No money for Hodgson as Henry tightens Reds' belt
Roy Hodgson will not target any trophy signings in the January transfer window as Liverpool's new owners, New England Sports Ventures (NESV), look to put a stop to the profligate spending which it believes has hampered the club's progress in recent years.
NESV is believed to have been concerned by the millions of pounds haemorrhaged on transfer fees and wages by the club as it examined Liverpool's finances as part of the due diligence process carried out before the £300m purchase of the Anfield side was completed.
Under former manager Rafael Benitez, Liverpool spent more than £230m in six years on fees alone -- though much of that was recouped in sales -- while the purchases of the likes of Raul Meireles, Christian Poulsen, Brad Jones and Paul Konchesky totalled £25m in Hodgson's first summer at the club.
NESV's takeover freed up £36m a year of revenue -- money that had previously been used to service Liverpool's £282m debts -- to be reinvested in the club. Although its offer also made provisions for an immediate injection of funds into the playing staff, the American consortium has made it clear it expects value for money, both from fees and salaries.
"We have to be smart," John W Henry, NESV's principal backer who will assume a place on Liverpool's board, said after the deal was completed. "We have to be more efficient. When we spend a dollar it has to be wisely. We cannot afford player contracts that do not make long-term sense. We have to be smart, bold, aggressive. It's a great challenge."
Henry will take an active role in football matters at Anfield, assessing Hodgson's suggested transfer targets and setting budgets for contract renegotiations of players already at the club. The 61-year-old has already expressed his concern at the wages earned by older players on long-term, high-value contracts.
NESV's approach -- applied with great success at the Boston Red Sox -- is likely to rule Liverpool out of the glamour signings which many fans hoped would follow the eviction of previous owners Tom Hicks and George Gillett.
Instead, the club's recent scouting activity suggests they intend to follow the Arsenal model or, perhaps more pertinently, institute on an informal basis the transfer policy employed at Manchester United, where premium fees are only paid for younger players with resale potential.
"At the Red Sox we invested a lot in management and the scouting system," said NESV chairman Tom Werner. "We believe the foundation of any good sports club has to be the experience, valuation and understanding of scouting."
Those players assessed by Hodgson and his scouting team in recent weeks include Steven Defour, the Standard Liege captain and a long-term target for the Liverpool manager. At 22, and valued at around £12m, Defour represents minimum risk for maximum reward.
Likewise Ibrahim Afellay, the PSV Eindhoven winger who Liverpool have assessed several times. Already a Dutch international at 24, Afellay would fall within Liverpool's budget.
More expensive would be Eden Hazard, Defour's Belgian international team-mate, currently with Lille. The 19-year-old has attracted interest from Barcelona, Real Madrid, Arsenal, Chelsea and United, and could cost £18m. However, Liverpool believe they can tempt the player with the incentive of regular first-team football.
Hodgson will not be allowed to add any players, though, without first trimming the squad. Liverpool boast the fourth-highest wage bill in the Premier League -- standing at £107m in 2009, according to football finance analysts Deloitte -- but find themselves marooned in 18th place in the table.
NESV does not blame Hodgson for that poor performance so far this season, but rather interprets it as evidence that many of the squad do not warrant their reputations or their earnings.
Henry's experience as a futures trader, as well as his noted obsession with sporting and financial statistics, put him in a perfect position to analyse such information.
He is acutely aware that figures suggest that, with almost unerring accuracy, a club's league position is defined by their wage bill. That Liverpool's key statistics are so discordant suggests the money is not being spent wisely.
He is also a devotee of Sabermetrics -- the statistical analysis of the value of baseball players, pioneered by Bill James and which led Henry to appoint Theo Epstein as general manager of the Boston Red Sox in 2002 at the age of 28.
Epstein applied James' principles -- which are designed to help poorer teams identify value-for-money acquisitions -- to lead the franchise to two World Series championships with a squad largely composed of bargain purchases.
Initial impressions of his time at Liverpool suggest Henry retains his faith in the method. (© Daily Telegraph, London)