A Champions League tie between Liverpool and Roma inevitably conjures memories of the European Cup in a different age — when the Merseysiders beat the Italians on their home turf in the 1984 final — yet this week’s semi-final tie could also be viewed as a quintessentially modern affair.
Liverpool and Roma represent an intrusion into the super-club monopoly that has gripped the latter stages of the Champions League in recent years. Both are historic, romantic clubs woven into the fabric of their cities’ working class identity and have struggled to always compete with the cabal of Real Madrid, Barcelona, Bayern Munich and Juventus which has dominated the competition’s last few seasons.
They are also both owned by one of the newest breeds of football club owner, the American hedge fund billionaire. Both clubs have hedged on data and analytics being able to provide a competitive edge. And both have recognised the importance of harnessing digital platforms to fill a revenue shortfall on their rivals.
Roma owner James Pallotta and Liverpool’s John W Henry — the head of the Fenway Sports Group (FSG) that owns the Premier League club — will be particularly familiar figures to each other. Pallotta is a native Bostonian, while Henry has been an adopted son since buying the Boston Red Sox in 2002. The view from Pallotta’s Raptor Group hedge fund office in Boston looks out over the city’s Rowes Wharf, where Henry has been known to dock his yacht. Pallotta also co-owns NBA franchise the Boston Celtics with Stephen Pagliuca, a close friend of Henry.
As similar as they may be, they’re far from unique as members of America’s gilded class operating in Europe’s beautiful game.
The Glazer family’s takeover of Manchester United in 2003 opened up a pipeline through which a steady stream of American investment has crossed the Atlantic. The Europa League also reflects the trend, with semi-finalists Arsenal and Marseille owned by American tycoons Stan Kroenke and Frank McCourt respectively. Elsewhere, Crystal Palace, Swansea City, Fulham, Millwall, Sunderland, Palermo, Nice, Portsmouth, and Barnsley have all been taken over by US investors in the last 15 years.
Investors from Russia, the Middle East and Asia have also planted flags in the European game in the same period although but those from the latter two regions have slowed in recent years while Chinese owners have arrived in a flurry in the last few seasons. According to governing body Uefa’s most recent Benchmarking Report, “the most steady flow of new foreign owners has come from the USA, with US owners taking over in most of the years reviewed”, between 2003 and 2017.
In contrast to the big spending associated with Chelsea’s Russian benefactor Roman Abramovich, Qatar-owned Paris Saint-Germain or Abu Dhabi-backed Manchester City, American owners have been markedly more prudent and more likely to treat their clubs as a business proposition. After United, Liverpool and Roma are the first of the newly American-owned clubs to have made it to the final four of the Champions League. Unwilling to sign blank cheques to guarantee quick success, their respective routes to the top have been more circuitous.
As men who earned a fortune spotting value deficits that had been missed by the market, both Henry and Pallotta moved quickly to introduce more mathematical methods to their clubs’ transfer dealings. One of FSG’s first appointments at Liverpool was Moneyball advocate Damien Comolli as director of football strategy, who was tasked with finding star players among the stats. At Roma, Pallotta has built a cutting edge in-house analytics department that uses artificial intelligence technology to identify potential new recruits. Last summer the sophistication of the club’s data operation swayed transfer market guru Monchi, who spotted a stream of future superstars as Sevilla’s director of football, to join the Giallorossi ahead of the many other clubs chasing his insights.
Other American owners with a background in private equity or hedge funds — Josh Harris and David Blitzer at Crystal Palace, Swansea’s Steve Kaplan — are advocates of analytics at the American sports franchises they own. Harris, Henry and Pallotta have all addressed the industry-leading MIT Sloan Analytics Conference.
When Roma and Liverpool met in the ‘84 final, they were football clubs and not much more. Teams made money by winning trophies, attracting fans, selling out their stadium. In 2018, owners increasingly consider their properties not just football clubs but media companies, global brands, merchandise monoliths.
This has been particularly important to Pallotta and FSG who have looked to leverage their clubs’ brands as an iconic world capital or historic team to drive revenues and make up the gap on their sovereign wealth-funded rivals. “When you want to be a worldwide brand, you have to create content 24/7,” argues Pallotta. He hired digital guru Paul Rogers from Liverpool, with social media targeted as an arena in which Roma could win over neutrals as their second team. Demonstrating a similar attitude, when searching for a replacement for long-standing chief executive Ian Ayre last year, FSG looked not to sport but to digital media and Peter Moore, whose background was at tech entertainment firms Electronic Arts, Sega and Xbox.
In 2014, both Roma and Liverpool qualified for the Champions League for the first time under their American owners and both suffered embarrassing exits at the group stage. Three seasons later, they have both reached the semi-finals. Football’s era of hedge funds, data and digital media has officially arrived.