Liverpool had not planned to make an announcement on Saturday afternoon regarding their controversial decision to utilise the UK government’s Coronavirus Job Retention Scheme. “Our hand was forced,” one senior club source told The Athletic.
The Anfield hierarchy believe details were leaked by another Premier League club after what Liverpool understood to be confidential discussions involving top-flight sides about how they intended to handle the effects of the pandemic.
Liverpool’s plan was to wait until Monday to release their statement to ensure that every impacted employee was made aware by the club directly via letter before any public announcement was made.
Little did owners Fenway Sports Group know that the publication of a hastily constructed statement on the club website confirming that some non-playing staff had been placed on furlough would trigger a furious backlash that culminated 48 hours later in a dramatic U-turn and public apology.
In an open letter to supporters on Monday, chief executive Peter Moore said the club was “truly sorry” for coming to the “wrong conclusion” after initially deciding to furlough about 200 employees. Liverpool will no longer seek taxpayers’ money to cover 80 per cent of the wages of staff who are currently unable to work with no matches going on. They would have been claiming about £500,000 per month.
The Athletic understands principal owner John W Henry, chairman Tom Werner (both pictured top) and FSG president Mike Gordon were “shocked” by the torrent of criticism and stung by what they regard as unfair accusations of greed. During a series of conference calls on Monday, they were in full agreement that back-tracking was the best solution to limiting the damage caused by the fallout.
Gordon, who is FSG’s second biggest shareholder after Henry, runs Liverpool on a day-to-day basis and is a popular figure at both Melwod and in the club’s Chapel Street offices. The Milwaukee-born businessman, who divides his time between Merseyside and FSG’s home in Boston, has the final word on everything from sanctioning transfer deals to making senior executive appointments.
Managing director Billy Hogan and Moore answer to him and the trio spoke extensively before the initial decision to furlough was taken last week. From a business perspective, they all felt it was crucial to help ease the current cash-flow issues. All revenue streams have dried up in the current crisis but overheads remain huge and even for a club the size of Liverpool that’s a major headache.
As well as an annual wage bill of £310 million, there are payments on previous transfers due in the coming months. There’s uncertainty over whether TV money will need to be repaid and if the next instalments from global sponsors will be forthcoming given that with no games being played Liverpool are currently unable to fulfil their side of the bargain.
The Athletic has reported there are significant fears that Premier League sides may yet need to repay £762 million to broadcasters should the 2019-20 season not be completed, while the determination to finish the campaign even led to one idea of taking games to China.
The collective commitment to find a way to complete the Premier League season when it’s safe to do so is good news for Liverpool, with Jürgen Klopp’s side on the brink of sealing the title. However, just when football will return remains unclear. Mid-to-late June, with matches initially played behind closed doors, is currently regarded as the most optimistic scenario. Meanwhile, the financial toll will keep growing.
Liverpool’s latest accounts may have shown a pre-tax profit of £42 million but FSG insists those figures are almost a year old and all money generated is reinvested into the club as it constantly looks to balance the books.
There has been no public announcement but The Athletic understands more than a dozen executive staff, including Hogan, Moore and chief operating officer Andy Hughes, voluntarily took a 25 per cent pay cut last week. It was kept quiet as they didn’t want to place the players in a difficult situation as their own discussions over wage reductions continue.
As a major UK taxpayer and one of the biggest employers in the city with a staff of around 800, FSG felt it was entitled to utilise the coronavirus fund to help safeguard jobs.
Bigger companies than Liverpool FC have turned to the government for help and they currently have hundreds of operational, hospitality and catering staff who have no work to do in the continued absence of Premier League football.
Liverpool had already promised to cover the wages of casual Anfield match-day staff for the postponed games in April, which will cost them about £250,000 per match.
The club hierarchy believed criticism of their furlough decision would be mitigated by the fact that, unlike Tottenham Hotspur, they would be topping up the 80 per cent coming from the government with the remaining 20 per cent to ensure that no employee would be left out of pocket.
They were wrong. And the backlash over the weekend was so toxic that The Athletic understands a number of other Premier League clubs who had intended to announce the furloughing of staff have since decided to shelve those plans.
“That kind of thing was almost expected of Daniel Levy and Mike Ashley but you don’t expect Liverpool to go down that same route,” one Liverpool staff member, who asked to remain anonymous, told The Athletic.
“We’re always told we’re part of a family here and that working for Liverpool is different. ‘This means more’ is the marketing slogan. Surely part of that is looking after your own rather than taking government money which would be better spent elsewhere with so many businesses struggling?”
Former Liverpool players including Jamie Carragher and Stan Collymore led the fierce criticism on social media and as one FSG executive in Boston admitted “the bullets really started flying”.
The fact that it became national headline news with government ministers wading into the debate as Liverpool took a battering led to a series of urgent trans-Atlantic calls and a swift rethink. It had been a decision driven by data but the emotion it triggered hadn’t been properly considered.
Influential supporters’ union Spirit Of Shankly (SOS) submitted an open letter to Moore via email on Sunday afternoon demanding a full explanation and expressing concern for “the damage this is causing to our club’s reputation and values”.
On Monday, Moore and Tony Barrett, Liverpool’s head of club and supporter engagement, conducted a series of phone discussions with respected figures in the community. Feedback was collated and then presented to Gordon. There were three separate conversations with Joe Blott, the chair of SOS.
“It wasn’t clear at that stage that the decision would be reversed but I genuinely felt they were listening,” Blott tells The Athletic. “They wanted to gauge where the fanbase was on this. We told them it went right to the heart of the values of the club. I’m thankful we got to this position in the end but it all could have been avoided if supporters had been involved from an early stage.”
Moore also rang the Mayor of Liverpool Joe Anderson and the region’s Metro Mayor Steve Rotheram as well as local MPs Ian Byrne and Dan Carden. Byrne, a lifelong Liverpool fan, tells The Athletic: “Peter asked me what I thought and I told him that I’m in favour of using furlough if it means retaining jobs, as the overriding priority has to be that staff members get paid.
“Everyone was delighted when British Airways went into furlough as it saved jobs but the reality is that football gets judged by a different set of rules. With football clubs, there is a moral side to this.
“If Liverpool were saying, ‘We’re going to furlough for three months, we’re going to get X amount from the government and then we’re going to pay it back further down the line’ — that’s a different argument. The shame for me was that this decision has overshadowed a lot of the great work the club is doing in the local community at this difficult time.
“Football is an easy target for the government and some people are always looking for a reason to give Liverpool a knock. The club gave them an open goal on this one. It’s caused some damage but they’ve done the right thing in the end.”
Manchester City and Manchester United subsequently announced they would not be furloughing staff.
Having assessed all the feedback from Merseyside and done plenty of soul-searching, Gordon sanctioned the U-turn on Monday afternoon as he concluded there had been “a misjudgment” which needed to be reversed. He fed back to Henry and Werner. It was decided that Moore would write an open letter to fans.
There are parallels with February 2016, when FSG scrapped plans to increase ticket prices after 10,000 supporters walked out of Anfield in protest during a game against Sunderland.
On Monday, Moore wrote that Liverpool would find “alternative means” to cover wages rather than furlough during this “unprecedented period”. In the short-term that means dipping into cash reserves but concerns within the club about the impact of this crisis going forward are genuine and growing.
A glaring mistake has been rectified and the damage done has been reduced if not erased.
It’s a fine line between running Liverpool FC as a business and embracing the principles and values that the club’s supporters hold dear. After a torrid 48 hours, FSG acknowledged they fell on the wrong side of it..https://theathletic.com/1721466/2020/04/07/liverpool-furlough-leak-u-turn/