Football finance guru Mo Chatra has helped highlight what Liverpool’s summer transfer business might look like, in light of the club’s current wage structure.
With the failure to bring in a new centre-half (following the departure of Dejan Lovren) last summer, the Reds have suffered dearly this year without appropriate backup.
Injuries to Jurgen Klopp’s remaining senior centre-half, Joel Matip, and midfielder-turned-defender Fabinho, forced a late foray into the winter window for Ozan Kabak and Ben Davies.
Dependent on the performances of our most recent signings, the likelihood is that Liverpool will need to spend reasonably big on a new defender come the season end.
The extent of our involvement in the transfer market, however, will be largely influenced by our current expenses – most notably, wages, in addition to payments for Anfield’s expansion, for example.
Take a look at the tweets below, courtesy of Mo Chatra’s Twitter:
When owners FSG took over the club in October 2010, LFC's wage bill stood at £121m. That was the amount the club paid for all staff, from players to those working in the club shop. In the subsequent years, that bill grew by 256% up to 2018/19 (2019/20 figures are estimates). pic.twitter.com/uDjz69mV9I
— Mo Chatra (@MoChatra) February 11, 2021
When looking at wages relative to turnover, the ratio was relatively high before stabilising between 56-58% for all but one of the seasons between 13/14 and 18/19. As a general rule of thumb, the lower this ratio, the greater the available funds there are to invest elsewhere. pic.twitter.com/szyMuL5TqJ
— Mo Chatra (@MoChatra) February 11, 2021
When looking at the wages-to-turnover ratio across the Big Six, Man City's was excessively high until the arrival of FFP when it, coincidentally, fell significantly to less than 60%. Man Utd's ratio maintained at approximately 50% for almost the entire period- which is ideal. pic.twitter.com/Nu1g4IiP6S
— Mo Chatra (@MoChatra) February 11, 2021
In early-2013, the club decided to structure contracts to be more incentivised, performance-based deals. This article from the time explains: https://t.co/JQ2WPOoxuH
— Mo Chatra (@MoChatra) February 11, 2021
Indeed, the wage bill had swelled to £310m by 2018/19, largely off the back of the club's success and performances. Across Europe, that meant LFC had the seventh highest wage bill in Europe, just narrowly behind Bayern Munich, Man City and only £9m less than that of Real Madrid. pic.twitter.com/MciP0pJdfE
— Mo Chatra (@MoChatra) February 11, 2021
This analysis shows that, in recent years, Liverpool's incentivised payment structure has paid dividends and has also turned the club into one of the biggest payers in world football.
— Mo Chatra (@MoChatra) February 11, 2021
The total annual sum of all these deals doesn't come close to the £300m total, however. The following breakdown shows estimated figures on what else comprises that overall figure (apologies for the typo in the image: pic.twitter.com/zNGiyJhrrn
— Mo Chatra (@MoChatra) February 11, 2021
Bonuses are paid for events such as appearances, goals, assists, clean sheets, a top four finish, major trophies won plus more. I have also assumed image rights fees as part of that £101.6m. This article by @FootballLaw perfectly explains image rights https://t.co/JkHcIwaGPp
— Mo Chatra (@MoChatra) February 11, 2021
Bonuses will not be evenly spread throughout the squad. Those with the best negotiated bonuses will benefit more than players on the fringes of the squad.
— Mo Chatra (@MoChatra) February 11, 2021
Linked to wages, another area of heavy investment has been agents fees. I posted a thread last year specifically on this subject, but this extract from an FA document (covering transactions involving payments to agents between February 2019 to January 2020) is interesting. pic.twitter.com/Ud7aj0QR9z
— Mo Chatra (@MoChatra) February 11, 2021
Nonetheless, the above analysis shows why the club has in recent years transitioned from being a stepping stone to a destination club. The challenge for the owners is to maintain this whilst freeing up funds to make necessary upgrades in certain parts of the squad.
— Mo Chatra (@MoChatra) February 11, 2021
That will be a tough decision- but it's one that LFC made with much success just over three years ago when it moved on Coutinho and used proceeds from his sale to Barcelona on van Dijk and Alisson.
— Mo Chatra (@MoChatra) February 11, 2021
To listen to me go into even more depth and detail on this and other finance/commercial-related matters pertaining to Liverpool Football Club, do check out my podcast – Money Talks – featured exclusively on @AnfieldIndexPro (free seven day trial available).
— Mo Chatra (@MoChatra) February 11, 2021
If the last part is true whose gonna spend over £100 mill on Salah or Mane this summer. Not RM or Barca, they’re skint and no doubt they’re the 2clubs they’d want to leave for.
So don’t expect any marquee signings
…..and next year they’ll both be 30 or approaching it and be less attractive for buying