What could FSG's interest in Malaga mean for Liverpool?

This is an updated version of a story first published in March 2024.

Ever since the appointment of Michael Edwards as chief executive of football at Fenway Sports Group (FSG) in March 2024, it has been clear the multi-club ownership model is coming to Anfield.

Edwards, Liverpool’s former sporting director, returned to the FSG fold with the belief that the club has little choice but to expand if it is to “remain competitive” in the Premier League and beyond. The key to that is an ambitious plan to invest in a partner club.

On Saturday, The Athletic reported that FSG is exploring a deal to purchase Spanish second-tier side Malaga. So what do we know at this stage?

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What exactly is FSG’s strategic vision?

FSG’s multi-club plans mean falling in line with the Premier League crowd, effectively. Well over half of the 20 teams in the English top flight now have relationships with at least one other European club and the pattern has been extended in the past two years.

This is Liverpool having to keep up with the Joneses, as FSG president Mike Gordon outlined in an email to staff last year following Edwards’ appointment.

“Global football has changed immensely over the past several years, becoming increasingly sophisticated and creating myriad challenges,” Gordon wrote. “To remain competitive, we must identify every avenue available to us to gain an edge. To this end, Michael (Edwards) will use every tool at his disposal and has already identified the acquisition of another club as one channel that will help fortify our overall operation and drive our competitive ambitions.”

Liverpool had previously resisted the trend set by Manchester City’s ownership, who have amassed 13 teams around the globe under the City Football Group (CFG) banner — including Girona in Spain, Palermo in Italy and New York City in the U.S. – but there is an acceptance that the advantages of a multi-club model cannot be overlooked.

“This in no way takes away from the focus, attention, care and, most importantly, the investment in Liverpool,” added Gordon. “In fact, we see it as a path that will help strengthen our club for the future.”

It has long been mooted that FSG was open to buying another football club to run alongside Liverpool. There were links to as many as four sides in Brazil – Cruzeiro, Botafogo, Athletico Paranaense and Internacional – but Billy Hogan, Liverpool’s chief executive, suggested in 2023 that this had ceased to be a priority.

“For certain clubs, (multi-club ownership) makes sense,” Hogan said during the SportsPro Media APAC conference in Singapore. “But from our perspective, at the time being, we’re focused on what Liverpool is doing.”

The door was never closed, but Edwards’ return presented an opportune moment to press ahead with the strategy. The chance to expand the FSG stable was a factor in quietening Edwards’ initial reticence over a Liverpool return.

“One of the biggest factors in my decision is the commitment to acquire and oversee an additional club, growing this area of their organisation,” Edwards said in an FSG statement after his appointment. “I believe that to remain competitive, investment and expansion of the current football portfolio is necessary.”

That last word is key. For Liverpool, this is no longer a strategic choice, but essential.

Why are Malaga under consideration?

There is a pattern to the clubs targeted by those in the Premier League seeking expansion: big enough to compete in the top division of a domestic competition without costing the earth to buy.

The South American market, particularly Brazil, has previously been assessed by FSG, but the preference for this first step was always likely to be a team in Europe.

Brexit, the United Kingdom’s vote to withdraw from the European Union (EU) in 2016, has led to complications in recruitment, making it more difficult for overseas players to obtain a work permit to join English clubs.

Owning one in an EU member nation helps circumvent those rules, presenting the chance for a player to build up his UK qualification criteria in another league. It could also give a temporary home to promising under-18s from continental Europe who are no longer eligible to sign for English clubs. The push to form partnerships with European sides in the years since Brexit has not been a coincidence.

For FSG, Malaga fit the bill nicely.

The move aligns with the group’s interest in acquiring teams with strong traditions and growth potential, similar to its previous interest in Bordeaux. In July last year, FSG withdrew from talks to buy the French club “following extensive and constructive discussions with all stakeholders”.

Malaga have a history of being an established top-flight team and competing in Europe, but they have experienced a decline in recent years, falling into Spain’s third tier. They were promoted back to the second division last season and FSG believes there is an opportunity to restore the club, who were Champions League quarter-finalists in 2013, to the upper echelons of the Spanish game.

An FSG delegation visited Malaga’s headquarters in February as part of this process.

Nothing is concluded yet and any deal for Malaga would not necessarily be straightforward. As Dermot Corrigan reported on Saturday, a judge has controlled the club since 2020 amid complex legal issues around a proposed sale to local group BlueBay Hotels, who currently own about half of its shares. Judicial prosecutors are also investigating the alleged misappropriation of club funds during the presidency of Qatari businessman Abdullah bin Nasser Al-Thani, who has always maintained his innocence.

FSG appears to be exploring multiple options, having conducted due diligence and site visits on several Spanish sides over the past year — including Levante, Elche, Espanyol, Getafe, and Valladolid, with the French market the other main focus of its evaluations.

What are the benefits to Liverpool of the multi-club model?

It is not a term any executive likes to use — not when it is so disparaging to those lower down a multi-club pyramid — but the chance to use these other teams as ‘feeder clubs’ has an increasing appeal to those in the Premier League.

As well as the edge it can offer in the recruitment of youngsters, it also gives a chance to develop Liverpool’s own talent. There is greater control over a youngster’s progression when sent on loan to a partner club, with the multi-club model typically asking all its teams to play in the same style.

Chelsea co-owner Todd Boehly summed up the motives well enough. “Our goal is to make sure we can show pathways for our young superstars to get onto the Chelsea pitch while getting them real game time,” he said in 2023.

Youngsters can be loaned out to partner clubs knowing they will get opportunities and minutes at a competitive level, something that cannot always be taken for granted. That might not lead to that player eventually enjoying a career with the biggest club in the stable, but it will likely see them build up a greater residual value. In these times of tightened profit and sustainability rules (PSR), these are the gains that can make a difference.

There is also the opportunity to share scouting analysis and data when part of a multi-club model, casting the net wider and further, as the Red Bull group, featuring Germany’s Leipzig and Austria’s Salzburg among others, has done so impressively. This all leads back to Gordon’s spoken ambition to strengthen Liverpool.

And what are the drawbacks?

It is not always sweetness and light, as Chelsea’s BlueCo owners are discovering while owning French club Strasbourg, where restless supporters have made their displeasure clear. Things have improved there this season, though, with their win against Lyon on Friday taking them up to fifth in Ligue 1, the top division of club football in France.

In recent years, there have also been protests at Lyon against John Textor’s Eagle Football Group, as well as at Lorient, where Bournemouth owner Bill Foley’s Black Knight Football Entertainment has a stake.

Others have also run into problems when two clubs from the same group have ended up in a European competition together.

UEFA, European football’s governing body, prohibits partner clubs from facing one another and that ruling threw up problems ahead of last season after Brighton & Hove Albion and Belgium’s Royale Union Saint-Gilloise both qualified for the Europa League. Brighton were eventually able to feature after UEFA was persuaded that their owner Tony Bloom did not have decisive influence at Union.

Aston Villa had the same issue as their Portuguese partner club, Vitoria Guimaraes, joined them in the Europa Conference League last season. Villa’s owners, Nassef Sawiris and Wes Edens, were eventually forced to reduce their stake in Vitoria to comply.

Liverpool, by extension, also saw the problems encountered by Milan and Toulouse. RedBird Capital Partners, which owns an 11 per cent stake in FSG, has control of those clubs and was able to convince UEFA both ought to be able to play in its competitions.

Included in UEFA’s conditions on all those cases was that no partner clubs could transfer players from one to another until after last summer’s window.

Does FSG want the same model used by rivals such as City Football Group and BlueCo?

The premise will be the same: to form beneficial partnerships and reap the competitive advantages they bring. Replicating the CFG model, however, would take enormous resources and time.

CFG has been at this for over a decade, planting roots in North America, South America, Australia, Asia and Europe. Its influence spreads far and wide.

While this approach is being imitated, nobody has shown a willingness to replicate its breadth and FSG, an organisation conscious of its financial limits, is not expected to try that either.

BlueCo, which bought Chelsea in 2022, embarked on its multi-club mission in the summer of 2023 when buying Strasbourg and more are expected to join the stable.

FSG is yet to indicate how ambitious its plans for a multi-club model will be, but Edwards believes expansion is a must and perhaps Malaga could be the start.

(Top photo: Liverpool owner John W. Henry and his wife Linda Puzzuti; Paul Ellis / AFP via Getty Images)