FSG reveal they ‘underestimated how poor Reds squad was’

Matt Stead

Fenway Sports Group “underestimated how poor the playing squad was” at Liverpool when they bought the club in 2010, according to information revealed in a court case.

The admission was revealed in documents released to the Supreme Court in New York where former owner George Gillett and Royal Bank of Scotland are being sued by Mill Financial, a company that lent the businessman £50m.

Mill Financial are chasing compensation from Gillett and RBS after their late attempt to buy LFC in October 2010 failed.

Fenway Sports Group, who were called England Sports Ventures, won the race to buy the Reds for £295m after Gillett and fellow owner Tom Hicks were unable to pay back a £280m RBS loan secured against the club.

Mill started legal action against RBS and Gillett in November 2010 as they believe the Liverpool board sold the club on the cheap and want compensation.

RBS refute the allegations and have asked the judge to throw out the case on the basis that Mill has not suffered any financial loss from the sale of the club.

Over 600 legal papers have been submitted to the court as evidence and some of those documents have been released which reveal that FSG underestimated the amount of investment in the squad and “Fernando Torres and Pepe Reina were probably beyond their primes”.

It was also revealed that most of FSG, led by principal owner John Henry, had never been to a Premier League match before attending a Liverpool game while conducting due diligence of the 2010 purchase of the Reds.

Mill requested Henry to answer questions under oath in January 2015, but FSG refused and the group’s one-time general counsel Edward Weiss was put up instead.

Excerpts from Weiss’ evidence in the Liverpool Echo

Question: Okay. You also testified earlier that the club would require “a significant amount of investment” to enhance the value of the club. How did you take that into account or how did NESV take that into account in is valuing LEC in October 2010?

Answer: I think we underestimated that. We ended up losing quite a bit of money in our first couple of years and we had to make even more considerable investment in the playing squad than we had estimated as we went through the bidding process. So, you know, like trying to catch a knife falling off the table, you’re not sure where before it’s hit the ground you’ve caught it. You know, I think we underestimated how poor the playing quality of the squad was, and frankly, we underestimated how difficult it was going to be to stabilise the asset. We were overconfident in assuming that many of the things that we had done in Boston at Fenway would translate naturally to the Premier League and they just didn’t all translate.

Question: Did NESV come to know that the team had a playing squad with top internationals before it made a bid to purchase the club?

Answer: I mean, we obviously did some due diligence on the playing squad during this process before we closed on the transaction in the middle of October of 2010. What we came to know was that the playing squad was poor. We were sitting at the time we closed on the transaction for the club in 17th place is my recollection which is one spot above the relegation line. And while we had a few top players like Steven Gerrard, other players like Fernando Torres and Pepe Reina were probably beyond their primes, and Javier Mascherano was not even on the team.

Question: Okay. And did you or any other representatives of NESV attend a Liverpool Football Club game?

Answer: We did.

Question: One or more than one?

Answer:  In due diligence we attended one match.