Donald Trump’s defeat could speed up FSG merger plans for Liverpool

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The American public will be heading to the polls today (Tuesday, November 3) to determine their future. Whether it’s four more years of Donald Trump or a new administration led by Joe Biden, the first day’s entrance bin will likely be pretty full as they grapple with the effects of the coronavirus.

Fenway Sports Group and RedBall Acquisitions will follow developments with interest, the decision of who becomes President of the United States is something that will have a ripple effect on their plans for Liverpool and the Boston Red Sox.

To explain it, plans are still on for the potential £ 6bn deal between John Henry’s FSG and the RedBall led by Gerry Cardinale and Billy Beane, and that likely won’t change whoever makes it home. White.

But how quickly a deal comes to fruition may well change, certainly if, as has been widely suggested, Biden becomes the next President of the United States.

Biden, who served as vice president under the Barack Obama administration, has previously said he would seek to raise the capital gains tax, a drastic proposal being to raise it from 23.8% to 43.4%. Enough to keep Henry, Cardinale and Beane et al thinking of doing their big business as soon as possible.

Speaking to ECHO, Andrew Zimbalist, an economist at Smith College in Boston, Massachusetts and a member of the editorial board of the Journal of Sports Economics, explained that a potential capital gains tax hike could speed up some transactions, while stressing that legislation in the event of a Biden victory would still give a fairly wide window of opportunity.

“One of the motivations in the United States is to take some of the capital gain that John Henry and Tom Werner experienced and realize that capital gain before hopefully the new administration that arrives in January,” Zimbalist said. .

“Joe Biden talked about raising tax rates, which were lowered significantly under Trump. Therefore, you want to be able to realize your capital gain before this tax rate is waived. ”

It had been suggested that the FSG / RedBall deal could be concluded before the end of 2020, although any legislative changes in the United States would take some time to be implemented given the most pressing issues to deal with COVID. -19.

“If Biden wins, he will become president on January 20 and it will take him a while before he brings in capital gains legislation,” Zimbalist explained.

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“There are more pressing issues he has to deal with. Once he introduced the legislation, it would take him a few months for it to be passed, and then it will probably not be implemented until the following year, which is January 1, 2022..

“That window could close faster, but it could also be open for about 14 months. ”

The merger between FSG and RedBall, which would seek to take a stake of around 25% in the company, would likely see them listed on the stock exchange, the company valued at around £ 6bn given its stake in the Boston Red Sox , Liverpool, Fenway Park itself and the NASCAR Roush Fenway Racing team.

The ability to generate cash through the sale of shares would allow them to bring money into the business in the midst of the pandemic and continue to be able to invest in infrastructure and maintain success on the ground. .

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