Anfield Expansion Will Give Liverpool Financial Boost
Thu 15th Jan 2015 | Football Stadiums & Facilities
Liverpool Chief Executive Ian Ayre explains to fcbusiness how the £100million expansion of Anfield will benefit not only the club, but also the wider area.
Anfield is of course one of the most iconic stadiums in world football, the home of many glorious nights of European and domestic football. However in a world of Financial Fair Play, where revenues are king, the stadium with a capacity of just under 45,000 simply wasn’t generating enough revenue to enable Liverpool to continue to compete with Europe’s elite.
The issue of increasing stadium revenues was initially recognised by former owner David Moores, who also acknowledged that he couldn’t afford to underwrite the expansion of Anfield and regrettably sold up in 2007.
Before and since that time the club have suffered many false dawns in relation to the long overdue issue of expanding the stadium or moving to a new ground, in nearby Stanley Park. However in the four years since Fenway Sports Group took over Liverpool, the owners have moved quickly and concisely to clear hurdles that others couldn’t manage, in a respectful and understated way, while being careful to under-promise and over-achieve.
“In 2010 and 2011 we compiled a comprehensive and detailed study - that was at the very heart of the development. As a result, we found an economic solution that kept us at Anfield and that offered us the best long-term solution for the club at the right price,” Liverpool Chief Executive Ian Ayre, tells fcbusiness.
As a result, Liverpool will redevelop Anfield in stages. The first phase is now under way to expand and modernise the Main Stand with an additional 8,500 seats, taking its capacity to nearly 21,000 and overall Anfield capacity to around 54,000 in time for the 2016-17 season.
Incorporating the iconic Club Crest into the proposed Main Stand’s exterior elevation, the scheme will also include a two-storey podium and a carefully designed cloister, which will become the new home for the Hillsborough Memorial. The Main Stand will open onto a wide public concourse, which will link the Stadium into the wider Anfield area.
A second phase could see the club expand the Anfield Road Stand by a further 4,800 seats, taking the stadium capacity close to 59,000. However the club will only make a firm decision on whether to proceed with this phase once the Main Stand is in operation.
The club looked hard to find a stadium solution for the Main Stand that would allow the expansion work to be carried out while not putting a dent in the current £45m a year match day revenues. The solution that the club and designers KSS came up with is an ingenious solution that will see the expansion built behind and above the stand before joining up with the current infrastructure.
“We didn’t want to simply knock down a stand and drop our revenues in the short term to boost our long-term revenues. We are very pleased to have found an effective solution that will be completed in a very short space of time. This solution satisfies our short and long-term plans,” explained Ian Ayre
“It is an ingenious design that delivers what we wanted and also fits in with the look and feel of the stadium. We wanted something that will feel part of the existing facility,” adds Ayre.
Estimates suggest the first phase of expansion will boost match day revenues by £20m a year through the additional 4,000 mix of general admission and season tickets and in particular from the 4,500 extra corporate hospitality capacity that will be introduced.
“Corporate hospitality revenues are essential. If we had increased capacity by 8,500 general admission seats only, it would have taken a ridiculous time to pay back the investment, meaning revenues into the team would have been affected. But the large corporate increase means we will pay the debt back quickly and not be saddled with debt, while quickly increasing revenues into the playing squad,” Ayre adds.
“The club wants the return on investment as quickly as makes sense. Liverpool has to be sustainable. We have formulated a model that gives a fast return of the capital expenditure over five to six years, but that will also allow the club to enjoy some benefits from the expansion even before that time. Beyond the five or six years, we will of course really see more revenues on the ▶ bottom line.” Fenway Sports Group are effectively lending Liverpool the money in the form of an interest-free loan, bypassing the need to meet crippling bank charges, while at the same time reconfirming the commitment of the US-based owners to the club.
Another income source that may come in as a result of the expansion is a naming rights deal on the new Main Stand, worth in the region of c.£5m per season according to a number of naming rights experts.
“The commercial department is in talks with various people. We didn’t think that looking for a naming rights deal on a stadium as iconic as Anfield made sense, but there are real value and benefits to be had around a naming rights deal on the new stand. It is not just a question of how much a deal is worth, but more about which deal would allow the club and partner to enjoy the most benefit.”
Some observers have questioned whether Liverpool’s expansion plans are big enough, considering the club have 28,000 fans on an active waiting list and more corporate interest than can fit into the expanded stand.
“We have found the solution that is best in terms of RoI v cost and that fits in with what we want to achieve. We would love to have everybody in the stadium that wants to come, but we have to be realistic and went through a comprehensive process to see what the best financial and investment opportunity was”.
While the club will benefit enormously from the expansion, so will the wider Anfield area, a part of Liverpool that has been blighted for many years. In October 2012, Liverpool City Council first announced its plans to transform the Anfield area with a comprehensive regeneration plan.
The club committed to working with the City Council and Your Housing Group in support of their delivery of the regeneration plan that will transform the Anfield area, and bring new jobs, investment and housing.
The overall regeneration of Anfield will see £260m invested into the local community and will deliver hundreds of jobs – both temporary and permanent into the area. The plan is a great example of how football stadia can be the key to unlock major redevelopment.
Ayre adds: “The club has enjoyed a great relationship with key stakeholders, the Council, Your Housing and Mayor Joe Anderson to carry out a plan that will have a massive value to the community. We collectively adopted a ‘community first’ approach.
“As a club we are very proud of the Anfield community and are fully aware of our responsibility in the north Liverpool area as the biggest house. We employ a lot of people, but this project will create more jobs and redeploy a blighted area with hundreds of new and refurbished houses and wonderful facilities including commercial space, an office building, a hotel and a training hotel for local talent. We are one part, but there are a number of major players.”
The regeneration will directly create 360 new jobs and boost the local economy by £14.5m a year once complete, according to economists Amion Consulting. The numbers exclude construction and supply chain jobs, which, according to the Council, when taken into account will mean a total of 770 jobs will have been created.
The Anfield scheme is already proving its worth, with a substantial waiting list of homeowners and businesses wanting to move into the area for the first time in a generation. Anfield stadium’s status as an Asset of Community Value didn’t appear to have had any direct effect in relation to discussions around the stadium expansion or surrounding redevelopment.
“That only really comes into play if we wanted to sell the stadium, but the owners are going the other way with their huge show of intent and investment. Fenway are not going to dispose of the club as they are clearly demonstrating,” he adds.
According to the planning application approved by Liverpool City Council, the redevelopment will also allow the club to now host international fixtures and European finals in the future. It said there are parts of the stadium that currently “fall below current UEFA and Premier League standards, which restrict the club’s ability” to host major games.
UEFA insists upon at least a 50,000-capacity stadium, corporate accommodation and a minimum standard for players and match officials’ changing rooms, criteria, which will all be passed once the first phase has been completed.
By Alex Miller @alexmiller73
Taken from fcbusiness issue 82 - bit.ly/1BCDLDg
Posted by: Aaron Gourley
If you have any football business related news stories you’d like to share then please contact us – firstname.lastname@example.org
To subscribe to our range of football newsletters including news, products and jobs CLICK HERE.
Mon 10th Apr 2017 | Football Stadiums & Facilities
From Russia 2018 World Cup venues to Derby County, 2016 was the year to remember for SISGrass. fcbusiness speaks to Phil Blackwell, UK Project Director for the Cumbria based company about their...
Thu 6th Apr 2017 | Football Stadiums & Facilities
AFC Fylde’s Community Foundation has revealed further details about its new £400,000 Education Centre, which is due to open at the £25m Mill Farm Sports Village later this year....
Fri 31st Mar 2017 | Football Stadiums & Facilities
Wembley Stadium is one of the most famous football grounds anywhere in the world. The new stadium opened in 2007, and as this was our first visit, we wanted to do it in style with some hospitality....