Liverpool CAN spend this summer but FSG transfer model has long-term benefits
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Liverpool like Brighton’s Ben White and Watford’s Ismaila Sarr, but have used an approach that can only be described as cautious so far this summer.
While Chelsea, in particular, and other top-four rivals too have splashed the cash, Jurgen Klopp and Liverpool have steered clear of dipping into the market, despite continuing transfer links.
Speaking to the Blood Red podcast for a football finance and transfer podcast, the University of Liverpool’s Kieran Maguire explained the current situation off the field.
He said: "If the manager wanted to spend £40-50million, they will back him. But to spend that amount, it has to be a player who will play 30-plus games in the Premier League.
"Spurs haven’t spent loads, Arsenal have been pretty quiet and there is an awful lot of other clubs who have been pretty quiet as well. Liverpool are not alone in their caution this summer."
Dive further into the figures and Liverpool’s stance is understandable, and sensible.
Under FSG, significant investment has been made well beyond the obvious headline figures of transfer fees, but their financial model has always been to make the club self-sustainable.
In their most recent accounts, the Reds’ incomings totalled an almost identical figure to their outgoings.
Loans to be repaid stand at £129million (this was £183million in 2017, so it has reduced by 30 per cent in three years) and another £20million was repaid on the loan for the Main Stand’s construction.
That approach will pay off in the long-term, too; even if Liverpool do not spend any more this summer, that will mean that further down the line they will have much more money to play with.
Maguire further outlined: "If we take a look at the last six years in terms of day-to-day money coming and going out, Liverpool made £8million in 2014, £7million in 2015, they lost money in 2016 but they had a change in manager that year, and then they have broken even in 2017, 2018 and 2019.
"That does suggest that the owners are not willing to take the approach taken by some other clubs in terms of racking up huge losses in the pursuit of glory.
"Net debt has halved since 2017 - it was £179million and it is now down to £90million. Less debt means less interest, so in the long-term, there is more money to invest in the transfer market.
"For Liverpool, interest payments are about four or five millions pounds a year and are less than one per cent of revenues, which is a pretty good cost to have nailed down.
"At Manchester United, when the Glazers first took over, they were paying out around £100million a year.
"Long term, the more money is being paid to the bankers, the less money there is in the player budget. Having a strategy as FSG appear to have is something to use to the club’s advantage.
"This has allowed Liverpool to catch up with Manchester United - a decade ago, Liverpool were a long way behind. Last year, Liverpool’s wages were £310million and United’s were £330million, so there wasn’t a huge difference.
"Liverpool won the Premier League without spending money on new players last season. You don’t have to spend huge amounts if you have the infrastructure in terms of the playing part of the club in place, and in my view, they also have the strategy for the infrastructure off the pitch as well in terms of the training facilities and the stadium."
Importantly, Klopp is content with the squad that he has at his disposal, and the lack of incomings is not only linked with the economics of the situation: squad size is also an important consideration, with the likes of Harry Wilson and Marko Grujic currently swelling the first-team roster.
That will mean a big decision to make with all three in terms of what comes next, not only in succession planning but also in terms of offering them their next contract.
But by not spending for the sake of it this summer, carefully continuing to follow the model that has seen Liverpool win both the Champions League and the Premier League, the Reds will be in the best possible position to sustain their success in the long-term
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Liverpool like Brighton’s Ben White and Watford’s Ismaila Sarr, but have used an approach that can only be described as cautious so far this summer.
While Chelsea, in particular, and other top-four rivals too have splashed the cash, Jurgen Klopp and Liverpool have steered clear of dipping into the market, despite continuing transfer links.
Speaking to the Blood Red podcast for a football finance and transfer podcast, the University of Liverpool’s Kieran Maguire explained the current situation off the field.
He said: "If the manager wanted to spend £40-50million, they will back him. But to spend that amount, it has to be a player who will play 30-plus games in the Premier League.
"Spurs haven’t spent loads, Arsenal have been pretty quiet and there is an awful lot of other clubs who have been pretty quiet as well. Liverpool are not alone in their caution this summer."
Dive further into the figures and Liverpool’s stance is understandable, and sensible.
Under FSG, significant investment has been made well beyond the obvious headline figures of transfer fees, but their financial model has always been to make the club self-sustainable.
In their most recent accounts, the Reds’ incomings totalled an almost identical figure to their outgoings.
Loans to be repaid stand at £129million (this was £183million in 2017, so it has reduced by 30 per cent in three years) and another £20million was repaid on the loan for the Main Stand’s construction.
That approach will pay off in the long-term, too; even if Liverpool do not spend any more this summer, that will mean that further down the line they will have much more money to play with.
Maguire further outlined: "If we take a look at the last six years in terms of day-to-day money coming and going out, Liverpool made £8million in 2014, £7million in 2015, they lost money in 2016 but they had a change in manager that year, and then they have broken even in 2017, 2018 and 2019.
"That does suggest that the owners are not willing to take the approach taken by some other clubs in terms of racking up huge losses in the pursuit of glory.
"Net debt has halved since 2017 - it was £179million and it is now down to £90million. Less debt means less interest, so in the long-term, there is more money to invest in the transfer market.
"For Liverpool, interest payments are about four or five millions pounds a year and are less than one per cent of revenues, which is a pretty good cost to have nailed down.
"At Manchester United, when the Glazers first took over, they were paying out around £100million a year.
"Long term, the more money is being paid to the bankers, the less money there is in the player budget. Having a strategy as FSG appear to have is something to use to the club’s advantage.
"This has allowed Liverpool to catch up with Manchester United - a decade ago, Liverpool were a long way behind. Last year, Liverpool’s wages were £310million and United’s were £330million, so there wasn’t a huge difference.
"Liverpool won the Premier League without spending money on new players last season. You don’t have to spend huge amounts if you have the infrastructure in terms of the playing part of the club in place, and in my view, they also have the strategy for the infrastructure off the pitch as well in terms of the training facilities and the stadium."
Importantly, Klopp is content with the squad that he has at his disposal, and the lack of incomings is not only linked with the economics of the situation: squad size is also an important consideration, with the likes of Harry Wilson and Marko Grujic currently swelling the first-team roster.
That will mean a big decision to make with all three in terms of what comes next, not only in succession planning but also in terms of offering them their next contract.
But by not spending for the sake of it this summer, carefully continuing to follow the model that has seen Liverpool win both the Champions League and the Premier League, the Reds will be in the best possible position to sustain their success in the long-term
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