July 21, 2013 at 2:49 pm

Pepe Reina: A Nonperforming Asset


Quite a few confused people were throwing the ‘FSG are asset-stripping’ trope at me on Twitter, so instead of argue with them all, I thought I’d quickly make my argument here.

An asset is, I hope we all know, a useful or valuable object, person, quality or thing which is owned. It is not anything that can be owned. I might own a business which is making a loss, or be employing a person who is losing me money, and they would be considered a Nonperforming Asset.

As we can see from a simple definition of asset-stripping, the people throwing this around are quite confused. For starters, asset-stripping is something you would normally do to a company you intend to close down, not sell, as it is a company’s assets that (in part) give it value. If FSG *did* intend to sell Liverpool in the near future for a profit, selling off the best players and in-turn risking the club’s standing would be a risky strategy, as prospective buyers would far rather buy a club which had retained their valuable assets.

When Liverpool *were* forced to sell a valuable asset in Fernando Torres, the first thing FSG did was to reinvest the cash in two more assets: Andy Carroll and Luis Suarez. Pepe Reina hasn’t even been sold, so FSG have actually added an asset in Simon Mignolet, rather than sold one off.

Whether or not Pepe Reina even qualifies as an asset is debatable. His form has failed to match his wages for at least three seasons, and at his age and on his wages, he might even be considered a nonperforming asset, as we are spending a lot of money on a player whose value is in decline which could be spent on players who would perform better.

When companies asset strip, they take a company that is unprofitable and sell it off bit by bit, squeezing out any value they can find in a business that wasn’t profitable. If this were to happen to Liverpool, the most valuable assets would be Suarez, Coutinho and Sterling. An ageing keeper on massive wages who hasn’t performed well (or, for argument’s sake, at least to the level of his wages) for three seasons isn’t really an asset at all.

In football, assets (when talking about players) are determined by a few key factors. The first is ability. Lionel Messi is an asset because he helps a team to win, and other teams would pay handsomely for his services. Stewart Downing isn’t because he doesn’t and they wouldn’t. But that’s not all. Age is another vital aspect. David Villa is a quality footballer, but he’s just moved to Atletico Madrid for a minor fee. Why? Because despite his ability, he is getting on, and will have little-to-no sell-on value in a year or two. Another factor is wages, or how expensive the asset is. There are other aspects too, like susceptibility to injury, how valuable a player is in terms of marketing (Beckham) and so on, but having been a good player a few years ago, sadly, isn’t one of them.

If I have a brand new Ferrari in perfect condition, I have a great asset. But if that Ferrari costs £50,000 in petrol per mile to run (an equivalent to wages), it isn’t actually an asset at all, because it’s really bad value compared to what else is available, expensive to run, and nobody will want to buy it from me.

The ultimate football asset would be a young player with fantastic ability who is on low wages. Players like Suarez, Sterling and Coutinho are fantastic assets. Players like Downing and Reina are not.

Ironically, what FSG have done is actually acquire a new asset for the club. Simon Mignolet is young (for a keeper), cheap (low wages) and he has performed above the level of ability his wages represent over the last few seasons.

FSG are not asset-stripping. They are shipping out nonperforming assets and replacing them with better value alternatives who might actually perform.


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