Small loss at Liverpool is impressive

From his Zurich bastion, the authoritative Swiss Ramble analyses the latest accounts of Liverpool FC.

Liverpool’s 2020/21 accounts show they reduced their pre-tax loss from £46m to £5m, despite a large COVID impact. Revenue was slightly lower at £487m. Profit from player sales was up £12m. Wages were down £11m to £314m. Gross debt cut £70m to £198m

The small £5m loss is pretty impressive, given there was a full year of the pandemic. The only Premier League clubs that have posted profits in 2020/21 are Wolves £145m (loan write-off) and Manchester City £5m. Others have made big losses, e.g. Chelsea £156m, Arsenal £127m and Spurs £80m.

Liverpool have lost a total of £51m in the last two years, having made £207m profits in the preceding three years. That included a huge £125m profit in 2018, which is the third highest ever profit in the Premier League, plus £42m in 2019 and £40m in 2017.

Revenue was significantly impacted by COVID. The Swiss Ramble estimates the loss as £87m in 2020/21 (match day £74m, commercial £10m and broadcasting £3m), which would make £114m lost over the last two years. Partly offset by £35m of TV money deferred from prior year accounts to 2020/21.

The £186m revenue growth in the last 5 years is highest in Big Six, ahead of City £178m. As a result, the £487m revenue is the third highest in England, within touching distance of Manchester United £494m, but nearly £100m below City £570m. There is then a fair sized gap to the following club headed by Chelsea £435m

In recent years the club have also benefited from the absence of exceptional charges, which had increased their costs by £113m in the 10 years up to 2016, mainly stadium development £61m and sacked managers £47m.

They have become increasingly reliant on profit from player sales, generating an impressive £370m from this activity since 2015. A key element of clubs strategy is they have become a club that sells well. In last five years only Chelsea have made more from player trading than the Reds with £413m, but Liverpool £274m is well ahead of the rest of the Big Six. [Player trading has become more important across Europe, but it is a volatile source of income. Liverpool have clearly overcome this challenge].

Liverpool climbed two places to 5th in the 2019/20 Deloitte Money League, which ranks clubs globally by revenue. This is the first time they have been in the top five since 2002, though still a long way behind Barcelona and Real Madrid, both £627m, and Bayern Munich £556m.

The sage of Zurich estimates that the club earned €89m for reaching the Champions League quarter-finals, €9m more than prior year (when they only reached the last 16). That’s pretty good, though a fair bit lower than finalists Chelsea and Manchester City, who both received around €120m.

The Champions League has been an important driver of revenue growth with an impressive €361m earned in the last five years, even though they did not qualify for Europe in 2017. The total is only surpassed by City €422m in England. It is very important for Liverpool’s business model.

£218m remains third highest commercial revenue in England, still a fair way behind City£272m, though quite close to United £232m. Post-pandemic Liverpool will expect a significant rise in this revenue stream, especially with the new Nike deal.

The 2019/20 average attendance of 53,143 (for games played with fans), was the 6th highest in the Premier League. Anfield Road expansion will increase capacity to 61,000 for 2023/24 at an estimated cost of £80m.

The wage bill fell £12m (3%) from £326m to £314m, as prior year included bonuses for winning 2019 Champions League (played in June 2020) and 2020 Premier League (accrued). Wages have increased by £107m (56%) in the last four years, around the same as Chelsea and Manchester City. Following this recent fall, the club’s £314m wages are 4th highest in the Premier League, below City £355m, Chelsea £333m and Manchester United £323m.

The wages to turnover ratio slightly improved from 66% to 65%, which is not too bad, given the estimated net £52m COVID revenue impact. Also one of the better results in the Premier League,

Fulham requires big funding from owner

After lengthy delays, Fulham’s shiny, new Riverside Stand has finally opened, creating “a unique Thameside destination with first class facilities for supporters and partners on match days, as well as for the wider community year-round”. This ambitious project has increased Craven Cottage’s capacity by around 4,000 to 29,600, while it has also taken advantage of the club’s fantastic location and wealthy catchment area by including two Michelin star restaurants, a rooftop swimming pool, corporate hospitality and event space, all benefiting from views of the Thames. Chief executive Alistair Mackintosh observed, “Fulham is the sort of club that can have a business class or first class and have fans that turn left on a plane.” Indeed, there is also an exclusive members club – with a football season ticket as an optional extra. It’s fair to say that “the times they are a-changing”, as this is a long way from the traditional pie and a pint. However, in a world where clubs face the tw...

Threat of financial calamity removed from Baggies

West Bromwich Albion had effectively been in decline ever since the club was sold to a Chinese consortium in August 2016, paying a figure north of £200m to buy former owner Jeremy Peace’s stake. Controlling shareholder Guochuan Lai’s ownership was fairly disastrous for the club, but his unloved tenure finally came to an end after Bilkul Football WBA, a company ultimately owned by Florida-based entrepreneur Shilen Patel and his father Dr Kiran Patel, acquired an 87.8% shareholding in West Bromwich Albion Group Limited, the parent company of West Bromwich Albion Football Club. This change in ownership was urgently required, due to the numerous financial problems facing West Brom, including growing high-interest debt and serious cash flow concerns, following years of no investment from the former owner. Indeed, West Brom’s auditors had already rung the alarm bell in the 2021/22 accounts when they cast doubt on the club’s ability to continue as a going concern without making player s...

A poor financial record, but new hope at Everton

I recently saw an amusing video online in which a group of Everton fans were rebuked in jest for being hopeful. Football fans in general tend to swing between excessive optimism and excessive pessimism, but for many it seems that moaning is in their bloodstream (Spurs fans probably take the trophy). However, Everton fans have had plenty to moan about on and off the pitch. Let’s hope that a new era is about to begin for this grand old club. Everton’s 2023/24 financial results covered a fairly momentous season, when they ended up 15th in the Premier League, though they would finished three places higher if they had not received an 8-point deduction for breaching the Premier League’s Profitability and Sustainability Regulations (PSR). It was a worrying time for Everton fans, as the club faced a “perfect storm” of issues, including large financial losses, an ever increasing debt burden, a challenging stadium build and the tortuous sale of the club. There were eve...

The Political Economy of Football V2

Search This Blog