July 20 (Bloomberg) -- On a steamy night in April, Fenway Park is gussied up with bunting as the Boston Red Sox prepare to host the Texas Rangers.
The owner’s box is a mix of corporate and academic types, including hedge-fund managers and the president of a nearby liberal arts college. Red Sox co-owner Tom Werner holds court, recounting the experience of witnessing one of the two other teams he co-owns win a big title, Bloomberg Businessweek reports in its July 23 issue.
“People say it must have been fun, but watching the game was hell,” Werner said. “The fun came later.”
The trophy his players captured in February was the Carling Cup and the team is Liverpool Football Club of English soccer’s Premier League. Although the tournament lacked the prestige of a Premier League title, the win helped fans warm to the team’s new custodians.
As chairman of Fenway Sports Group, Werner and his partner John Henry took control of Liverpool in October 2010 for a cut-rate price after paying off about $300 million worth of the club’s debt.
While Henry conceded they knew “virtually nothing” about the Premier League or soccer before buying the club, recognizing the global reach and moneymaking potential of the sport didn’t require much expertise.
The U.S., soccer resistant for so long, is now home to the owners of five of the 20 clubs in England’s top tier. Manchester United, owned by the Tampa Bay Buccaneers’ Glazer family, is the most valuable sports team in the world, according to a Forbes estimate. Arsenal, controlled by St. Louis Rams owner Stan Kroenke, is the fourth-richest club. Liverpool, winner of 18 English league championships, is the eighth.
On July 25, Werner will preside over a rare collision of worlds as Fenway’s pitcher’s mound and foul lines are replaced with penalty areas and soccer goals.
In one of 39 games being played in North America this summer by high-profile foreign clubs, Liverpool will battle Italy’s Roma, which happens to belong to a Red Sox minority owner, Thomas DiBenedetto.
While Werner and Henry weren’t exactly welcomed by Boston fans in 2002 when they bought the Red Sox and New England Sports Network for $700 million, their methodology of sourcing untapped streams of commercial revenue helped secure top talent and usher in the franchise’s most successful era since the early 1900s.
The Red Sox won the World Series in 2004 and 2007, helping the number of corporate sponsors jump to 95 from 35 in the past decade.
Werner and Henry “spent money, reorganized the team, and fixed a ballpark that everyone said couldn’t be fixed,” said Bill Simmons, Massachusetts-born editor-in-chief of ESPN’s online review Grantland.
“They couldn’t have been better owners coming out of the gate,” Simmons said.
(The author is a regular contributor to Grantland.)
Starting in 2007, Fenway began expanding its portfolio, buying a 50 percent stake in Nascar’s Roush Racing for $50 million. Seeking an acquisition with more “worldwide appeal,” Werner said, it turned to Liverpool, a club near bankruptcy because of debt piled up by North American owners Tom Hicks and George Gillett.
“Someone mentioned Liverpool’s games against Manchester United draw an estimated 500 million global television audience,” said Werner. “Coming from MLB, we simply could not relate to that number.”
Each game in the 2011 World Series was watched by 16 million people on average.
Werner was also attracted to the fact that the Premier League operates without the salary restrictions, player drafts and revenue sharing of U.S. sports leagues.
“In baseball, when you acquire a franchise, you are one-thirtieth of an industry,” he said. “If we sell a Liverpool jersey to a supporter in Jakarta, we keep 100 percent of that.”
Sam Kennedy, president of Fenway Sports Management, said the Liverpool deal opens new markets to the company’s corporate partners, including Boston-area based companies such as New Balance and Dunkin’ Donuts.
“Red Sox Nation can only expose a sponsor to six states,” he said.
By enabling FSG to expand its corporate relationships worldwide, Liverpool can act as a global amplifier.
In January, Liverpool announced the most lucrative jersey deal soccer has ever seen, a $40 million-a-year partnership with a New Balance subsidiary called Warrior.
The final piece of Fenway’s worldwide marketing strategy came in April 2011 with the signing of LeBron James. In exchange for acting as James’s global marketing representative -- the Miami Heat star may be divisive at home but is widely beloved in Asia -- FSG offered him a minority ownership share in Liverpool.
Asked why James eschewed more traditional agencies, his business manager, Maverick Carter, said: “They don’t own sports franchises last time I checked.”
Liverpool is far removed from its glory days. Beginning in the 1990s, the historically great club struggled to adapt to the globalization of English soccer and was eclipsed by Manchester United both on the field and commercially.
Werner is confident he, using the methodologies perfected at Fenway, can restore Liverpool’s fortunes -- even though he’d never been to a Liverpool game before buying the team.
Results have been mixed so far. Before the 2011 season, Fenway splashed $179 million on a crew of underperforming players who failed to qualify Liverpool for the elite European tournament, the Champions League. In May, the club posted an $80 million loss for 2011.
“No supporter will take pleasure where we are right now,” said Werner.
Henry said the past 18 months have been humbling.
“Our first year and a half was spent learning as much as we could,” he said. “We’re just now really beginning to understand what we have to do differently.”
Over the past three months, Fenway overhauled Liverpool’s management team. They fired manager Kenny Dalglish and hired Brendan Rodgers.
“I genuinely think a club of our status and value to the football world, we can go (win) again,” said Rodgers. “But it’s going to take time, and whether it will be in my time, I’m not so sure.”
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