alternative view on new owners

[Soleilrouge]

Do our interests as fans coincide with the new owners?

Please note I expect to be rogered from a height for expressing this theory.




New owners want sustainable long term maximum profitability

This is the only way they make money

Profit = revenue less costs

Revenue is a function of high profile footballing success (nobody has made lots of money yet from an Aston Villa or a Spurs) plus a strong brand plus a well run commercial department to get the most from same in terms of ticket sales, attendances, jerseys etc

Football success is a function of costs (players /wages etc) plus a good manager

Our club is one of the few where the large round the world support base would suggest that revenues have the ability to exponentially outrun the costs

Therefore the clubs (and owners) efforts are best focused on footballing success combined with the ability to exploit same by generating revenues

Now here is the tricky bit that I think I agree with

Their ability to generate revenues from football success is dependent upon mantaining the culture and ethos of the club and bringing the supporters of the club with them i.e. they must respect what it means to be a liverpool fan

If that last statement is correct then we have nothing to fear from the current owners if they understand all of this and are acting rationally and in their own longer term interests

In the meantime given they do not have unlimited funds they have to manage to tricky art of deciding the extent to invest in players (football success) or a new stadium (a major and necessary investment on the revenue generating side) - both are important

The owners then have to judge which manager will bring them most success within the cost base that they decide is appropriate

Rafa is rattling their cage to change that cost base

Rafa will lose that battle unless he convinces them that increasing the cost base will drive the revenues

The owners are saying that they want to see how Rafa does with the current cost base before making further investment decisions - like all managers Rafa has to work with limited resources

If Rafa wins this argument (unlikely) he stays and we are all potentially happy

If he loses and the team does not do well on the football front this season they will have to decide whether to sack Rafa

These are the decisions that all top football clubs have to make every so often

In fact it could be argued that this dose of commercial reality may even be good for a club which has underperfomed (lets be honest) for quite a number of years

What it says to me is that Rafas future with our club depends on the football results for this season

Which is how it should be for a manager who has received a reasonable degree of backing

Anyway, the net point is that I believe our interests as fans and theirs as owners are very much in line with each other. So provided they are intelligent (which they seem to be) and understand the game (not so sure about this one) then we should be ok together in the long run.

I'll get my coat.

[aws]

A nice theory but it assumes they want to maximise profit when what they want to do is maximise the return on their cash which is actually a completely different proposition.

So long as they can more or less fill the new stadium, jack up the ticket prices, have reasonable success and collect the TV money then they will be happy if they haven't had to put much cash in because when they sell they'll get a huge return on the little of their own cash they've invested.

I expect that they'd rather do that than invest more of their own cash in the hope (gamble) that they would win something and generate a bit more profit.

[Soleilrouge]

Originally Posted by aws A nice theory but it assumes they want to maximise profit when what they want to do is maximise the return on their cash which is actually a completely different proposition. So long as they can more or less fill the new stadium, jack up the ticket prices, have reasonable success and collect the TV money then they will be happy if they haven't had to put much cash in because when they sell they'll get a huge return on the little of their own cash they've invested. I expect that they'd rather do that than invest more of their own cash in the hope (gamble) that they would win something and generate a bit more profit.

understood but the amount they get for selling the club is maximised by maintaining football success whioch drives revenues

if they underinvest on the footballing side they lose potential sales value unless they plan to sell short term before the underinvestemnt means footballing decline

[aws]

Originally Posted by Soleilrouge understood but the amount they get for selling the club is maximised by maintaining football success whioch drives revenues if they underinvest on the footballing side they lose potential sales value unless they plan to sell short term before the underinvestemnt means footballing decline

They know they've got a captive market which wouldn't be seriously undermined by a few years of "average" success. Three years of finishing fourth wouldn't affect ticket sales at all.

[GOLDMEMBER]

Originally Posted by aws They know they've got a captive market which wouldn't be seriously undermined by a few years of "average" success. Three years of finishing fourth wouldn't affect ticket sales at all.

what he said

[Soleilrouge]

Originally Posted by aws They know they've got a captive market which wouldn't be seriously undermined by a few years of "average" success. Three years of finishing fourth wouldn't affect ticket sales at all.

i think any buyer would price that lack of success into any bid they make

[aws]

Originally Posted by Soleilrouge i think any buyer would price that lack of success into any bid they make

Maybe but,as I said above, it's not necessarily about selling for the highest price, often it's about getting as much as you can for as little as you can.

But I do hope you're right.

[Red Nick]

its what property investors do they buy with 100% mortgages and sell at profits using banks money and make upto 500% on the capital that theyve outlayed, these two American will probably make 300m profit on a close to nothing outlay, not bad work if you can get it

[G Richards]

I think the new owners will have thier financial goals satisfied if we carry on being a solid CL team (top four year in year out) plus we build a new 70K stadium.

As fans we want the trophies - and the bigger the better (Premier League then CL, FA, Carling).

I have the suspicion that the owners will do well (financially) if we carry on being 'there or thereabouts', whilst not really making that final, sustained push to get back on 'our perch' as it were.

[Soleilrouge]

Originally Posted by G Richards I think the new owners will have thier financial goals satisfied if we carry on being a solid CL team (top four year in year out) plus we build a new 70K stadium. As fans we want the trophies - and the bigger the better (Premier League then CL, FA, Carling). I have the suspicion that the owners will do well (financially) if we carry on being 'there or thereabouts', whilst not really making that final, sustained push to get back on 'our perch' as it were.

would we need a 70000 stadium in those circumstances? i think we need to push on football wise to fill one of those consistently

[G Richards]

Originally Posted by Soleilrouge would we need a 70000 stadium in those circumstances? i think we need to push on football wise to fill one of those consistently

Maybe you're right, but I'm thinking of the season ticket waiting list (20,000+?) Even so, my main point is that the owners might fare well financially if we just carry on approximately as we have been doing (albeit in a bigger stadium, and perhaps with a bit more marketing savvy e.g. naming rights).

[SpeedyG]

Originally Posted by Soleilrouge i think any buyer would price that lack of success into any bid they make

What makes you think that they will be selling vs. taking dividends / vs. going public / getting options?

Revenue can also be increased by other than just success. I think we all agree that LFC has not maximized other revenue streams. For example merchandising is awful. Just this year we've added the additional revenue stream of LFC.TV. I think the new marketing gut that we hired will be able to idenitfy several other low hanging fruits. Factor in success and potential revenues are enormous.

[rondeco]

Originally Posted by SpeedyG What makes you think that they will be selling vs. taking dividends / vs. going public / getting options? Revenue can also be increased by other than just success. I think we all agree that LFC has not maximized other revenue streams. For example merchandising is awful. Just this year we've added the additional revenue stream of LFC.TV. I think the new marketing gut that we hired will be able to idenitfy several other low hanging fruits. Factor in success and potential revenues are enormous.

Would these options not be still dependant on the same factors that selling would?

[moxter]

What I don't understand is how these chaps can be from the same country as whoever is, as Beckham beautifully and correctly put it, 'the owner of the galaxy' - the thought processes seem diametrically opposed. I know they're in different markets and all that.