FSG signed an agreement with Dynasty Equity, which resulted in the New York firm making a strategic minority investment in Liverpool.
After dominating most of the off-tone conversation for most of the year, Fenway Sports Group finally closed the book on Liverpool’s pursuit of a minority stake earlier this week.
In the sales package presented to potential investors, the owners of the Reds already opened the door to a possible sale of the club in November 2022. But they quickly pivoted to look for a minority partner to provide the capital they needed and align with FSG as a company .
It was confirmed on Thursday that New York-based Dynasty Equity had taken a minority position in the club through a joint equity investment whereby Dynasty acquired new shares in the football club.
Financial details of the deal were not disclosed, but it is worth between $100m and $200m (£164m) and aims to pay off bank debt on FSG’s balance sheet.
Infrastructure projects such as the Anfield Road End, the AXA training ground in Kirkby and the buy-back of the Melwood training facilities following investment in the women’s team.
When the Dynasty deal was announced, the message was very clear that it was not coming to help with transfer costs. Indirectly, however, the elimination of debt and related interest payments will boost the club’s cash flow and give the Reds an opportunity to move forward as a company on a more stable financial footing.
It may not be the kind of investment that some sections of the supporter base may have seen at a time when the transfer market remains out of shape, largely due to Chelsea’s reckless spending of £1billion in the past 18 months.
Owned by Todd Boehly and Clearlake Capital. But it is a good financial decision that will strengthen the club off the field, which will probably encourage it at the right time when they need to strengthen it.
The Dynasty Equity deal solved FSG’s problem, but what does it mean for the company founded last year by sports investment veterans Jonathan Nelson and Don Cornwell? Dynasty is a company whose business is to take minority positions in sports properties, be they teams, media and entertainment companies or other sports-related businesses.
Liverpool’s investment is their biggest profile to date and although they do not have operational control and it is currently inactive, they have the expertise to expand the sports business.
In recent years, sports have become an active class of their own.
Despite economic pressures, geopolitical issues and a global pandemic, ratings for major sports teams have risen. Sports, which were considered one of the riskiest industries at the beginning of the pandemic, have proven to be very resilient and have a huge impact on investors.
Speaking on the ECHO Bottom Line Podcast this week ahead of Dynasty Equity’s announcement, Bruin Capital founder and CEO George Pyne, one of the most prominent US sports investors of the last two decades, explained why venture capitalists were so interested. in sports lately, and why it’s likely to last a while.
“I started with Bruin Capital eight or nine years ago, and sports as an asset class wasn’t really as advanced as it is now,” said Pyne, the former chairman of international sports management company IMG and a former chief executive of NASCAR.
“I just see more and more people investing in sports and I don’t think that’s going to change. Why? If you go back 30 years and look at team or club valuations, they’ve grown at double-digit CAGR (compound annual growth rates). Very few things have grown as much in the last 30 years as sports.
“Sports are quite stable and recession-proof.
Fans still go to see their clubs, still go to games, so people understand that it’s a good investment. I think you’ll see more and more investors. You’ll see. more and more advanced lending and structured capital.Very few asset classes are as reliable and durable as sports. “Sports is one of the last things you want to give up in a bad economy. Fans can say they’re going to do this or that, but they’re going to watch their favorite club play. It makes sense.
“When you’re a fan of a club, it’s an expression of who you are, what you stand for and what your community means. These are things that have been built over generations.
It’s not going to go away and it’s something that’s hard to beat. “When you look at some of these brands and they’re brands, it’s a logical extension. When you think about real estate and media continuing to fragment, these incredibly powerful brands that people interact with become even more valuable in the media space.
“I believe we will have the opportunity to expand the offer in the future. As pieces of media where people cut the cords and live, clubs can be very powerful and create new ways for fans to engage in something they are passionate about, which is unlike anything else.
Everything else is a fad, even a great TV show. In sports there are winners and losers, villains and villains. Every time you think you’ve seen it all in sports, you haven’t.”
For FSG, Liverpool has been the most valuable sports property in their portfolio for some time and is valued higher than FSG’s Boston Red Sox baseball team.