Liverpool plots course for success
Yesterday, Liverpool Football Club celebrated its 120th anniversary in uncharacteristically quiet fashion. Few teams traditionally extract more pleasure from their history and lore.
But the club that, in the words of iconic coaching legend Bill Shankly, has thrived off the passion of a "Holy Trinity -- the players, the manager and the supporters" is changing. In the words of managing director Ian Ayre, "The modern game demands we add the business side as a fourth pillar. It is no longer sufficient to be historically successful. A clubs needs a commercial strategy if its intends to compete."
While all eyes rest on new manager Brendan Rodgers and his efforts to reincarnate Liverpool's tradition of "pass-and-move football," an appointment that recently occurred behind the scenes may prove to be just as transformational. Billy Hogan, formerly managing director of Fenway Sports Management, is the club's new chief commercial officer.
Cleveland-born Hogan, 38, is a modest yet ambitious strategist. "When Fenway Sports Group [John Henry and Tom Werner's Sports sports investment company, FSG] took over Liverpool, the club had been through a tumultuous time," Hogan said. "But the ownership group is a proven braintrust that owns and controls multiple sporting properties," referring to the Red Sox, NASCAR's Roush Racing and regional cable outlet NESN. "Our goal is to grow Liverpool's revenue and return the team to the top of every category -- be it the English Premier League, Facebook 'likes,' or number of global supporters."
Hogan is describing a position Liverpool enjoyed not so long ago. In the 1980s, this proud team from a spirited northern town was the game's gold standard. However, the creation of the Premier League in 1992 transformed English soccer into a money-fuelled game.
Ayre, a thoughtful and measured man, admits that "Football's business model changed, Liverpool remained conservative and our rivals took advantage. But in the last four years we have woken up and made great commercial strides." Identifying South East Asia, China, India and the United States as the prime areas for growth, Ayre said, "Our goal is to reclaim the territory we held in the '70s and '80s when we were football's most dominant brand."
At the press conference to announce Rodgers taking the job, club owner John Henry hinted at the strategy his team will employ to achieve that goal. "We will embrace the unconventional, build the right way and together set a bold, exciting course for this historic club."
The exact words could have been used in January to describe the record breaking $38.4 million-a-year jersey deal the team struck with Detroit-based New Balance subsidiary, Warrior. A six-year contract so lucrative, former manager Kenny Dalglish quipped it was as "good as points."
What's in a shirt, anyway?
The story behind that blockbuster deal offers a glimpse of the unconventional course Henry has charted. It also explains why a club craving a return to the elite level would associate its brand with a relatively unknown soccer manufacturer, and how that manufacturer was persuaded to fork over a record-breaking sum to an inconsistent team that stumbled to eight place in the English Premier League, 17 points off the Champions League pace, this past season.
The origins of the deal lie in the breakdown of negotiations with Liverpool's previous sponsor, Adidas, when the German manufacturer refused to increase its $18.4 million-a-year contract. "We got to a point where the disparity between our valuations was too great," Ayre said, referring to the strength Liverpool drew from its position as one of the leaders in global shirt sales.
"What we might not have achieved in footballing terms in recent years, we have certainly achieved in popularity as a brand," Ayre said. "We knew we had a passionate global fanbase, so we opened up the conversation to other sports brands and every major company jumped into the mix."
Once Henry and Tom Werner's FSG ownership group stepped in to rescue Liverpool from the verge of administration in October 2010, Liverpool's options multiplied. "The sports brand search was handled out of Liverpool," Ayre said. "But once FSG joined discussions from the Atlantic side, the relationship they had forged through the Red Sox with New Balance led to our introduction to Warrior."
From the perspective of Warrior's president and CEO, Dave Morrow, the strength of the deal lay in its timing. Warrior had become one of America's fastest-growing retail team sports companies by building an iconoclastic brand targeting elite teenage athletes in lacrosse and ice hockey. "We were looking to grow globally, and had eliminated one option after another," Morrow said. "Gridiron football is distributed on a team basis, not through retail. Baseball is not truly global, and basketball is not really an equipment sport."
Morrow's conclusion was simple. "There was no way for us to go global unless we moved into the soccer space."
Morrow is an immensely passionate man, a one-time All-American lacrosse player who started his company as a 20-year-old in a college dorm room and who ends every email with the sign-off "DOMINATE!" Analyzing the uber-competitive landscape of soccer-manufacturing, he remained sanguine. "There are 40 to 50 brands, but most are regional except Puma, Nike, Adidas and Umbro. They may be massive but we have a unique point of view [because] a 17-year-old competitive soccer player is our [target audience]. We are not going after everybody."
Asked about the attraction of Liverpool, Morrow was refreshingly honest. "I would love to tell you there was an elaborate plan but most of the top 10 powerhouse teams were already under contract, so when the Liverpool opportunity presented itself, the negotiation happened very quickly."
Warrior's parent company, Boston-based New Balance, had enjoyed a successful, long-standing relationship with FSG's Red Sox. "Liverpool were the only team on the top 10 list who would enable us to work with guys that literally work down the street, which means there was a trust element there. We had proof of FSG's record of returning a team to a winning tradition, which is a prime consideration in any investment."
Warrior harbors ambitious expansion plans for its soccer business. Morrow intends to sponsor a top-tier team in Spain, Germany and Italy. For now, the brand's sole focus is Liverpool, and Billy Hogan said his club is enjoying the attention. "There is a benefit to having a partner thinking only about you," he said, "just as there is a risk for us in that Warrior are a new entrant into the world of football."
Ayre believes that the freshness Warrior brings to the task makes them ideal partners. "We don't see ourselves as wearing a lacrosse brand," he said. "We are wearing an innovative brand that wants to break barriers and be at the forefront of football."
"Breaking barriers" is an apt description of what Warrior had to achieve to bring the kit to market. As Morrow remembered, "We won the deal on April 11th, 2011 and had to begin to develop 320 unique styles," referring to the home kit, away kit, third strip, European strip, and training kit that comprise a modern football line. "The process normally takes 18 months. We had 120 days to cram in design, production, material testing and social compliance."
Richard Wright, general manager of football for Warrior, remembers the stressful side narrative that accompanied a design process executed at lightning speed. "When Liverpool fans read about the deal, they loved the big check we had signed, but were skeptical of the Warrior brand," he said. "All the club message boards were ablaze with fans asking what the hell Warrior was and whether we would deliver mad skateboard designs."
From the very go, Warrior understood Liverpool as a club steeped in history. Its design team immersed itself in the past century of Liverpool jerseys to conjure a collection it called "Modern Tradition." Modern alluded to the construction and fabric performance; tradition referred to design touches stolen from some of the jerseys worn by Liverpool's most historically successful teams.
"Overall, the design of the home shirt is reminiscent of the '80s when the team won everything," Wright said. "We also restored the Liverbird crest in its original amber yellow color, a staple that had gotten lost in the early '90s and returned to a long neckline -- the placket -- inspired by the an early Liverpool shirt from 1902."
Most significantly, Warrior has returned the club to its original shade of red. "The club has gone too red over the past two decades," Wright said. "We reclaimed the shade Shankly chose in 1964 that he believed made his players look 7-feet tall."
The jersey was unveiled on May 10th. Although detractors declared the design similar to a McDonalds uniform, pre-sale orders have doubled those of past launches. "All the fans tell us the shirt conjures our glory years which is the exact message we are trying to deliver as we strive to grow the club's commercial side without losing touch with the 'Liverpool Way,'" Hogan said.
A way forward
The away shirt draws its inspiration from Liverpool's away uniform from 1900-1906, featuring a "yoke detail" that pays homage to the city's nautical roots. The home-and-away shirts are also a symbol of the club's evolution. "When we won the Champions League in 2005 we lacked the infrastructure to capitalize on that success," Ayre said. Pointing to Hogan's appointment and Liverpool's transatlantic future, he added, "The strength of our current infrastructure is the people we have in Liverpool and in Boston and the Warrior deal is the perfect example of that."
Hogan must now focus on sourcing untapped streams of revenue to close the gap on competitors such as Manchester United, which announced a five-year global sponsorship deal with Chevrolet as its "automotive sponsor," the latest in a maze of global partnerships it has brokered with an official airline, bank and beer seemingly on every continent. While Liverpool doesn't officially release sponsorship information, sources indicate the club had approximately 18 partnerships at the time of FSG's acquisition in 2010, and intend to have 25 in place before the kick of the 2012-13 season. By way of comparison, the Boston Red Sox had 35 in 2002 when FSG took over. It now boasts 95.
By that evidence, the Warrior deal may be the first of many. But that does not detract from the unbridled joy Morrow experienced when his jersey launched. "The unveil was at midnight Engish time," he said. "I had just landed at the airport in Detroit where it was 7 p.m." The CEO fired up his iPad and prepared to monitor digital feeds on Facebook and Twitter. "It felt like waiting for the ball to drop in Times Square on New Year's Eve," he said. "At 7.01, my iPad just went 'boom,' lighting up with thousands of people tweeting in languages I had never had to read before -- Arabic, Chinese and Cyrillic -- and I could not determine whether the feedback was good or bad."
Then the messages started to arrive in English, French, Spanish, languages Morrow could understand. "The responses we received were rapturous and I found it emotionally overwhelming to experience just how passionate and global Liverpool's fanbase could be."
Roger Bennett is a columnist for ESPN, and with Michael Davies, is one of Grantland's "Men In Blazers." Follow him on Twitter: @rogbennett.