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Liverpool owners are worth £5BILLION - so why did they furlough staff?

  /  autty

As the news broke over the weekend that Liverpool would be putting their non-playing staff on furlough, a quote from chief executive Peter Moore from last year started doing the rounds.

'We had this historical figure, Bill Shankly, a Scottish socialist, who built the foundations. Today too, when we speak about business questions, we ask ourselves: 'What would Shankly have done? what would Bill have said in this situation?''

Last month, Jurgen Klopp made it clear where he stood on coronavirus: 'The first thing you have to do is be generous: generous with words, generous with feelings and generous with money of course as well. That's what we do, that's clear, wherever we can help we try to help, 100 per cent.'

Moore's words were a nice idea but the truth of the modern Liverpool is that they are the product of ruthless capitalism. They are, after all, part of the third biggest sports conglomerate on the planet.

This is an organisation valued in the billions and now they are using taxpayer money to prop up an arm of the business.

John W Henry has been the owner of Liverpool since 2010, when he took over from the failed Tom Hicks and George Gillett Jr regime.

He made his money in the financial markets and quickly moved into sports ownership. There was his stint owning the Tuscon Turos, a minority stake in the New York Yankees and then the purchase of the Florida Marlins before the end of the last century.

Henry's real announcement that he was on the scene was buying the Boston Red Sox along with Tom Werner in 2002. They are one of the most storied franchises in MLB and under Henry and Werner, have tasted serious success.

Werner was an executive producer for television shows and had that role on The Cosby Show, Roseanne, 3rd Rock from the Sun and That 70s Show.

Together they have crafted the first team in the 21st century to win four World Series, ending the 86-year 'Curse of the Bambino' in the process.

Their company, Fenway Sports Group, is named after the Red Sox's stadium. That umbrella organisation also owns Liverpool. At a lower level, they also run Roush Fenway Racing from NASCAR and minor league baseball sides the Pawtucket Red Sox and Salem Red Sox.

Combine a serial winner in MLB and a team that took the Champions League last season and looks set for the Premier League this campaign and you can understand why FSG was valued at $6.6billion (£5.3bn) last year by Forbes.

That's only behind Arsenal owners Kroenke Sports – $8.4bn (£6.8bn) – also owners of the LA Rams, the Denver Nuggets and the Colorado Rapids, and Dallas Cowboys owner Jerry Jones – $6.9bn (£5.6bn) – in terms of ownership groups worldwide.

Within that, there is also 80 per cent ownership of the New England Sports Network, and control of the Boston Globe, although the value of those stakes pale in comparison to Liverpool and the Red Sox.

Henry himself was estimated to have a personal net worth of $2.6bn (£2.1bn) in November 2018 on the back of his sporting success.

Those numbers are all well and good when the global situation is normal, but the truth is that Henry and FSG must be feeling some of the pressure brought about by coronavirus.

The 70-year-old has seen assumed revenue from the rest of Liverpool's season – plus the benefits of a new kit deal with Nike – go up in smoke, while the baseball campaign has been suspended until at least the middle of May. There are serious concerns it might not go ahead at all.

MLB's commissioner Rob Manfred announced a delay last month, while the Centers for Disease Control and Prevention in the US have recommended against gatherings of 50 or more until at least May 10.

Last week, an agreement was rapidly reached between players and owners across the league that saw both sides agree to concessions.

Players will receive $170m (£138m) in salary in advance over the next two months – which pales in comparison to what they might expect to earn – and 'service time' credit, which sees players edge towards free agency.

Red Sox pitcher David Price, for example, rakes in £485,000 a week, or £2.1m a month. Split with the rest of the division, he will not receive anywhere near the £4.2m he is meant to between now and the end of May.

There has been no indication that non-playing staff might be hit at the Red Sox as it stands. Clubs across the league promised full-time employees will receive their salary until April 30 with nobody to be made redundant.

That said, some employees in MLB have received a warning letter to give a 60-day notice on potential mass redundancies.

Like in England, there is a lot at stake financially. There is a potential $1bn that will be lost in broadcast advertising revenue for America's top three sports leagues amid the pandemic, according to Media Radar. It matches the Premier League's potential TV rights bill of £762m.

That would be a particular concern for Henry, given his ownership of New England Sports Network, which broadcasts games from the Red Sox and the Boston Bruins.

A solution that has been pitched is playing behind closed doors in empty spring training ballparks in Florida and Arizona, while quarantining players.

But in a similar vein to the Premier League's own plan for a possible 'festival of football', that depends on how the pandemic develops. The disease does not follow the best laid plans of mice and managers.

A stark warning came last week when a Boston Red Sox minor league player tested positive for coronavirus. That meant they had to shut down the South Player Development Complex and give it a deep clean. An organisational hub of this franchise had been hit.

Yet back on these shores, the decision to turn to the government to pay 80 per cent of non-playing staff wages will rankle.

That is especially the case given Liverpool posted pre-tax profits of £42m in 2018-19 and publicised that in February this year. Sure, they might be topping up staff wages themselves but it is a plaster on a bullet wound.

And while there might be problems across Fenway Sports Group if this crisis continues to develop, the most any Premier League side is estimated to potentially save from furloughing staff is £1.3m per month. That's 1/4000th of FSG's value.

Piers Morgan slammed them on Monday. 'Liverpool Football club built up such a good reputation in recent years under Jurgen Klopp, and winning the Champions League, this dynamic wonderful team, everyone was proud, everyone loved what Liverpool were standing for,' he said on Good Morning Britain.

'All gone, all gone, because their billionaire owners in America decided that this was the time in a year when they made £45m profit that they were going to furlough their staff at Liverpool Football Club.'

Jamie Carragher also tweeted over the weekend: 'Jurgen Klopp showed compassion for all at the start of this pandemic, senior players heavily involved in players taking wage cuts. Then all that respect & goodwill is lost, poor this.'

Former player Dietmar Hamann was equally taken aback, adding: 'Astonished by the news that @LFC takes advantage of the furlough scheme to claim 80 per cent of non-playing staff wages back off the government. That's not what the scheme was designed for. Contrary to the morals and values of the club I got to know.'

According to reports, there had already been talks about how sacrifices could be made to help all staff and society on Merseyside while this crisis goes on. The move on Saturday diminishes that and the charitable efforts of the Liverpool players, with the squad yet to agree to a pay cut.

Some people have pointed out that it makes simple business sense to use a scheme open to businesses – it will protect Liverpool in the long-term. At the same time, though, it also clearly shatters the image that Moore and Liverpool have created for the organisation.

Henry, Werner and the whole of FSG now have a lot on their plate across their various ventures. This furloughing, in financial terms, is just a small portion of that.