It probably came as something of a surprise last week when the club announced a massive loss for the 2023/24 season, though this did reflect results on the pitch, as they only played in the Europa League, where they reached the quarter-finals, as opposed to the far more lucrative Champions League.
They finished third in the Premier League, two places better
than the previous season, while they won some silverware after beating Chelsea
in the Carabao Cup final, though they were eliminated in the FA Cup
quarter-finals by Manchester United.
Liverpool’s pre-tax loss significantly widened from £9m to
£57m, which is not only the largest under FSG, but is actually the club’s
highest ever. Despite missing out on the
Champions League, Liverpool still managed to increase revenue by £20m (3%) from
£594m to £614m, a new club record, though profit from player sales fell £12m
from £34m to £22m. However, there was
steep growth in operating expenses, which shot up £52m (8%) from £632m to £684m,
while net interest payable more than doubled from £4.5m to £9.4m.
Liverpool have now posted losses two years in a row, which
is a bit of a blow to their previous record of financial sustainability, e.g.
outside the COVID-impacted seasons, they were profitable in six out of seven
seasons. Indeed, in the five years up to 2018/19, they had managed to generate
nearly a quarter of a billion of profits.
Revenue
Liverpool’s £81m revenue growth in the last five years has
been outpaced by Manchester City £180m and especially Arsenal, who are up by
£219m (55%). As a result, the North London club had almost exactly the same
revenue as the Reds last season.
Liverpool’s £614m revenue (just) remains the third highest
in England, albeit around £100m below Manchester City’s £715m and nearly £50m
less than Manchester United. They are
in turn well ahead of Tottenham £529m and Chelsea £469m. In other words, in
revenue terms, there is a degree of competitive imbalance even within the Big
Six, though this is partly dependent on which clubs qualify for the Champions
League.
Commercial is actually the club’s biggest revenue source
with 50%, followed by broadcasting 33%, while match day only accounts for 17%. Liverpool’s £120m (64%) growth in commercial
revenue in the last five years is the best in the Premier League, along with
Tottenham, just ahead of Manchester City £118m and Arsenal £107m.
Europe
As a result of only playing in the Europa League, Liverpool
saw a drop in broadcasting, which fell £38m (16%) from £242m to £204m. However, this was more than compensated by
growth in both commercial, up £36m (13%) from £272m to £308m, and match day, up
£22m (27%) from £80m to £102m. Both these revenue streams established new club
highs.
Normal service has been resumed this season, as Liverpool
have returned to the Champions League in some style. They topped the league
phase, winning seven out of eight games, which has earned them €98m to date
(participation fee €18.6m, prize money €38.2m and the new value pillar €41.3m).
Europe has been an important driver of Liverpool’s revenue
growth with an impressive €399m earned in the last five years, only surpassed
by Manchester City’s €567m, but more than every other English club.
Although a loss is rarely good news, especially if it’s as
much as £57m, Liverpool’s deficit is actually only mid-table in the Premier
League, where nearly half of the clubs lost more than £50m, led by Manchester
United’s awful £131m.
Another factor in Liverpool’s large loss was a relatively
small profit from player sales, which decreased from £34m to £22m. This may be
lower than many had anticipated, after a couple of sizeable sales to Saudi
Arabian clubs, with Fabinho moving to Al-Ittihad and Jordan Henderson to
Al-Ettifaq. However, some big names left
for free, including Roberto Firmino to Al Ahli, Naby Keita to Werder Bremen,
James Milner to Brighton and Alex Oxlade-Chamberlain to Besiktas, so Liverpool
might have had to book a loss on these deals.
Like all clubs, Liverpool were hit hard by COVID, which the
authoritative Swiss Ramble estimates cost them £114m in lost revenue, split
between £27m in 2019/20 and £87m in 2020/21, largely from match day, as many
games were played behind closed doors without fans.
The Anfield Road redevelopment increased capacity by 7,000
seats to around 61,000 at an estimated cost of £90m. The cost was more than
expected after the previous contractor, Buckingham Group, entered
administration, which led to a delay in the planned opening. As the Anfield Road expansion was only
completed during 2023/24, there should be further growth this season,
especially as they already have five guaranteed home games in the Champions
League.
Wages
Liverpool’s wage bill rose £13m (4%) from £373m to £386m,
another club record, which means that this has increased by 85% (£178m) in the
last seven years. Given that they only
played in the Europa League, last season’s increase was a little surprising,
though it was probably driven by a raft of contract extensions, including
Kostas Tsimikas, Conor Bradley and Ben Doak, while some bonuses for Champions
League qualification may have been paid in the 2023/24 accounting period.
Liverpool’s £386m wages are the second highest in the
Premier League, only behind Manchester City’s £413m, though they have overtaken
Manchester United £365m. They also pay more than Chelsea £338m, Arsenal £328m,
Aston Villa £256m and Tottenham £222m.
Liverpool’s other expenses shot up £30m (22%) from £137m to
£167m, which means that this cost category has increased by £67m (68%) in just
five years. Like other clubs, they have
been hit by high inflation, e.g. the price of utilities has doubled, while
match day costs have grown by 80%.
Debt and funding
Liverpool’s gross financial debt increased by £117m from
£197m to £314m, as the owner loan rose £127m from £71m to £199m in order to
fund the stadium expansion work, while the bank loan fell £10m from £125m to
£116m. This means that gross debt has nearly doubled in the last two years.
However, even after this growth, Liverpool’s £314m debt is
miles below Tottenham £851m (new stadium funding), Everton £792m (new stadium
and player recruitment) and Manchester United £547m (still paying for the
privilege of having the Glazers as owners).
In the last 10 years most of Liverpool’s £1.1 bln available
cash has been sourced from the club’s own operations with £813m, which
underlines the club’s devotion to a sustainable model. An additional £252m has
come from loans, £199 from the owners and £53m from the bank, but many of their
rivals have taken on even more debt to fund their expenditure.
Unlike the well-publicised issues that many clubs have with
the Premier League’s Profitability and Sustainability rules, not least the one
on the other side of Stanley Park, Liverpool have absolutely no problems with
Financial Fair Play (FFP).
Even though Liverpool posted a large £57m loss last season,
this can be considered a bit of a blip, driven by only qualifying for the
Europa League, and there was plenty of good news in these results, including
record revenue and new highs for commercial and match day. This season’s figures should be better,
following the return to the Champions League and the likelihood of winning the
Premier League, though improved profits from player sales would be beneficial.
Comments
Post a Comment