[article]In theory, this was supposed to be a big summer for Liverpool.
Having romped to a maiden Premier League title in dominant fashion, the Reds were supposed to be leaving their rivals wondering how they might ever catch up.
Instead, the coronavirus pandemic and its financial repercussions have put the champions’ transfer plans on pause, at least until the outlook becomes clearer.
For some fans, this has lead to fears that the joy of a first league championship in 30 years is set to be short-lived.
It has also resulted in a vocal minority on social media questioning whether Fenway Sports Group are the right owners to lead the club forward after restoring its standing over the last decade.
But are these concerns legitimate? And why aren’t Liverpool able to spend with confidence following their recent successes?
As Kieran Maguire, a football finance lecturer at the University of Liverpool, explained to Standard Sport, FSG are currently contending with a drop in income that could never have been anticipated.
He said: “If you take a look at the most recent accounts, Liverpool had a total matchday income £84million for 27, 28 games at home, about £3m per match.
“They missed out on four games at home, so in terms of pure matchday income that's £12m.
“You’ve also got to add onto that the rebate in terms of broadcast money as well. The estimate for the Premier League as a whole was around about £360m.
"We don’t know whether that’s going to be divided evenly or not but if you work on that basis, it’s another £18m for Liverpool so we’re already up to mid-£30m.”
FSG’s critics often argue that these losses should be mitigated in some part by increased revenues and past prudence in the market.
One recent estimate suggested that Liverpool are in line to bag £175m for winning the Premier League this season, while a lucrative new kit deal with Nike begins this summer.
The club have also spent less than £10m on transfer fees - a figure accounting for the signings of Sepp van den Berg and Takumi Minamino - over the last three windows.
But, as Maguire points out, the Reds’ latest accounts make it clear where the money is going.
He said: “If you take a look at Liverpool’s wage bill, that has practically doubled since 2015. What Liverpool have done is that when they’ve had money they’ve put it into the squad.
“Fans are unhappy about players not being signed but what Liverpool are doing instead is that they’re getting their existing squad on longer contracts.
“If I were a Liverpool fan, the thing I’d want to do most of all is get Sadio Mane and Virgil van Dijk and tie them up for another couple of years. That, to me, is more valuable than trying to get a player who won’t necessarily improve the starting XI but might improve the squad.
“That’s one contributory factor, that Liverpool have invested but they’ve invested in players, managers, coaches they already have by tying them to the club for longer periods.”
Of course, that rationale would perhaps be easier to accept for some supporters were it not for the spending of rivals.
Chelsea have already added former Reds target Timo Werner and Ajax star Hakim Ziyech to their squad for next term, while moves for the likes of Kai Havertz and Jan Oblak are being widely touted.
So, how is it that a club that only qualified for the Champions League on the last day of this season is better equipped to weather the coronavirus storm than the current English, European and world champions?
Maguire explains: “The nature of Financial Fair Play is that it is a three-year rolling target and, if you look at Chelsea’s player sales over the three-year period, they are phenomenal.
“If you sell a player, you take all of the profit immediately, and when you buy a player you spread his cost over the life of the contract with amortisation.
“So, you sign Timo Werner for £55m on a five-year contract, it’s £11m a year. And even if they sign three Timo Werners, it’s £33m a year.
“You’ve only got to sell one player [to account for that] and they sold Eden Hazard at a ridiculous profit because he was near the end of his contract and his accounting value was fairly close to zero.
“This is the way that the accounting works, you sell a player and book all the profit, you buy a player and you spread the cost over four or five years.”
And what of Manchester United, whose pursuit of Jadon Sancho is continuing apace despite the financial challenges posed by the absence of supporters?
Prior to coronavirus, it had been predicted that Liverpool would overtake their rivals in terms of revenue in both clubs’ next set of accounts, but Maguire believes that may no longer be the case.
“Covid just throws everything up into the air,” he adds. “I think United have got a slightly better chance of being ahead of Liverpool when next year’s figures eventually come out probably due to the fact that United’s commercial arm is amazing.
“While Liverpool have been catching up, they’re catching up from a long way behind. United had a commercial income of £275m compared to Liverpool’s £188m last year.
“Their commercial revenues are probably the ones which are going to be less affected for 2019-20 because the likes of Adidas and Chevrolet have already committed to paying the club.”[/article]
