick Feinstein , has worked with FSG on a number of issues for many years and knows no matter what turmoil envelops in the Merseysiders’ dugout, the club remains in the safest of hands.

    “FSG know exactly what they are doing with what are essentially two of the most famous franchises in sport. The American sports ownership model is far ahead of what they have in Europe. If you take American business principles and apply that to teams in the Premier League, you will soon see a myriad of new revenue streams,” he told Sport360 in their plush Manhattan office. 

    “American owners aren’t numb to the way the Premier League is structured. The merchandising, the stadium experience, it’s just so far evolved from anywhere else. Can they emulate NFL or MLB? There’s no reason why it can’t be like that. They are very astute in building a plethora of brand opportunity and have done a very good job of building their brand – learning how to monetize all their different revenues has been key. That helped them gather a lot of steam which eventually led to them winning the World Series again. 

    “Yes, the Red Sox have struggled recently but looking at the prior history and where they are today, they have enjoyed great success. Their management team is superior to what they inherited.”

    “John Henry is a brilliant businessman. Werner a smart guy too. They play well off each other” – Kishner

    When FSG finally ended the nightmare reign of Tom Hicks and George Gillett, some members of Red Sox nation feared the money in the vaults would be spent in England, not the US. While younger fans appreciate the involvement of Liverpool and have turned into Kop fans following the explosion of the Premier League here, the older generation were, and to some degree remain, sceptical.

    “Managing two franchises at once is very possible. You need to have the right people on the ground an they have a very solid systems in place. They are very well respected, especially owning two seminal franchises,” added Kishner. “John Henry is a brilliant businessman, Werner is a smart guy too. They play well off each other.”

    There are certainly difficulties and criticisms of their ownership. The relationship with their own NESN network plus ownership of the Boston Globe newspaper has raised questions over impartiality.

    Meddling in team affairs has also been rumoured. In his book from 2013, Terry Francona, the man who helped seal that first World Series pennant since 1918, wrote how Werner demanded the team played a more exciting brand of baseball to boost their own TV ratings.

    Fenway Sports Group owner John Henry is said to be worth $2.2billion. 
    “They come in with all these ideas about baseball, but I don’t think they love baseball,” he wrote. “I think they like baseball. It’s revenue, and I know that’s their right and their interest because they’re owners… and they’re good owners. But they don’t love the game. It’s more of a toy or a hobby for them.”

    Yet is there a team on earth who have the perfect, angelic custodians who never put a foot wrong?

    “FSG always pride themselves on being very analytical, of late though they have come under pressure because of what has happened at Liverpool. It must be noted however that the club are finally turning profitable after years of losses,” added Daniel Etna, a partner at Herrick Feinstein. “FSG are trying to rebuild the team while also making the club functional in a business sense. When that intersects with what the fans are looking for, that often create issues.

    “The Red Sox management is changing which causes ebbs and flows but the owners get high marks for taking a team and helping it operate as a profitable business. Lately, they have been beaten up. Maybe there are issues with the way they select management, yet their business acumen is undoubted.”