As Europe's new champion, Liverpool collects $21m - but a bigger reward is the resulting increase in the Reds' value
Millions of Liverpool fans around the world cheered their team’s 2-0 victory over Tottenham Hotspur in Saturday’s Champions League final in Madrid, but for one billionaire on the other side of the Atlantic it was especially gratifying.
John Henry, the principal owner of Fenway Sports Group, which also owns the Boston Red Sox, has put his money behind Liverpool since 2010. For Joe Lewis, a Bahamas-based currency trader who has controlled Tottenham since the turn of the century, the evening was a disappointment. Their stakes are each valued at about $1 billion, according to the Bloomberg Billionaires Index.
As Europe’s new champion, Liverpool collects 19 million euros ($21 million) for its latest efforts on the field. But a bigger reward is the resulting increase in the Reds’ value.
“It helps your standing with sponsors, the value of your club and where you sit in the global pecking order,” said Dan Jones, global lead for sports business at Deloitte. “The better a club does on the pitch, the greater its value.”
Both owners have already benefited from their investments. Fenway Sports bought Liverpool for about $500 million in 2010. The club had an enterprise value of around $2.4 billion at the start of 2019, according to KPMG calculations.
Lewis built his stake more gradually, joining with Daniel Levy to buy 27% for about 22 million pounds ($27.7 million) in 2001. Today, the pair own 86% through ENIC, with KPMG estimating the club’s value at $1.9 billion.
A spokesman for Tavistock declined to comment, while representatives for Fenway, Liverpool and Tottenham didn’t respond to requests for comment.
Liverpool got an early break in the match when Mo Salah scored a penalty in the second minute. Divock Origi doubled the advantage in the 87th minute to seal the win.
The result, largely expected before the match because Liverpool finished well ahead of Spurs in England’s Premier League, hands the club its sixth European crown. Only AC Milan with 7, and Real Madrid, with 13, have won the continent’s most prestigious event more often. Tottenham is yet to lift the trophy.
The teams are more evenly matched on the business side.
Tottenham had record revenue of 381 million pounds for the year ended June 30, 2018, with retained profit more than tripling to 113 million pounds -- the most profitable single season in the history of club football, according to Jones. Liverpool’s revenue reached 455 million pounds for the 12 months through May 2018 with 106 million pounds in profit.
Both billionaires had modest starts. After his father died in 1975, Henry took over the family’s soybean farm in Arkansas at the age of 26. Buying futures contracts to protect against volatile crop prices led to him to build a mathematical model to profit from these trades. He opened investment firm John W. Henry & Co. in 1981.
Lewis, 82, who was born above a pub in east London, also took over his father’s business and built it into a collection of themed restaurants, using their success to finance other ventures. Around the time Henry set up his firm, Lewis began to focus on trading, including betting against the British pound in 1992 like George Soros. Tavistock Group bears the name of his father’s catering firm and has a portfolio of more than 200 companies worldwide.
Their clubs have been run relatively frugally -- at least for sports teams -- and are known for making shrewd deals in the transfer market. Such discipline hasn’t stopped them from outperforming far wealthier teams, including Liverpool’s defeat of Spanish superclub Barcelona in the semi-finals.
Proceeds from Liverpool’s sale of Brazilian midfielder Philippe Coutinho to Barcelona last season were used to buy defender Virgil van Dijk and goalkeeper Alisson Becker, both star performers this season. Liverpool has spent a net average of 42 million pounds each year on player transfers since becoming part of Fenway Sports in 2010, far less than rivals Manchester United and Manchester City. Tottenham’s net outlay averaged just 3.9 million pounds over the same period.
Tottenham’s discipline extends to its payroll, which is the lowest among the English league’s six biggest teams, according to Sporting Intelligence. The club has instead funded the construction of a 62,000-capacity stadium in north London, increasing its debt to about 460 million pounds.
Liverpool has followed a different path under 69-year-old Henry, who scrapped plans for a new arena and instead chose to redevelop the team’s Anfield stadium. That’s left its balance sheet relatively debt free with just 55 million pounds of bank loans, though it also owes 100 million pounds to its parent company, according to its 2018 annual report.
“On the business side, they’re both in tremendously good shape,” Deloitte’s Jones said.
For Henry, Saturday’s result gives him another reason to be thankful for his 2010 investment.