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A whole new ball game

John W. Henry stood impassively in front of the glass doors of his lawyer’s London office, flash bulbs igniting like a military firefight. Henry had been here before, caught in the maelstrom that follows regime change at a world-famous, passionately supported sports club starved of success. Back then, in 2002, it was when he bought the Boston Red Sox, the American baseball institution famous for not winning the World Series in 85 years. Fans blamed the “Curse of Bambino” – the superstitious belief that their team was doomed to failure since selling Babe Ruth to the New York Yankees in 1919.

And here he was again, the flashbulbs glinting off his thick framed glasses, highlighting the hint of a wry smile as he dispensed a few straight bat, pre-prepared quotes for the ruck of pressmen and fans who had gathered to watch the arrival of the new order. This time he was across the pond, and the proud new owner of a very different franchise: Liverpool FC, a club that had once been the biggest in the world, but had not won the league in two decades.

“UEFA’s new financial fair play initiative is simple: you can only spend what you earn”

The fans present on this day did not have a “Curse of Bambino” to blame for straitjacketing their club’s success. Their ire was directed at Tom Hicks and George Gillett, the club’s previous American owners, rarely seen on Merseyside in recent times, who they accused of undermining the club through a series of reckless decisions.

Two billionaires out, one billionaire in; the epitome of the bloated, globalised world of Premier League football, fuelled by the pockets of the “fit and proper persons” many feel are strangling the game. Nothing, it seemed, had changed. Except it had.

The takeover of Liverpool FC won’t see the end of the extraordinary opulence of owners such as Manchester City’s Sheikh Mansour, who pays an annual wage bill some put at £133 million. But the purchase could mark the beginning of the end of the cowboy capitalism that has exploded since the Premier League’s launch in 1992. Reasoning and rationale might just return to English football.

Out of the reds

Michel Platini is far from being an Anglophobe, but that hasn’t stopped the English press from calling him one. The former France international, arguably his country’s greatest ever player, now walks the gilded corridors of football administration. As the president of UEFA, European football’s governing body which is in charge of, among other things, the Champions League, he is one of the most powerful men in the global game. So when he took a swipe at English football in 2008 – accusing its profligate, foreign owners of unfairly dominating European competition – it was clear something would change. “The goal is not to win titles but [to make] money to pay off debts,” he was quoted as saying in The Times. “Look at the debts of Chelsea and Manchester United. FIFA and UEFA owe it to themselves to fight this. Because today it’s those who cheat who win… We are going to need to find a solution. We’re starting to work on it, but I am very concerned by clubs being bought by foreigners. I don’t see why Americans come to invest in these clubs, if not to turn them into products.”

He was right, of course, but that didn’t stop the English sports press from going nuclear. Platini was clearly jealous of the dominance of the Premier League, they reasoned. That Champions League success for Manchester United, Liverpool, Chelsea and Arsenal didn’t require English money or even many English players – making their triumph for English football about as authentic as a Beefeater theme pub in Florida – was a fact rarely mentioned.

Two years later, Platini’s “solution” has finally arrived, and will have huge ramifications for the game. UEFA’s financial fair play initiative, which will be introduced next season, is simple: you can only spend what you earn. If you spend more, you can’t compete in the Champions or Europa leagues. Clubs will be given a three-year period during which they will be allowed to operate up to a £39 million loss, tapered down to zero by 2018. To put that sum in context, Manchester City made a loss of close to £100 million in the first season under Sheikh Mansour. Platini clearly means business – the  former Belgian Prime Minister Jean-Luc Dehaene has been drafted in to monitor European clubs hoping to bend the rules.

The importance of the move cannot be overstated. European football competition, with its promise of millions in TV receipts, attracts teams like moths to a flame, and many clubs have virtually bankrupted themselves trying to stay there (see Leeds) or have parted company with seemingly successful managers who haven’t delivered European titles (see Chelsea).

While banning debt-ridden clubs from European competitions does little to address the financial problems at the lower reaches of English league football, every team in the Premier League will surely be forced to adhere. After all, every top flight club lives in hope of finishing in the top six or seven and qualifying for Europe. Becoming ineligible takes the incentive away from benefactors looking to spend big. If UEFA’s new regulations existed a decade ago, would Chelsea’s Roman Abramovich or Manchester City’s Sheikh Mansour have spent billions in an attempt to parachute their previously mid-ranking clubs on to football’s top table without the gilded carrot of European riches and glory?

Which is where John W. Henry comes in. Far from being a scattergun sugar daddy, when he took over the Boston Red Sox, Henry, who made his name as one of America’s most successful futures traders, mixed big money with smart money. Within two years he had broken the “Curse of Bambino”, winning the World Series in 2004 and again in 2007. Crucially, his success wasn’t down to how much he spent, but how he spent it.

Bat to the future?

So why should we care about Henry’s success at a team playing a glorified version of rounders? The answer lies within a book that guided Henry and will become increasingly more important as UEFA’s new financial rules begin to bite. Michael Lewis’ 2003 book ‘Moneyball: The Art of Winning an Unfair Game’ revolutionised the way that baseball looked at itself. To be more accurate, it was the protagonist in those pages who revolutionised the way baseball looked at itself and could force football into the same introspection. Lewis merely told the world about it.

The book was a biography of Billy Beane, General Manager of the Oakland Athletics, a small, unfashionable club that had been punching above its weight on a shoestring, consistently reaching the end of season playoffs while other, richer teams fell by the wayside.

Lewis, a former Wall Street trader and baseball nut, was fascinated by the Oakland As success. In 2002, the New York Yankees had a payroll of $126 million. The Oakland As, however, were the joint poorest team, with a payroll of $40 million, less than a third that of the Yankees. Lewis discovered that Beane – along with a small band of geeks and graduates obsessed with the analysis of baseball statistics, known as sabermetrics – had exploited what Wall Street traders had been hunting for for years: market inefficiencies. Beane was an expert in
finding commodities that the market had, illogically, undervalued.

Beane – a charismatic wheeler dealer who never watched the As play for fear that the subjective part of his brain would overtake the objective facts he had dug up – tried to find value in players that had been historically overlooked. He searched for the players who had fallen foul of the prejudices of the baseball establishment – the anti-intellectual cabal of coaches, players and ex-professionals who commentated on the game that Lewis dubbed “The Club”. By doing so he uncovered rough diamonds who outperformed supposedly superior, and certainly more expensive, rivals. Henry had been watching.

According to Lewis, “most baseball owners were heirs, or empire builders… Henry had made his money in the intelligent end of the financial markets. He had an instinctive feel for the way statistical analysis could turn up inefficiencies in human affairs. Inefficiencies in the financial market had made Henry a billionaire – and he saw some familiar idiosyncrasies in the market for baseball players.”

When Henry bought the Red Sox there was only one General Manager he wanted: Billy Beane. But after initially accepting the job, Beane backed out and Henry hired Theo Epstein, a young former government economist and an “outsider” uncorrupted by the clichés of baseball’s locker room. The rest is history.

How the Premier League table would look on 1st Jan according to points per pound spent. 

[INSERT LEAGUE TABLE HERE – PICTURE CUT OFF]

 

Football hasn’t had its ‘Moneyball’-moment yet, mainly because it is far harder to break down an individual’s contribution to victory in a football match than it is in baseball. But Liverpool FC under Henry could provide it. When Henry bought Liverpool, one of the first people he met was Paul Tomkins, a Liverpool blogger and author of ‘Pay to Play: The True Price of Success in the Premier League Era’, a book that attempted to analyse the correlation between the success of clubs, managers and transfer spending.

Tomkins’ book throws up some intriguing inefficiencies, especially when it comes to the merits of club managers. Rather than measuring success purely on the number of trophies and titles won, Tomkins, like Beane before him, looks at the relationship between points won and pounds spent. If, for example you divide Tomkins’ figures for squad cost by the points earned in the first half of the season a very different table emerges. Top of the pile come Blackpool, Blackburn – whose manager Sam Allardyce was recently sacked by the club’s new Indian billionaire owners – and Bolton. Liverpool come 15th, while Manchester United and Manchester City, top of the table as of Jan 1 2011, take two of the bottom spots. It makes for interesting reading, but the fact remains that not one of the top six in the pounds-per-point table would qualify for Europe in the real world. In footballing terms money still talks, but what happens when UEFA shushes it?

“Hopefully more owners like John W. Henry will arrive, with backgrounds in achieving sporting excellence through sensible levels of investment, and not siphoning off profits,” says Tomkins, before cautioning that, “even he will struggle to get Liverpool to the very top of the league given the multi-billionaires at other clubs”. When it comes to the new rules Tomkins is sceptical.  “[UEFA’s new regulations] may slow things down, and hold clubs partly accountable for spending,” he says, “but there are plenty of potential loopholes.”

Like Billy Beane, whose off-the-wall draft picks bamboozled baseball’s establishment until they turned out to be inspired signings, Liverpool fans can expect to enjoy a string of seemingly bizarre, but impeccably sourced new arrivals. It was no surprise Roy Hodgson was sacked. After all, he wasn’t Henry’s man.

The question is, where does Henry look next? Interim manager and Liverpool legend Kenny Dalglish might be a smart choice for galvanising the club on a short-term basis. But his longer-term future will be decided as much by number crunching as by his relationship with the Kop. Others might have an equally good claim for the top job. The “pounds per point” big three, could all stand a chance. Both Blackpool boss Ian Holloway and Bolton Wanderers’ Owen Coyle have worked wonders with tiny budgets. Or could we see the out-of-work Sam Allardyce become Liverpool’s next manager? According to Tomkins, Allardyce is the greatest living over-achieving manager in Premier League history. Fanciful it may be, and perhaps unpopular with the fans given Big Sam’s no-nonsense approach to the game and Liverpool’s last two seasons. But ask a Red Sox fan – curses can be broken and the price of success doesn’t have to be sky high.

 

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