Saturday, 16 June 2012

New Anfield: A Response to John W Henry

The likelihood of Liverpool getting a new stadium has taken a massive step backwards following an interview given by John Henry to The Anfield Wrap.

He states that “no one has ever addressed whether a new stadium is rational” and then sets out an argument built around it being economically irrational for the new stadium to be built. The full interview is available here:

To put some factual evidence behind his argument, Henry posted the following chart showing the revenue per seat for various clubs:

Henry cherry picks Arsenal and Chelsea from the above list to show that their revenue per seat far outweighs Liverpool’s. He then points to the fact that they are situated in affluent London to back up his point. What he does not explain is why Manchester United, situated in Salford which has a similar macro economy to Liverpool, are able to generate £500 more per seat than Liverpool.

Let’s analyse the two clubs to see where this extra revenue comes from. Liverpool’s season tickets range from £725 to £802, whilst United’s range from £532 to £950. United have a bigger scale because they have more seats, but the average for both clubs is around £750. This backs up the point that the macro economics are comparable.

So, how do United generate £500 more per seat per year than LFC? The answer is that Manchester United’s corporate and premium seating far outweighs Liverpool’s, and it is the corporate customers who drive up the revenue per head. No matter how successful Liverpool are on the pitch, we will never be able to match United for spend per head in the existing Anfield due to its infrastructure.

When you take into account the fact that United also have 30,000 more seats than Liverpool, it is clear to see that staying at Anfield will lead to United’s spending power outgrowing Liverpool’s exponentially in the coming years. Success for Liverpool on the pitch will not help this aspect of our finances much, and it is a myth that global commercial income can bridge the gap. The truth is that the biggest gap between the revenues of the two clubs comes from match days and if we do not act it will continue to grow.

Henry’s argument is this: “If Anfield yielded £1550 per seat, without adding seats, LFC match-day revenue would rise from £41M to £71M.” What he fails to mention is that the current Anfield has no room for more corporate facilities. He also fails to mention that United’s increased spend per seat comes not from Joe Public paying more, but from corporate guests paying more. We have the fan base to match United on this front, but we do not have the infrastructure. That is why the new stadium is absolutely critical to our medium and long term success.

When Henry suggests that our future success on the pitch and through our global commercial revenue will lead to a new stadium, he is trying to get us to buy into the notion that he can get the cart to pull the horse. It won’t. His strategy will lead to us standing still, or moving backwards.

There is one potential chink of light at the end of the tunnel: "Redevelop Anfield". We have recently learnt that the previously impossible task of demolishing 1800 homes behind the main stand, and offering the residents a payment for these homes so low that they cannot afford to buy elsewhere, is back on the cards. It will be interesting to see what has changed since John Henry said in 2011 that redevelopment posed "so many obstacles."

Ian Ayre now speaks of "great dialogue" with the residents, a comment that bemused and angered the Salisbury residents committee (who have met Ayre just once) in equal measure. Salisbury have said "everybody can see which way this is going now." What they mean is that compulsory purchase orders will be sought and a massive fight will follow, one that could well end up with the European Commission and drag on for years. If you are wondering about timescales, a similar process started in the Edge Lane area of the city in 2001, it went to the High Court in 2006 and the European Court in 2009. The legal dispute was finally resolved in 2010, and the project is still a work in progress. 

The brutal truth is this: Without a new or redeveloped stadium, Liverpool have no hope of being able to compete with Chelsea, City, Arsenal or United financially no matter how well the team performs. Mr Henry needs to act on the stadium plans, and act now.

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