FSG - long term report

[Beamrider]

Because I'm bored and have nothing better to do I decided to pull together some very high-level numbers around LFC's spending during FSG's ownership. These figures are pulled directly from the cash flow statements in our accounts from 2010-2022.

[xtable=border:0|cellpadding:0|cellspacing:0|266x@]
{colgroup}
{col=185x@}{/col}{col=81x@}{/col}
{/colgroup}
{tbody}
{tr}
{td=185x19}Sources of income{/td}
{td=center|81x@}£'m{/td}
{/tr}
{tr}
{td=@x19}Operations{/td}
{td=right}

721.4​

{/td}
{/tr}
{tr}
{td=@x19}Sale of players{/td}
{td=right}

584.3​

{/td}
{/tr}
{tr}
{td=@x19}Shareholder loans{/td}
{td=right}

136.3​

{/td}
{/tr}
{tr}
{td=@x19}Bank loans{/td}
{td=right}

42.5​

{/td}
{/tr}
{tr}
{td=@x19}Sale of capital assets{/td}
{td=right}

10.6​

{/td}
{/tr}
{tr}
{td=@x19}Finance income{/td}
{td=right}

0.9​

{/td}
{/tr}
{tr}
{td=@x19}Total incoming funds{/td}
{td=right}

1,495.9​

{/td}
{/tr}
{tr}
{td=@x19} {/td}
{td} {/td}
{/tr}
{tr}
{td=@x19}Spending{/td}
{td} {/td}
{/tr}
{tr}
{td=@x19}Player purchases{/td}
{td=right}

1,190.2​

{/td}
{/tr}
{tr}
{td=@x19}Capital spend{/td}
{td=right}

278.3​

{/td}
{/tr}
{tr}
{td=@x19}Interest paid{/td}
{td=right}

32.8​

{/td}
{/tr}
{tr}
{td=@x19}Total outgoings{/td}
{td=right}

1,501.4​

{/td}
{/tr}
{tr}
{td=@x19} {/td}
{td} {/td}
{/tr}
{tr}
{td=@x19}Net cash flow{/td}
{td=right}

(5.4)​

{/td}
{/tr}
{/tbody}
[/xtable]

I've talked in the past about how FSG tend to balance the books year on year - i.e. cash in is generally equal to cash out, and the high-level summary reflects this - £1.5bn raised, £1.5bn spent.

Some comments:
Operations - this is the net amount of cash the business generates, before financing or spending on capital assets / players. So I've not looked at wage spending over this period, wages are deducted in coming to this figure.
Sale of players - this is cash instalments received, not headline sale proceeds, and it will include contingent bonuses on player deals etc. It may or may not include money still owed to us by Barca / Villa for Coutinho. 🙂
Shareholder loans - this is what FSG have put in to balance the books over the course of their ownership. This includes some initial funding to prop things up, some additional funds to top up the transfer coffers many moons ago and the loan to build the Main Stand, net of repayments of that loan.
Bank loans is the growth in our revolving credit facility (basically a business overdraft) and this will fluctuate up and down, year on year. It's basically the means by which we balance cash flow to (as good as) zero.
Sale of capital assets is mainly the proceeds on Melwood.
Player spend is cash spent on players up to 2022, so won't include any outstanding instalments on players bought before then.
Capital spend is mainly Main Stand, Kirby and part-build of the Annie Road. There'll be all sorts of other bits and bobs in there too, but those are the main projects.
Interest is mainly to the bank.

To focus on FSG's input, ignoring the team spend:
- They've put in a net £136m
- They / we have spent a net £268m on capital assets
- Which means LFC has self-funded £132m of that capital spend (basically half), although some of this will have been paid out of the additional revenues generated by the Main Stand expansion.

Then on the player side, our player investments have basically been self-funded out of our operating profits and player sales.

BUT: other than loan repayments (netted off their shareholder loan amounts above) they have NOT taken any money out of the club (although the Glazers are the only major PL owners who have done).

This kind of lays bare the extent to which they've funded improvements to the squad (not at all), but it also demonstrates that the club is capable of being largely self-sustaining. But clearly, to compete with the oil clubs, you need more money coming in.

Knock yourselves out.

 

[keniget]

The depressing thing is that it's not so much the lack of investment in the the team (i.e. players) that gets to me any more but the business / strategic side of things, which is a sad state of affairs for a fan.

I see other clubs (namely City) empire building and pursuing excellence in every aspect of what they do and then when I look at our club, it feels like we're just meandering along without any real strategy to do what's necessary to ensure we can compete in the long-term.

I'd feel more optimistic about things if we could still hold onto the fact that FSG are pursuing a forward thinking moneyball esque approach and hiring the best people in the business to make that happen but all that shit has properly gone by the wayside too.

So what are we left with?

Klopp. For now.

 

[Beamrider]

The depressing thing is that it's not so much the lack of investment in the the team (i.e. players) that gets to me any more but the business / strategic side of things, which is a sad state of affairs for a fan.

I see other clubs (namely City) empire building and pursuing excellence in every aspect of what they do and then when I look at our club, it feels like we're just meandering along without any real strategy to do what's necessary to ensure we can compete in the long-term.

I'd feel more optimistic about things if we could still hold onto the fact that FSG are pursuing a forward thinking moneyball esque approach and hiring the best people in the business to make that happen but all that shit has properly gone by the wayside too.

So what are we left with?

Klopp. For now.

Agreed. I think it's pretty clear that we are an after-thought. There's no passion from FSG for LFC, we're just a business asset.
It's possible that whoever they have managing us internally (Mike Gordon or whoever it is now) actually cares about the club, but at the top level FSG is just a bunch of old American investors who like watching rounders.

 

[the count]

I am guessing that there is not much more room for them to grow our value at this stage which is where their interest really lies.
I assume they will sell if anyone offers anything close to their valuation.

 

[Markeh]

I am guessing that there is not much more room for them to grow our value at this stage which is where there interest really lies.
I assume they will sell if anyone offers anything close to their valuation.

Yea they initially seemed to have that profiteering American / capitalist we know better attitude in that they thought they could work some sort of magic around TV rights and make a fortune. Plan b was the super league and now they just seem to be plodding along looking for an opportunity to exit with a phat wedge in their pocket.

 

[StevieM]

Yea they initially seemed to have that profiteering American / capitalist we know better attitude in that they thought they could work some sort of magic around TV rights and make a fortune. Plan b was the super league and now they just seem to be plodding along looking for an opportunity to exit with a phat wedge in their pocket.

Alternatively, you could say growing a £200m investment into £4b+ in 13 years, without pumping loads (any) of your own money in is borderline genius.

City spent a fortune and created all sorts of fake commercial deals just so that they can pretend they’re now run in the same manner.

The question would be, how much more would the club be valued at if they’d pumped more money in?

 

[Markeh]

Alternatively, you could say growing a £200m investment into £4b+ in 13 years, without pumping loads (any) of your own money in is borderline genius.

City spent a fortune and created all sorts of fake commercial deals just so that they can pretend they’re now run in the same manner.

The question would be, how much more would the club be valued at if they’d pumped more money in?

Oh yea they bought a distressed asset or whatever the proper term is and steered the ship in the right direction since then, hugely increasing its value in the process. That’s what @the count was saying and I’m agreeing with, they’ve almost maxed out what they can do now.

But my point was that they’ve now abandoned the naive vision they arrived at the club with to revolutionise quaint old soccer and it’s outdated TV rights and uncertain European football incomes.

There’s nowhere left to go but sell, the competition is getting tougher and the returns on any investment in the playing squad is likely to keep diminishing. Especially when Klopp leaves.

 

[rubans]

Thanks [mention]Beamrider [/mention]
So basically Klopp the real difference maker, good to see the numbers confirming we are a well self sustained club and have to credit FSG for guidance on that. However, what happens when we get a new manager?
As an potential acquisition, we must be attractive to any prospective buyers based on current state.
By the way, is the women’d team and assets part of the current account or is that a whole new entity? Apologies, if you have already included it in the OP

 

[The Nomad]

@Beamrider

Ah ignore. Noticed you put it in cash from operations.

 

[Squiggles]

I still suspect there's further room to grow PL valuations, TBH. The UK/European market is probably maxed out, but the money from overseas rights is only going to go in one direction.

 

[Beamrider]

Thanks [mention]Beamrider [/mention]
So basically Klopp the real difference maker, good to see the numbers confirming we are a well self sustained club and have to credit FSG for guidance on that. However, what happens when we get a new manager?
As an potential acquisition, we must be attractive to any prospective buyers based on current state.
By the way, is the women’d team and assets part of the current account or is that a whole new entity? Apologies, if you have already included it in the OP

For most of the period, the cash flow figures are from the group accounts, so they include Ladies (which is a separate entity). The Ladies figures may be missing from my analysis for one or two of the earlier years as LFC didn’t always do group accounts at club level, but the figures won’t be significant. Furthermore, I believe we largely fund the Ladies via a contribution from LFC so the spend on Ladies will effectively be captured in operations, even when the full results are grouped together.

 

[StevieM]

Oh yea they bought a distressed asset or whatever the proper term is and steered the ship in the right direction since then, hugely increasing its value in the process. That’s what @the count was saying and I’m agreeing with, they’ve almost maxed out what they can do now.

But my point was that they’ve now abandoned the naive vision they arrived at the club with to revolutionise quaint old soccer and it’s outdated TV rights and uncertain European football incomes.

There’s nowhere left to go but sell, the competition is getting tougher and the returns on any investment in the playing squad is likely to keep diminishing. Especially when Klopp leaves.

It depends, I suppose, the value of their “asset” is likely to keep increasing with minimal investment because it’s value isn’t tied purely to success on the pitch.

Not ideal as a fan because we don’t care about value and crave success.

I mean, I’d love more investment, better players and competing to win everything every year - but if you look at it dispassionately and something you don’t have any emotional attachment to, then I can kind of understand why FSG are being tight fuckers - there mission is to maximise shareholder return, not necessarily deliver trophies for fans.

I know that’s probably a bit bleak - but I think that’s what football is now - none of it is about delivering anything to the fans.

If winning trophies align with getting what the owners want out of owning the club while investing they feel they want - then great.

You’re probably right in that they’ve taken the club as far as they can or have the desire to.

 

[keniget]

It depends, I suppose, the value of their “asset” is likely to keep increasing with minimal investment because it’s value isn’t tied purely to success on the pitch.

Not ideal as a fan because we don’t care about value and crave success.

I mean, I’d love more investment, better players and competing to win everything every year - but if you look at it dispassionately and something you don’t have any emotional attachment to, then I can kind of understand why FSG are being tight fuckers - there mission is to maximise shareholder return, not necessarily deliver trophies for fans.

I know that’s probably a bit bleak - but I think that’s what football is now - none of it is about delivering anything to the fans.

If winning trophies align with getting what the owners want out of owning the club while investing they feel they want - then great.

You’re probably right in that they’ve taken the club as far as they can or have the desire to.

That's not what I see at the top end of the sport.

 

[the count]

Oh yea they bought a distressed asset or whatever the proper term is and steered the ship in the right direction since then, hugely increasing its value in the process. That’s what @the count was saying and I’m agreeing with, they’ve almost maxed out what they can do now.

But my point was that they’ve now abandoned the naive vision they arrived at the club with to revolutionise quaint old soccer and it’s outdated TV rights and uncertain European football incomes.

There’s nowhere left to go but sell, the competition is getting tougher and the returns on any investment in the playing squad is likely to keep diminishing. Especially when Klopp leaves.

They were keen on having a group of untouchable teams that could never get relegated from the Premier League.
Also, the Super League would have given them permanent membership of the lucrative and most prestigious European Cup.
I guess it is the easiest way to protect revenue streams. rather than having to spend the cash to make the team competitive enough to earn those prizes on the playing field.
Something which will become more and more expensive with the arrival of nation backed teams, either by ownership, or by proxy like Chelsea appears to be

 

[StevieM]

That's not what I see at the top end of the sport.

Isn’t it?

I don’t believe City or Newcastle’s owners are in it to show off trophies - City’s owner has managed to attend like 3 games since he bought it.

I imagine the Saudi’s don’t know what a Geordie is - god only knows what’s going on in Boehly’s head, Joe Lewis is more interested in making money out of his new stadium than Spurs - the Glazers certainly don’t give a fuck.

Arsenal didn’t care about winning when they were busy paying off the new stadium.

The Brighton model returns loads without ever having to win things.

As for Everton - that’s a money laundering operation.