Liverpool’s 2016/17 set of accounts show how far the club has progressed off the field since the stormy Tom Hicks and George Gillett era, but the jury remains out as to whether that will end up translating into on field glory.
The recent report published by Liverpool Football Club and Athletic Grounds Limited showed that revenue has increased to record levels, with increased matchday income of £12 million from the new Main Stand one of the eye-catching points published.
Six years have passed since Liverpool’s accounts exposed the cost of clearing up the mess left by former owners Hicks and Gillett.
The financial results for 2011 – published in May 2012 – revealed an annual loss by the club of nearly £50m before tax.
Total revenue fell to £183.6m as Liverpool missed out on income from the lucrative Champions League.
With £35m written off on the failed new stadium project in Stanley Park and a bumper payout for manager Roy Hodgson and his backroom staff, it’s fair to say Fenway Sports Group had a big job on their hands.
Fast forward to the latest set of accounts and revenues have risen to £364m, with a post-tax profit of £39m – impressive stuff considering Liverpool didn’t qualify for Europe in 2016/17.
FSG have generated sustained financial growth which has gradually been reinvested into both the playing squad and the infrastructure of the club with the new training ground complex.
With Liverpool through to the last eight of this season’s Champions League, the next set of accounts promise to be even better.
The financial boost offered by rising TV rights deals in the last decade has led to many English clubs not only being bought by investors but also investing in key areas like Liverpool with Anfield, and the net result has been a multi-fold increase in the value of the investments made.
And now with cryptocurrency also making its mark on the sports industry, it will be interesting to see just how much further sports evolves as a great financial investment. Led by Bitcoin, cryptocurrency has made a big splash in sports, with sports betting leading the way in terms of practical uses for this digital currency and becoming many people’s preferred method of payment. Athletes in ice hockey, speed-skating and even mixed martial arts have signed up to be paid in this way.
It seems certain that there will be more of these types of deals in the coming years, as the international banking sector and governments better understand how to regulate Bitcoin & co, but from football’s perspective, more money being pumped into the game can only be a good thing. With Liverpool getting its own form of digital currency, the Liverpool Local Pound, could we perhaps expect more of an appearance from cryptocurrency in the football scene? We just might. But we digress from our argument.
Back to Liverpool FC, just as the investments in English football have seen English teams take over the top 20 richest clubs rankings, Liverpool’s financial growth under FSG looks likely to follow the same upward path over the coming years.
However, as noted by respected sports business blogger Swiss Ramble, Liverpool still trail the likes of Manchester United, Arsenal and Manchester City in Earnings Before Tax, Depreciation and Amortisation.
This ability to generate higher revenue theoretically gives those clubs an advantage, yet there are signs that Reds’ boss Jurgen Klopp’s approach to transfer business could eventually deliver silverware.
Klopp has opted for evolution rather than revolution, but there are some areas of his squad that still need strengthening.
Summer signing Mohamed Salah has been a huge success, while Sadio Mane has also made a positive impact at Anfield.
Andrew Robertson and Alex Oxlade-Chamberlain have had question marks against them, but Klopp’s coaching methods appear to be paying off judging by the improvements both have shown in recent weeks.
Klopp has praised Virgil van Dijk’s start at Liverpool, but neither Joel Matip or Dejan Lovren have convinced that they are consistent enough to play alongside him and another new face at the back wouldn’t go amiss.
A lack of creativity in midfield has also held back Liverpool’s on-field progress, although highly-rated RB Leipzig midfielder Naby Keita’s arrival next summer is a positive sign.
Lazio midfielder Sergej Milinkovic-Savic has been linked with a move to the Premier League and he’s the sort of player the Reds need if they are serious about challenging for honours.
Roberto Firmino’s link-up with Salah and Sane has ensured Liverpool haven’t missed Philippe Coutinho in the forward areas, but the addition of either Borussia Dortmund winger Christian Pulisic or Monaco forward Thomas Lemar this summer would be a further statement of intent.
Klopp has also bolstered his first team squad with a number of impressive youngsters from the club’s academy and their progression is another plus point.
The German now looks like he’s got Liverpool heading in the right direction on the field, but it’s what happens off it that will determine whether the club kicks on from here.
Plans for phase two of the overall stadium development are currently being finalised, with the expansion of the Anfield Road End taking the capacity to around 61,000.
That new capacity would make Anfield the second biggest club stadium in the country behind Old Trafford, helping the club generate even more income.
Man City have plans to expand their stadium to a similar size and Tottenham Hotspur’s new White Hart Lane will hold 62,000, but the Reds will be operating on a more level playing field than had previously been the case.
While the value of Premier League broadcasting rights appear to have levelled off in the UK, the revenues being generated remain significant.
The global popularity of the league continues to grow, as does the value of rights, suggesting that top flight clubs will continue to cash in for the foreseeable future.
These elements will certainly contribute to keeping Liverpool moving in the right direction, but continued participation in the Champions League could well be the difference if the club is ever to return to its former glories.
Liverpool have already guaranteed themselves a £50million windfall with their progress to the quarter-finals of the competition this season and that would increase further if they can reach the semi-finals or final.
The Reds have a four point lead over fifth-placed Chelsea with eight games to play in the Premier League, but with a visit to Stamford Bridge and a derby game at Everton still to come a top four finish is far from certain.
Missing out on Champions League qualification could derail Klopp’s plans to make the necessary improvements to his squad and potentially undo some of the financial progress the club has made in recent years.
FSG can rightly claim that they have turned things around financially following Hicks and Gillett’s disastrous time at the club, but the next couple of months are hugely important in ensuring that the off-field progress isn’t wasted.