Why LeBron James is joining forces with Liverpool FC

Sourcing investment has been something that has been on the agenda for Liverpool owners Fenway Sports Group for some time.

Prior to the pandemic the high value of their business interests, in particular the growth seen by Liverpool thanks to the ability of FSG to leverage success on the pitch by Jurgen Klopp's men, provided them with the perfect chance to be able to create some capital by offering up a slice of the FSG pie.

When COVID-19 hit the goalposts moved but the need for capital was just as important in trying to make sure their business interests remained profitable and they continued to try and see growth despite the impact of the pandemic.

FSG have already sold small shareholdings to private equity firms, including the likes of Arctos Partners, but in October last year the first murmurings of a major deal with the special purpose acquisition company RedBall Acquisition Corp, fronted by American billionaire financier Gerry Cardinale and baseball analytics guru Billy Beane first surfaced.

RedBall had raised over $500m at their initial public offering and were seeking to raise around that sum again through a second tranche of investment to seal a deal that would have seen FSG, and ergo Liverpool, go public on the stock exchange, a move that would have generated around $500m in capital for John W. Henry et al.

That never happened owing to FSG dialling back on their desire to go public and RedBall struggling to get the remainder of the necessary funding owing to some disagreement from potential investors over the $8bn valuation of FSG's overall operations.

But while RedBall left, Cardinale and his private equity firm RedBird Capital Partners have remained and a deal could well be closed on a $750m investment in FSG very soon, a stake of around 10 per cent being suggested.

And now, basketball superstar LeBron James is set to join John W. Henry and Tom Werner et al in the ownership structure of FSG, along with James' business partner Maverick Carter.

Henry's wife Linda Pizzuti welcomed the new duo to the company last night as she tweeted: "Welcome to an even bigger part of the FSG family".

It is understood FSG have now also approved the $750m RedBird investment deal, subject to MLB approval.

James' arrival in the ownership structure would not alter Henry's position as principal owner, with RedBird set to become the third biggest partner. The precise shareholdings being taken are unknown.

Quite what the potential investment will be used for remains unclear, with neither Liverpool or the Boston Red Sox likely to see a direct impact from the funds but potentially benefits further down the line from enhanced revenue streams.

 

The Boston Globe suggest that funds could be used to expand the portfolio of sporting organisations under the FSG umbrella, something that was key to the RedBall plan last year.

While James can clearly help boost Liverpool's profile, there is also no doubt that Cardinale will be interested in Liverpool's position in the portfolio, especially when you consider his long-standing interest in European football, something he has solidified through the purchase of French second tier side Toulouse through his RedBird FC business, part of RedBird Capital.

Cardinale was also linked with a takeover of AS Roma last year before fellow American Dan Friedkin completed a sale.

James already had a minority 2% stake in Liverpool which he bought back in 2011 for £4.7m. Recent estimates have suggested that could now be worth more than £37m.

In terms of James and further mutual benefits for him and FSG as their ties become closer, the ECHO spoke to Michael Silverman - sports business reporter at the Boston Globe - back in January and he provided some insights.

Silverman said: "My source who has knowledge of the [RedBird] deal informs me that the governance roles of John Henry as principal owner, Tom Werner as chairman and Mike Gordon as president of FSG will remain exactly the same.

"This investment will not have a direct impact on Liverpool, the Red Sox, NESN and Roush. [But] another arm of the FSG family is Fenway Sports Management, a sports marketing and consulting firm.

"That's the LeBron James connection, he is a part of that and as we know LeBron James has been a minority shareholder in Liverpool for some time and is now a client of Nike who now do Liverpool's kits. That was a big part of the Liverpool and New Balance court case.

"As far as I know to date we haven't seen much from LeBron on that relationship aside from a picture of him in a Liverpool kit. That to me signals that we are going to see, with this potential investment, a bit more of that LeBron James influence with Fenway Sports Management, we may see some moves there."