When Tim Hicks and George Gillett assumed control of Liverpool F.C. three-and-a-half years ago, few thought the term "saga" would be linked with the owners so readily, so soon. Such is the attitude surrounding new investment in soccer. There's rarely pause for reflection, time spent dwelling on the negative. As Thaksin Shinawatra's spell at Manchester City illustrated, pocks short of a conviction at trial can be glossed-over. Thus when the two men (already owners of major sports teams) bought Liverpool in February 2007, promised to invest £200 million and build a new stadium, few were cynical enough say "I'll believe it when I see it."
Kenny Huang, Liverpool, And The English Premier League’s Impending China Syndrome
Even now, their club having finished in seventh place, the unapproved plans for Stanley Park thrown into the basket with the umbrellas, the red half of Merseyside has reason for optimism. The sadness of losing their choice manager has been salved by getting the people’s coach, who then pulled-off the headline signing of the summer. Stevie G’s staying! ’Nando is staying! Yeah, Mascherano might go, but with the news that would-be owners are primed to bring the club’s investment in line with its stature, the darkest days may be behind LFC supporters.
That kind of optimism is always present when unpopular owners leave. It's an attitude that's fed by the implied assumption the new guys can't be any worse; paradoxical, considering there's always a time where the current, unpopular owners were "the new guys." There's always the feeling that anybody putting forth huge money must want what's best for the club. One need only look to Portsmouth's plight last season to see the cruel optimisms that infuse supporters at the end of each bad owners' reign. Although Pompey's problems got progressively worse with each new, unsuccessful investor, there was always the hope the next one would be better.
For Liverpool fans, Jianhua “Kenny” Huang has become that next one, with news early this week identifying the Chinese-born businessman as the man leading Liverpool’s takeover. And that’s how Huang has approached the deal - as a takeover. Rather than approaching Hicks and Gillett and negotiating an inflated price designed to have the owners a payday (some reports have the owners demanding £200 million above the perceived market value), Huang went to Hicks and Gillett’s creditor’s, the Royal Bank of Scotland (RBS), with the idea of buying-out Liverpool’s outstanding debt, thus becomng Hicks and Gillett’s main creditor. With Liverpool having to work with RBS last year to restructure a debt they had trouble servicing, Huang’s could leverage the creditor’s role to gain control of the club.
It’s the kind of aptitude you’d expect from a man whose made his name predicting which piles of money are most likely to grow. Huang was the first Chinese college graduate to be employed on the New York Stock Exchange, further educating himself at Columbia and St. John’s after moving to the States. He eventually combined his business acumen with knowledge of his homeland, working with the Houston Rockets and New York Yankees to establish the teams’ brands in China. Founding a youth sports development group, managing an investment group, philanthropic work that’s won him awards in China - Huang’s done it all without acquiring tycoon status. He’s seen as the brains, not the bank. That his brain has been drawn to Liverpool speaks to the enduring value of the brand, the deflated price and the opportunity that is Liverpool.
It’s the nature of Huang’s financial backing that, revealed over the last two days, speaks to the perceived value of the Liverpool brand. Once it became clear Huang was too smart to risk financing his own investment, one outlet started to put the pieces together and determined that it’s actually the Chinese government that’s looking to buy the Reds. The China Investment Corporation, - a fund where China puts money to make money - has sold $558 million of shares in Morgan Stanley to fund the Liverpool purchase. That amount, £351.4 million, is almost the exact amount of Liverpool’s debt. Although the is denying aligning with Huang, Huang has denied formally bidding on the club, and Liverpool has played down the viability of a prospective buyer’s approach to the RBS, the Guardian’s sources confirm Huang is fronting the CIC’s bid. And if you’re not keeping track, that’s a front for a front.
It's not everyday that a super power wants to invest in your team. And we're not talking Barcelona, Real Madrid, Manchester United super power. This is China. You know - we have 1.3 billion people China. We're talking literal, international, we throw people into space and jail super power. "We have contingency plans for nuclear fall-out. You don't think we can come up with a plan for Manchester United?"
At least LFC supporters won’t have to worry about new owners changing the team’s colors.
While Huang/CIC has not make a formal bid, the potential transaction raises a number of hereto overlooked questions. CIC may not be the Chinese government, but there is little is only one functional distinction as it concerns Liverpool. While CIC is playing with China’s money, its actions are not necessarily coupled with China’s, though many concerned with China’s politics may not make the distinction. CIC’s narrow focus (making money) is much different than its backers’.
Thankfully, the practices of both Huang and CIC hint they're looking at Liverpool as a business venture - a buy low, sell high investment. The group doesn't seem likely to funnel China's huge resources into soccer; at least, not any more than the Abu Dhabi group has funneled its resources into Manchester City. Still, are we reaching a point where you may need to be an Abu Dhabi or China in order satiate the Premier League thirst? How else do you respond to calls for investment from a fanbase that already has Gerard and Torres, Mascherano and Reina, Carragher, Agger, Johnson, Cole and Kuyt? The new standards at the top of the Premier League may require oil fields and a large tax base.
There’s a healthy amount of hyperbole there, but it’s still worth considering the trend. For years the refrain concerning Premier League debts’ been as long as people are willing to buy the clubs, the teams are fine. Liverpool’s mounting debts are cast in new light when a Huang and CIC-level investor is needed to assume them, as are Manchester United’s when a supporters’ trust must turn to a legion of financiers (the Red Knights). Whereas American sports moguls and Russian oligarchs made up the last class of Premier League barons, now government-supported venture capitalists and Justice Leagues of affluent businessmen are required.
But don’t count me as one who’ll deride the league’s state. I find it all incredibly compelling. Sheiks are people too, and as long as there are enough captains of industry and billion person nations of social-capitalists to keep the ship moving, there’s always a chance to correct its course. Along the way, the Premier League will turn into that 20th season of Football Manager - the point where the same formulas have been applied over and over again, and all of a sudden your regenerated players are scoring 1.5 goals per match as 20-year-olds. Except in this version of the game, the distortion isn’t in the players and the results. It’s in the resources. It’s true that a club’s debt is only a problem if somebody isn’t willing to assume it, but given the resources available to the few entities that can take on Liverpool and Untied-esque debts, we may see a level of commitment that makes Roman Abramovich look practically equivocal.
Which is exactly what Liverpool fans may be hoping for.
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