The Shrinking Pool

FSG and the price of being too smart.

It’s that time of the season again. After a wonderful four-month hiatus of happiness, fun, rainbows and points, international football is back to ruin our collective lives. Great.

But it’s not all bad, no. The break always presents us with an opportunity on this Substack. We have a Distance Covered tradition. Whenever England play football, my subscribers assume the spotlight.

Next week’s podcast episode will be a Q&A special. And I’m going to dedicate today’s post to a question that has already been submitted, so shoutout to Christian for inspiring this piece.

He asks:

‘What is Fenway Sports Group’s next trick? They’ve used the Moneyball approach to this point, but other clubs are adopting biometrics, analytics, etc. So how do FSG continue to possess a competitive advantage off the pitch?’

It’s a really interesting topic. Most debates surrounding FSG are awful. Like the kind of arguments you’d witness on Jerry Springer. But if you ignore the eternal calls for John Henry to spend more, there’s plenty to think about in there.

So FSG pride themselves on being the smartest guys in the room. That’s their superpower. You might have more cash, but it doesn’t matter, because we know more than you do.

They establish their strength by making shrewd hires. Putting the right people in the right places. Their recruitment at the summit is often very good, and that filters down until you reach the players on the pitch.

It happened in Boston, it happened in Liverpool. Theo Epstein, Michael Edwards, Ian Graham, Bill James, Jürgen Klopp, whatever. For me, the number one priority for any ownership group isn’t spending loads, it’s establishing a strong front office. A capable team of suits who consistently make optimal decisions.

It took a few years for FSG to strike that balance on Merseyside, but we got there in the end, and the evidence so far suggests that when those guys are all singing from the same hymn sheet, Liverpool do really well in the transfer market and thus, on the pitch.

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But beyond the construction of the club’s management team, the command of FSG kinda stretches no further. Think about it. If you’re a billionaire who lives in the US and prefers baseball, would you really care whether Liverpool signed Alexander Isak, Julián Alvarez or neither of them?

Henry pays Edwards to make that sort of thing his problem nowadays. So Edwards hired Richard Hughes to act as his man on the ground last year, with Hughes appointing Arne Slot last summer. The good hires flow downwards, like a waterfall.

FSG dictate the budget, of course, with Liverpool challenged to spend within their means. Whatever you earn, you can spend. If you make £200m, you can spend £200m. This is why a productive academy is vital. It’s why the Reds can’t afford to sign Casemiro at the age of 30 on a six-year deal.

Such an approach has downsides, for sure, but it fosters a culture of creativity and most of all, efficiency. Hughes can technically buy and sell whoever he wants as long as he can balance the books and his decisions can be reinforced with evidence. FSG’s model essentially rewards the sporting director for being good at selling.

So when people talk about the owners not wanting to invest in Marco Reus because they’re cheap and unwilling to spend, I’m usually a hard disagree. Instead, most of the time, I think it’s simply a football decision rooted in efficiency that has been made by the suits — not the owners — with that decision shaped by the culture that FSG have created.

Henry is too busy and too rich to care about whether Milos Kerkez is really worth £45m. FSG provide the house, and the suits — alongside the manager — decide how the place gets decorated.

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But going back to Christian’s original question, here’s the issue that Liverpool have encountered with FSG’s model as they’ve improved their squad from mediocre to elite over the past decade.