China’s route to the famous gates of Liverpool FC, one of England’s most storied football clubs, started about 30 miles away in Manchester.
During a state visit to the UK last October, Chinese president Xi Jinping went to the training ground of Manchester City, posing for a selfie with star striker Sergio Aguero and the then UK prime minister David Cameron. As the picture did the rounds on social media back home, the image was noticed by some of the country’s richest business people.
Since then, Chinese groups have spent billions of dollars acquiring stakes in European football clubs, media rights agencies and other sports entities. Chinese football clubs have meanwhile broken transfer fee records to buy star players from the European game. Mr Xi’s stated desire is to transform China into a “great sports nation” that will host a world cup, and win it.
This is the backdrop to Saturday’s disclosure that a consortium led by Chinese investment group Everbright and private equity firm PCP Capital Partners has made an approach to buy one of the crown jewels of English football: Liverpool.
“Football teams are trophy assets,” says Feng Xin, founder and chief executive of Baofeng, the Chinese internet group that joined with Everbright to buy a majority stake in Italian sports right agency MP & Silva in May. “Just like the Russian or Middle Eastern buyers before, Chinese have more money and are interested in them.”
Chinese groups are drawn to lucrative new media rights for the Premier League, compelling club valuations linked to a weakened sterling after the Brexit vote, and a burgeoning domestic audience.
If a Liverpool deal is agreed, it could be the biggest transaction in a growing list of investments from China into English football. The largest came shortly after Mr Xi’s UK visit, when a Chinese consortium led by private equity groups China Media Capital and Citic Capital paid $ 400m for a 13 per cent stake in City Football Group, the parent company of Manchester City, which is owned by Sheikh Mansour bin Zayed al Nahyan of Abu Dhabi.
Amanda Staveley, founder of PCP and a dealmaker with good contacts in the Middle East, brokered Sheikh Mansour’s deal to take over of Manchester City in 2008. Ms Staveley is a keen Liverpool fan was the face of an unsuccessful attempt by Dubai to buy Liverpool in 2008.
Now, PCP has joined with state-backed Everbright to put together a substantial bid for Liverpool, which is owned by Fenway Sports, the US group that also has the Boston Red Sox.
There are many factors that could derail the deal as key meetings take place in the coming weeks, according to people close to the talks. For now, Liverpool’s official position is that the club is not for sale and no active discussions are taking place.
But John W Henry, Fenway’s majority owner and founder, is taking the unsolicited approach seriously enough that he has appointed advisers Allen & Co, as the Financial Times reported on Saturday. The precise size of the stake that the consortium involving Everbright and PCP could buy in Liverpool, and hence the club’s valuation, are still to be determined.
Meanwhile, UK Companies House documents reveal an entity called Everbright Development Liverpool Ltd was incorporated in late March, before the partnership with PCP. The company is using the Liverpool address of local accountants Matthew Sutton & Co.
The consortium involving Everbright and PCP has scoped a number of football clubs in England and the US before alighting on Liverpool, the world’s ninth-richest by revenues, according to accountants Deloitte. It is willing to make a substantial investment in Liverpool, say people close to the situation.
After the news broke about the consortium’s approach, fans took to social media to question whether Ms Staveley was merely a stalking horse for Sheikh Mansour as a way of covertly securing control of Liverpool.
But the rules of Uefa, European football’s governing body, prohibit owners or substantial stakeholders of other clubs from taking on rivals.
When Fenway Sports purchased Liverpool for £300m in 2010, its ambition was to re-establish the club as regular title contenders in the Premier League, and consistent qualifiers for the Uefa Champions League, Europe’s most prestigious competition. Liverpool came close to winning the premier league in 2013-14, but ultimately slipped to second place, and the club last won the champions league in 2005.
Hopes remain in Liverpool for a return for past glories. After a disappointing start to last season, the club replaced Northern Irish manager Brendan Rodgers with former Borussia Dortmund coach Jürgen Klopp, widely considered one of Europe’s best coaches.
Fans begin matches with a rendition of the club’s anthem You’ll Never Walk Alone. Soon, they may need to walk to the tune of Chinese ownership.
Additional reporting by Lauren Fedor in London
Copyright The Financial Times Limited 2016. You may share using our article tools.
Please don’t cut articles from FT.com and redistribute by email or post to the web.