Liverpool's distinctive player strategy

The Swiss Ramble has been used his analytical skills to examine the way in which Liverpool spend money and he has come up with some interesting findings.

Many Liverpool fans are unhappy that their club has not bought more players in this summer’s transfer window. This thread looks at where the money has gone, reviews the business model under FSG and explains why the approach is less restrained at other clubs.

Low spending is a calculated risk, as Liverpool might be overtaken by others in the race for the Champions League (and its lucrative rewards), especially as the team is growing old together, but as Klopp said, “we were quite successful given the limits in the last two years.

This summer he club only spent £36m on RB Leipzig defender Ibrahim Konaté, by far the lowest of the Big Six. Four clubs splashed out more than £100m: Arsenal £149m, Manchester United £126m, Manchester City £115m and Chelsea £108m. On a net basis, the club’s £11m was second smallest, as Chelsea made £110m sales. Even though they spent £74m the prior season, mainly on Jota, Thiago and Tsimikas, their £110m gross spend in the last two years is still the lowest of the Big Six.

Looking at transfers since FSG acquired the club in October 2010, Liverpool had £1.1 bn gross spend (£575m net), but they have been significantly outpaced by Chelsea £1.8 bn, Manchester City £1.8 bn and Manchester United £1.5 bn. In other words, this disparity is nothing new for Liverpool.

In the last 10 years, Liverpool made £61m pre-tax profit, though this is a “game of two halves”, as first 5 years delivered £80m losses, offset by £141m profits in last 5 years, despite big £46m loss in 2020. However, worth noting that this £61m pre-tax profit is entirely due to £359m profit on player sales. Excluding these profits, they would have made a large loss.

£490m is 5th highest revenue in the world per the Deloitte Money League, which is the first time they have been in the top five since back in 2002 and means they have improved 4 places since 2011. However, still miles behind Barcelona and Real Madrid, both £627m.

European TV money has seen massive growth with the club earning an impressive €272m in the last 3 years, more than any other English club, having won the Champions League and reached the final in this period. I estimate they also got €89m in 2021, so CL qualification is imperative.

All of the revenue growth has been eaten up by higher costs. In fact. wages have grown by £197m since 2011, the highest in the Big Six, due to recruiting better quality players and higher bonus payments. The focus has been on extending contracts.

Per the club’s audited accounts, the £326m wage bill, including all staff, is the second highest in England, only behind City £351m, but ahead of United £284m and Chelsea £283m. This includes social security and highly incentivized bonus payments, i.e. it’s the price of success.

One fan argued that this represented a sustainable and long-term strategy. But another commented: ‘This model views LFC as an asset in FSG’s portfolio, to be managed. Whereas the club should be owned by people who view it primarily as a dominant force in the sport.’

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The Political Economy of Football V2

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