Liverpool announces pre-tax profit of £7.5m for 2021-22
- Thread starter Dreambeliever
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If they've been available and you've still not updated this thread, I think you need to sort out your priorities!
He may become the sacrificial poster for next season unless he pulls his finger out.
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I'm not sure we should go that far (let's be honest, we need @Beamrider).
Not sure I'd trust him to submit my tax returns on time though.........
Maybe we need a poll on who needs to be sacrificed
If you did a poll, does the person voted to be sacrificed also get banned from Xpert Eleven?
If so, could you please add @doctor_mac to the list?
If so, could you please add @doctor_mac to the list?
If anyone is just too giddy with excitement, you can now find the accounts at:
https://find-and-update.company-information.service.gov.uk/company/00035668/filing-history
I, unfortunately, have lots of shit to do the next few days so will probably not be able to post until Sunday, assuming I don’t get sacrificed before then. Obviously you’re on your own if that happens.
https://find-and-update.company-information.service.gov.uk/company/00035668/filing-history
I, unfortunately, have lots of shit to do the next few days so will probably not be able to post until Sunday, assuming I don’t get sacrificed before then. Obviously you’re on your own if that happens.
I would still play via the app though Rafa. I just wouldn't get to rub your face in my pungent musk of domination.
OK, here we go....
@tombrown 2-word summary = “shrugs, but…”
For the rest of you, strap in.
In summary, these aren’t a bad set of financial results, which shouldn’t be surprising after the season we had, but they ought to have been better – if we’re only making a small profit after a season where we nearly won the lot and having not invested heavily in the squad in recent years, then you have to ask why not. Clue – wages.
Context:
In the year, we won the two domestic cups, runners up in Premier League and Champions League. All of the relevant games were played in the period (UCL final was on 28th May) so all income / prize money should be recorded in turnover.
We signed Luis Diaz. We sold Wilson, Shaqiri, and Awoniyi. Konate was signed on 28 May 2021 so he will have been included in the previous year’s accounts.
2021-22 results
Firstly, as trumpeted by the club, we have achieved record turnover. Whilst that’s hardly surprising given football performance, there are also a few other points to note:
Media revenue was actually down overall, largely a result of wrinkles in the post covid era – 2021 revenue was disproportionately higher due to some timing issues with the 2019-20 fixtures / revenue leaking into 2020-21, plus some of the financial impact of the reduced PL fees for the covid period leaked into 2021-22. This should even out in the current year.
On the expenses side, the most notable item is the increase in wages – up £52m from £314m to £366m. That’s clearly a huge leap. Whilst the club has taken on 30 odd extra non-playing staff, I doubt they’re all on £1.7m each. So we can assume this will be a combination of:
What this means in summary is, no surprises here, a lot of our players are on top whack, and it won’t be easy to shift some of the ones who are surplus to requirements as potential buyers will be wary of taking on their high salary costs. Typically this means the club will have to pay some of them to leave, which would take the edge off any profits on sale. I’ll comment a bit more on the financial aspects of the squad status when I get to player registrations.
Bank interest is down about 25%, which basically means we had a lower average overdraft across the year compared to the prior year as the interest rate is about the same from one year to the next. The cash flow statement reports that, year on year, our net debt (i.e. debt less cash balances) has gone down £22m. So, to be cynical, we could probably have afforded to splash out a bit more in the transfer market had we chosen to do so.
Analysts like to talk about wages to turnover ratio, but in truth this isn’t something clubs have historically paid a lot of attention to (although clubs in the Championship really need to!). For what it’s worth, the ratio in 2021-22 (62%) is lower than in 2020-21 (65%) and more or less in line with the five year average.
@tombrown 2-word summary = “shrugs, but…”
For the rest of you, strap in.
In summary, these aren’t a bad set of financial results, which shouldn’t be surprising after the season we had, but they ought to have been better – if we’re only making a small profit after a season where we nearly won the lot and having not invested heavily in the squad in recent years, then you have to ask why not. Clue – wages.
Context:
In the year, we won the two domestic cups, runners up in Premier League and Champions League. All of the relevant games were played in the period (UCL final was on 28th May) so all income / prize money should be recorded in turnover.
We signed Luis Diaz. We sold Wilson, Shaqiri, and Awoniyi. Konate was signed on 28 May 2021 so he will have been included in the previous year’s accounts.
2021-22 results
Firstly, as trumpeted by the club, we have achieved record turnover. Whilst that’s hardly surprising given football performance, there are also a few other points to note:
Media revenue was actually down overall, largely a result of wrinkles in the post covid era – 2021 revenue was disproportionately higher due to some timing issues with the 2019-20 fixtures / revenue leaking into 2020-21, plus some of the financial impact of the reduced PL fees for the covid period leaked into 2021-22. This should even out in the current year.
On the expenses side, the most notable item is the increase in wages – up £52m from £314m to £366m. That’s clearly a huge leap. Whilst the club has taken on 30 odd extra non-playing staff, I doubt they’re all on £1.7m each. So we can assume this will be a combination of:
- Player wage increases / performance bonuses
- Staff bonuses / pay rises (although the directors’ pay has “only” gone up £0.2m, which is 7%, much of which will be bonuses). However, “key management personnel” pay was up £3.6m to £12.3m, suggesting senior and middle management got some nice bonuses (I’m guessing this doesn’t include Klopp and the Melwood team as I expect they’ll be on higher wages than that).
- Increased casual wages (matchday stewarding and opening up of Anfield on non-matchdays). This probably won’t be a big number as the club kept paying most of the regular casual workers through covid, although increases to minimum wage will have added 7-8%.
What this means in summary is, no surprises here, a lot of our players are on top whack, and it won’t be easy to shift some of the ones who are surplus to requirements as potential buyers will be wary of taking on their high salary costs. Typically this means the club will have to pay some of them to leave, which would take the edge off any profits on sale. I’ll comment a bit more on the financial aspects of the squad status when I get to player registrations.
Bank interest is down about 25%, which basically means we had a lower average overdraft across the year compared to the prior year as the interest rate is about the same from one year to the next. The cash flow statement reports that, year on year, our net debt (i.e. debt less cash balances) has gone down £22m. So, to be cynical, we could probably have afforded to splash out a bit more in the transfer market had we chosen to do so.
Analysts like to talk about wages to turnover ratio, but in truth this isn’t something clubs have historically paid a lot of attention to (although clubs in the Championship really need to!). For what it’s worth, the ratio in 2021-22 (62%) is lower than in 2020-21 (65%) and more or less in line with the five year average.
Transfers
For the first time, the club has split out transfer payables / receivables, which makes it a little easier to work through the cash burden this puts on the club.
In terms of transfers completed by the end of the period (i.e. summer 2021 and January 2022 windows), minimum future cash flows would be:
Net £18m out in current year (2022-23)
Net £21m out next year (2023-24).
These figures are BEFORE overlaying summer 2022 and January 2023, and exclude contingent amounts (i.e. extra payments based on performance / appearances etc). Those contingent payments are only going to make things worse for us, as the amount potentially payable is £33.7m and the amount potentially receivable is £3.5m.
The other point to note is that the gross amount payable for transfers has come down from £122m at the end of 2021 to £94m at the end of 2022. Whilst this could just be a factor of timing on instalments reflected in transfer deals, the more likely explanation is that it is a symptom of us tightening our belts on transfer spending, ploughing more of the money into wages (hence the big increases mentioned above).
What this means in terms of player spending policy is that we have shifted our priorities even further from bringing in new, younger players, towards paying top-whack for the ones we already have. The logic for this is, of course, they have been among the best performing players in global football for several years. The problem, as we are now seeing, is that if they fall off a cliff in terms of performance due to age, fatigue, injury, then we’re saddled with a squad of players who, whilst they’re all good lads and do their best, are not performing at the level they’re being paid at and can’t be easily shifted as a result.
The lesson, which won’t be a surprise to most of you, is that we should have turned some of these players over when they were at their prime rather than keeping them on with bumper new contracts. Whether that’s down to blind-faith loyalty to those guys or a failure in transfer policy is something we can and will debate at length.
Headline value of additions to the squad is £69m – this is mostly Diaz, but will also include some agents fees (club’s share) on contract renewals and a few contingent payments on past transfers, plus sundry youth spend which is individually not notable but will usually add up to a few £m.
In cash terms, we paid out £97m in transfer instalments and received £32m – so a net CASH spend of £65m.
In gross terms (i.e. ignoring the impact of instalments), players sold in the year attracted sale proceeds of £35m (so a net spend of £34m). This underlines why I say you always need to look at the cash impact, and the extra cash spend probably reflects the impact of historic deals for Konate, Thiago, Jota (in the latter case, there was a suggestion the instalments were more heavily weighted towards years 2 and 3).
Please allow me a brief geek moment on amortisation. The key thing is that the charge has gone downrelative to last year. The significance of this, in purely financial terms, is that it indicates a weakening of / failure to invest in the squad. Obviously it’s all accounting bollocks and all that, but the point stands. The criticisms many have made on here about squad strengthening / refresh are reflected in the numbers as well.
And why the frugal approach to spending? Well, in addition to the shift from transfer fees into wages we had the new training ground a couple of years back and now the…
For the first time, the club has split out transfer payables / receivables, which makes it a little easier to work through the cash burden this puts on the club.
In terms of transfers completed by the end of the period (i.e. summer 2021 and January 2022 windows), minimum future cash flows would be:
Net £18m out in current year (2022-23)
Net £21m out next year (2023-24).
These figures are BEFORE overlaying summer 2022 and January 2023, and exclude contingent amounts (i.e. extra payments based on performance / appearances etc). Those contingent payments are only going to make things worse for us, as the amount potentially payable is £33.7m and the amount potentially receivable is £3.5m.
The other point to note is that the gross amount payable for transfers has come down from £122m at the end of 2021 to £94m at the end of 2022. Whilst this could just be a factor of timing on instalments reflected in transfer deals, the more likely explanation is that it is a symptom of us tightening our belts on transfer spending, ploughing more of the money into wages (hence the big increases mentioned above).
What this means in terms of player spending policy is that we have shifted our priorities even further from bringing in new, younger players, towards paying top-whack for the ones we already have. The logic for this is, of course, they have been among the best performing players in global football for several years. The problem, as we are now seeing, is that if they fall off a cliff in terms of performance due to age, fatigue, injury, then we’re saddled with a squad of players who, whilst they’re all good lads and do their best, are not performing at the level they’re being paid at and can’t be easily shifted as a result.
The lesson, which won’t be a surprise to most of you, is that we should have turned some of these players over when they were at their prime rather than keeping them on with bumper new contracts. Whether that’s down to blind-faith loyalty to those guys or a failure in transfer policy is something we can and will debate at length.
Headline value of additions to the squad is £69m – this is mostly Diaz, but will also include some agents fees (club’s share) on contract renewals and a few contingent payments on past transfers, plus sundry youth spend which is individually not notable but will usually add up to a few £m.
In cash terms, we paid out £97m in transfer instalments and received £32m – so a net CASH spend of £65m.
In gross terms (i.e. ignoring the impact of instalments), players sold in the year attracted sale proceeds of £35m (so a net spend of £34m). This underlines why I say you always need to look at the cash impact, and the extra cash spend probably reflects the impact of historic deals for Konate, Thiago, Jota (in the latter case, there was a suggestion the instalments were more heavily weighted towards years 2 and 3).
Please allow me a brief geek moment on amortisation. The key thing is that the charge has gone downrelative to last year. The significance of this, in purely financial terms, is that it indicates a weakening of / failure to invest in the squad. Obviously it’s all accounting bollocks and all that, but the point stands. The criticisms many have made on here about squad strengthening / refresh are reflected in the numbers as well.
And why the frugal approach to spending? Well, in addition to the shift from transfer fees into wages we had the new training ground a couple of years back and now the…
Anfield Road expansion
There is a contractual commitment of £49m for capital assets – I assume most or all of this will be the spend on the Annie Road which will be mostly in the current year, and then likely a flurry of activity in the close season to have everything operational for next season. In 2021-22, the club spent £21.4m on assets not yet in use (bring the total at year end to £27.4m). Again, most of this will be the Annie Road, so that puts the potential cost of the project at up to £76.4m, although it’s probably a bit less than that as there may be other bits and bobs in all of those numbers.
NB – the number previously touted in the press / online was £60m. I think this may have been speculation based on an initial tender estimate, and the figure has likely gone up since the preferred contractor has worked through the detailed specification and confirmed a final price. Key point to note is that there is a very clear figure in the accounts, which implies that a fixed price contract has been agreed, so the costs shouldn’t be pushed up by general inflation or other supply chain pressures in the global environment – those costs would sit with the contractor and would come out of their profit margin. To the extent we amend the specification during the process of the build, or if unforeseen complications arise, we would potentially be on the hook for incremental costs.
And just to re-iterate, we appear to be paying for the Annie Road out of our own resources – there is no sign of any additional finance coming in either from third parties or from FSG (as happened with the Main Stand). It would make perfect commercial sense to take on specific debt for the stand, but that would likely lead to all sorts of complications around security for the lenders – the banks probably have a first floating charge over all the clubs assets and it would be expensive to take on debt subordinated to the bank (i.e. at greater risk of default), so the thinking is probably that we can get by via the bank facility at a fairly cheap rate. This has necessarily meant curtailing spending on the squad, and it’s fair to say that’s a gamble that doesn’t seem to be paying off.
There is a contractual commitment of £49m for capital assets – I assume most or all of this will be the spend on the Annie Road which will be mostly in the current year, and then likely a flurry of activity in the close season to have everything operational for next season. In 2021-22, the club spent £21.4m on assets not yet in use (bring the total at year end to £27.4m). Again, most of this will be the Annie Road, so that puts the potential cost of the project at up to £76.4m, although it’s probably a bit less than that as there may be other bits and bobs in all of those numbers.
NB – the number previously touted in the press / online was £60m. I think this may have been speculation based on an initial tender estimate, and the figure has likely gone up since the preferred contractor has worked through the detailed specification and confirmed a final price. Key point to note is that there is a very clear figure in the accounts, which implies that a fixed price contract has been agreed, so the costs shouldn’t be pushed up by general inflation or other supply chain pressures in the global environment – those costs would sit with the contractor and would come out of their profit margin. To the extent we amend the specification during the process of the build, or if unforeseen complications arise, we would potentially be on the hook for incremental costs.
And just to re-iterate, we appear to be paying for the Annie Road out of our own resources – there is no sign of any additional finance coming in either from third parties or from FSG (as happened with the Main Stand). It would make perfect commercial sense to take on specific debt for the stand, but that would likely lead to all sorts of complications around security for the lenders – the banks probably have a first floating charge over all the clubs assets and it would be expensive to take on debt subordinated to the bank (i.e. at greater risk of default), so the thinking is probably that we can get by via the bank facility at a fairly cheap rate. This has necessarily meant curtailing spending on the squad, and it’s fair to say that’s a gamble that doesn’t seem to be paying off.
Summer 2022 transfer window
The club has disclosed a summary of financial impact from between the end of the accounting period (31 May 2022) and the signing of the accounts (September 2022) – this would cover all of the summer transfer window. There is a profit on sale of £36m (which will mostly be Sadio, Minamino, Ben Davies and Neco Williams – NB Sadio and Neco would probably have stuff-all accounts value, so the sale proceeds for them will be almost all profit) and a “net amount payable” of £51m – I read this as being the net amount due from purchase of players (Nunez, Carvalho, Ramsey) and sale of players mentioned above. I think this will be the full-fat value of those deals (i.e. it won’t be reduced for the first instalments) and it won’t include add-ons as they won’t have been triggered yet. The fee for Melo will likely not be included here as it’s just a one-year deal so won’t go into capital assets on the balance sheet.
So assuming the fees are split evenly between the next 3 years, the amounts payable on existing transfers I mentioned above would increase as follows:
To £35m current year (2022-23)
To £38m next year (2023-24)
To £17m in 2024-25
Gakpo will likely add another £15m+ to each of those figures (and on today’s performance he’s worth every penny).
The club has disclosed a summary of financial impact from between the end of the accounting period (31 May 2022) and the signing of the accounts (September 2022) – this would cover all of the summer transfer window. There is a profit on sale of £36m (which will mostly be Sadio, Minamino, Ben Davies and Neco Williams – NB Sadio and Neco would probably have stuff-all accounts value, so the sale proceeds for them will be almost all profit) and a “net amount payable” of £51m – I read this as being the net amount due from purchase of players (Nunez, Carvalho, Ramsey) and sale of players mentioned above. I think this will be the full-fat value of those deals (i.e. it won’t be reduced for the first instalments) and it won’t include add-ons as they won’t have been triggered yet. The fee for Melo will likely not be included here as it’s just a one-year deal so won’t go into capital assets on the balance sheet.
So assuming the fees are split evenly between the next 3 years, the amounts payable on existing transfers I mentioned above would increase as follows:
To £35m current year (2022-23)
To £38m next year (2023-24)
To £17m in 2024-25
Gakpo will likely add another £15m+ to each of those figures (and on today’s performance he’s worth every penny).
Future spending prospects
In order to estimate current year position, if we take the cash flow for 2021-22 as our base figure:
Cash flow from operations after interest was £110m
Fixed asset spend (Annie Road) likely -£49m
Player transfer payments c -£50m
Leaves c £11m left over (which may be used to pay down bank debt).
I think the £110m figure is a reasonable starting point – ignoring 2020-21 (ground closed so no matchday income) the 4-year average is exactly £110m.
However, in the current year, we’re going to take some hits relative to last year:
Fucked if I know what that all translates to in numbers terms, but I suspect we won’t be paying much debt down this year!
Going into 2023-24:
Again, I’m going to take the 2021-22 operating cash flow as the base figure:
Cash flow from operations £110m
Fixed asset spend -£10m (residual Annie Road plus general spend)
Increased income from opening Annie Road c +£8m (mostly low-value general admission seats with some hospitality, possible extra ancillary income from catering, retail etc). I’m not optimistic that naming rights will bring much, if anything, in. Third party sponsors will have learnt the lesson on that one by now.
Committed player spending -£53m
That leaves £47m for new player spending.
But, bear in mind that’s just the first instalments, so that would give us a net spend budget of three times that amount - £141m (headline fees plus agents and levies), and that is BEFORE any sales. We know Keita and Bobby will be off, and whilst there’s no fees that frees up a lot on the wage bill.
This £141m is comparable to the spend of c. £96m in the current season (mostly Nunez and Gakpo, less Sadio, Neco etc).
In order to estimate current year position, if we take the cash flow for 2021-22 as our base figure:
Cash flow from operations after interest was £110m
Fixed asset spend (Annie Road) likely -£49m
Player transfer payments c -£50m
Leaves c £11m left over (which may be used to pay down bank debt).
I think the £110m figure is a reasonable starting point – ignoring 2020-21 (ground closed so no matchday income) the 4-year average is exactly £110m.
However, in the current year, we’re going to take some hits relative to last year:
- Matchday income will be down due to not going deep in the cups / Champions League (NB most of our hospitality seats are sold seasonally and unlike general admission tickets they get cups / Europe free – hospitality probably loses money from cup runs as there is no income from most of the seats but there will be delivery costs for those packages)
- Premier League media income may be broadly flat – although performance-related payments will be down, we’re still on telly a lot and the overall pot for sharing should be higher
- Champions League media revenue will be down c £35m (rough estimate, based on prize money lost for quarter finals onwards – I’m not banking on a miracle in Madrid, I think we may have used up our spare goals for March this afternoon)
- Commercial income will likely be down (no sponsor bonuses and no major new partners this year that I can remember)
- Player wages hard to predict – Salah renewal will have a big impact but we have lost Sadio who will have been on big money plus bonuses will be down. Obviously there’s more variables here, but they are the three biggest.
Fucked if I know what that all translates to in numbers terms, but I suspect we won’t be paying much debt down this year!
Going into 2023-24:
Again, I’m going to take the 2021-22 operating cash flow as the base figure:
Cash flow from operations £110m
Fixed asset spend -£10m (residual Annie Road plus general spend)
Increased income from opening Annie Road c +£8m (mostly low-value general admission seats with some hospitality, possible extra ancillary income from catering, retail etc). I’m not optimistic that naming rights will bring much, if anything, in. Third party sponsors will have learnt the lesson on that one by now.
Committed player spending -£53m
That leaves £47m for new player spending.
But, bear in mind that’s just the first instalments, so that would give us a net spend budget of three times that amount - £141m (headline fees plus agents and levies), and that is BEFORE any sales. We know Keita and Bobby will be off, and whilst there’s no fees that frees up a lot on the wage bill.
This £141m is comparable to the spend of c. £96m in the current season (mostly Nunez and Gakpo, less Sadio, Neco etc).
CONTENT WARNING.
If you want to stay high off the back of today's results, stop reading now.
Because here is the potential kick in the balls – Champions League qualification. Relative to our performance in 2020-21, which is my base figure, we’d lose about £75m from not qualifying for the Champions League. Europa League is probably only worth a quarter of that. So current year performance could cost us c. £55m in 2023-24. We need to keep our momentum going and challenge for top four, but we’ve got some tricky fixtures coming up, before a reasonable run-in.
Sorry to end on a downer, but the really bad news is that the £55m comes off my initial figure of £47m, meaning we’d have fuck all to spend without selling players first or running up debt (which FSG has always been reluctant to do, but maybe things will change now Mike Gordon is stepping back). And to me this means you’d need to sell a big name if you want to be able to generate enough cash profit to reinvest – realistically you’re talking Mo, Trent, Alisson, Diaz. The kind of players where the club would want the player to be seen to engineer a move to avoid the flak that would come from the fans / sponsors. Failing that, you’ll need to clear out a load of fringe players and weaken the squad / rely on youngsters coming through. This is always a risky strategy as you usually end up spending before you sell, and there’s no guarantee that there’ll be buyers for fringe players, especially if they’re on above market wages. That said, I do think the gap between some of the youngsters v current fringe players isn’t that big.
Don’t shoot the messenger, and keep everything crossed that we somehow qualify for the Champions League (and if there is to be some investment coming in, we really need that to land in the club’s pockets, not FSG’s).
If you want to stay high off the back of today's results, stop reading now.
Because here is the potential kick in the balls – Champions League qualification. Relative to our performance in 2020-21, which is my base figure, we’d lose about £75m from not qualifying for the Champions League. Europa League is probably only worth a quarter of that. So current year performance could cost us c. £55m in 2023-24. We need to keep our momentum going and challenge for top four, but we’ve got some tricky fixtures coming up, before a reasonable run-in.
Sorry to end on a downer, but the really bad news is that the £55m comes off my initial figure of £47m, meaning we’d have fuck all to spend without selling players first or running up debt (which FSG has always been reluctant to do, but maybe things will change now Mike Gordon is stepping back). And to me this means you’d need to sell a big name if you want to be able to generate enough cash profit to reinvest – realistically you’re talking Mo, Trent, Alisson, Diaz. The kind of players where the club would want the player to be seen to engineer a move to avoid the flak that would come from the fans / sponsors. Failing that, you’ll need to clear out a load of fringe players and weaken the squad / rely on youngsters coming through. This is always a risky strategy as you usually end up spending before you sell, and there’s no guarantee that there’ll be buyers for fringe players, especially if they’re on above market wages. That said, I do think the gap between some of the youngsters v current fringe players isn’t that big.
Don’t shoot the messenger, and keep everything crossed that we somehow qualify for the Champions League (and if there is to be some investment coming in, we really need that to land in the club’s pockets, not FSG’s).
Cheers beamy lid.
Thanks as always @Beamrider for taking the time to break this down for us. Truly you are a great asset to our forum and very much appreciated!
It’s the stupidity of our policy over the last three years.
@Beamrider Amazing! I bet you lived essay type questions at exams. Seriously, I don't know anyone else who would give such an analytical report
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Liverpool Finances 2021/22
Bring Me Closer
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Liverpool’s 2021/22 financial results covered a season when the club was successful in winning both English domestic cups, namely the FA Cup and the EFL Cup. However, it was a case of “so near, yet so far” in the two major competitions, as they finished runners-up to Manchester City in the Premier League and were beaten in the final of the Champions League by Real Madrid.
The financial results were boosted by this being the first full season after the COVID pandemic.
Profit/(Loss) 2021/22
Liverpool swung from a £5m pre-tax loss to a £7m profit, as revenue shot up £107m (22%) from £487m to a club record £594m, but this was partly offset by operating expenses rising £85m (16%) to £612m and profit on player sales falling £11m from £39m to £28m.
Profit after tax was lower at £2m, due to a £5m tax charge.
The main reason for Liverpool’s revenue increase was the return of fans to the stadium, which led to significant increases in both match day, up £83m from just £4m to £87m, and commercial, which rose £29m (13%) from £218m to £247m. Both of these were new club highs.
However, broadcasting fell £5m (2%) from £266m to £261m, despite the success on the pitch, as the prior year included some revenue deferred from 2019/20 after that season was extended beyond the club’s accounting close.
However, Liverpool’s significant revenue growth did not directly feed into the bottom line, as expenses also grew substantially. Wages shot up £52m (16%) from £314m to £366m (another club record), while other expenses rose £36m (38%) from £96m to £132m, mainly due to the higher cost of staging games with fans.
On the other hand, player amortisation fell £5m (5%) from £108m to £103m, while net interest payable was cut by a third to £2m.
Only half the Premier League has so far published accounts for 2021/22, so comparisons with other clubs are a bit misleading, as the prior year figures were severely impacted by the pandemic with almost all games played behind closed doors.
That said, Liverpool’s £7m pre-tax profit is the third best to date last season, only surpassed by Manchester City £42m and West Ham £12m. This sustainable approach is in stark contrast to some other leading clubs, as large losses were reported by Manchester United £150m, Tottenham £61m and Arsenal £45m (plus Chelsea £156m in 2020/21).
In the previous two seasons, Liverpool’s revenue was significantly impacted by COVID. I estimate that they lost £114m, split between £27m in 2019/20 and £87m in 2020/21, largely from match day, as games were played behind closed doors.
To further place Liverpool’s small £2m post-tax profit into context, some other leading European clubs have reported considerably worse results for 2021/22, including PSG £327m (per French newspaper L’Equipe), Juventus £212m, Roma £190m, Barcelona £157m, Inter £124m and Real Madrid £119m.
Note: the Spanish clubs’ figures have been adjusted for their famous economic levers.
Liverpool’s profit from player sales fell £11m from £39m to £28m, mainly from Harry Wilson to Fulham, Marko Grujic to Porto, Xherdan Shaqiri to Lyon, Taiwo Awoniyi to Union Berlin and Kamil Grabara to FC Copenhagen. They also lost Georginio Wijnaldum to PSG on a free transfer.
The ability to realise profits was hit by the depressed transfer market, as budgets were impacted by the financial pressures of the pandemic, but some clubs have still managed to generate good money from payer trading, especially Aston Villa £97m, Manchester City £68m and Leicester City £44. Despite the decrease, Liverpool’s £28m was still one of the better results.
Pre-tax Profit/(Loss)
This is the first time that Liverpool have made a profit since 2018/19, having lost £51m in the preceding two years. The pandemic obviously hit the Reds finances, as they had been consistently profitable beforehand. They managed to generate nearly a quarter of a billion profit in the preceding five years, which is good going in the fiercely competitive world of football.
That included a huge £125m profit in 2018, which is the third highest profit ever in the Premier League. Liverpool’s profits of £42m in 2019 and £40m in 2017 also feature in the top 20 financial results.
Exceptional Items
In recent years Liverpool 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.
However, since then, they have only booked a £4m profit on the sale of their former training ground at Melwood.
Profit from Player Sales
Like many other clubs, Liverpool have become increasingly reliant on profit from player sales, generating nearly £400m from this activity since 2015. In the early years under FSG, it was very different story, as they actually posted losses from player trading for three consecutive seasons, while they cleared out some deadwood.
The accounts note that the profit made since year-end from player sales is £36m, including Sadio Mané to Bayern Munich, Neco Williams to Nottingham Forest, Takumi Minamino to Monaco and Ben Davies to Rangers. A few players left as free agents, including Divock Origi to Milan and Lorius Karius to Newcastle United.
A key element of Liverpool’s strategy is to be a club that sells well, as can be seen by the profit from player sales in the five years up to 2021, where only Chelsea made more than the Reds with £413m. Liverpool’s £274m was far ahead of the rest of the Big Six.
That said, other clubs are beginning to do better in this space, while Liverpool have suffered from a few players running down their contracts, so they cannot rest on their laurels.
Operating Profit/(Loss)
Liverpool’s operating loss (i.e. excluding player sales, exceptional items and interest payable) narrowed from £40m to £18m. The club used to be one of the very few that managed to achieve (small) operating profits, but this changed in 2020, largely due to the impact of COVID.
Most football clubs post losses at the operating level, which was the case for all but two clubs in the top flight in 2020/21, when some suffered massive losses, e.g. Chelsea £159m and Everton £118m.
Only West Ham have managed to make money from day-to-day business so far in 2021/22, but Liverpool’s £18m operating loss is the second best result to date in the Premier League.
EBITDA
Liverpool’s EBITDA (Earnings Before Interest, Tax, Depreciation & Amortisation), which is often considered a proxy for cash operating profit, as it strips out player sales and exceptional items, improved from £77m to a very healthy £96m, albeit a fair bit lower than their £124m peak pre-pandemic.
Nevertheless, Liverpool’s £96m EBITDA is still the third best in the Premier League, only behind Manchester City £131m and Tottenham £114m. It is better than both Arsenal £83m and Manchester United £81m.
Revenue
Liverpool’s £594m revenue is the club’s highest ever, £61m (11%) more than the previous £533m pre-pandemic peak in 2018/19. Interestingly, virtually all the growth since then has come in commercial, as match day only rose £3m, while broadcasting was flat.
Nevertheless, broadcasting remains the most important revenue stream at 44%, closely followed by commercial with 42%. Match day only accounts for 15% of total revenue.
In fact, Liverpool have enjoyed by far the largest revenue growth of the Big Six in the last five years, rising £230m (63%) from £364m to £594m. The next highest increases were Manchester City with £160m, followed by Tottenham £137m and Chelsea £120m. Manchester United were basically unchanged over this period, while Arsenal actually dropped £54m.
Liverpool’s revenue outperformance is perhaps best illustrated by the comparison with Manchester United, where the £217m shortfall in 2017 has been converted to an £11m surplus in 2022, i.e. a massive swing of £228m.
As a result, Liverpool’s £594m revenue is now the second highest in England, only behind Manchester City £613m. United are within touching distance at £583m, but there is then a huge £100-200m gap to the next clubs: Chelsea £481m, Tottenham £443m and Arsenal £369m.
In other words, in revenue terms, there is competitive imbalance even within the Big Six .
Comparing Liverpool with Manchester City, we can see that the Reds are better in two revenue streams, namely match day and broadcasting, but the significant commercial deficit is enough to put City ahead overall.
Money League
Liverpool were the biggest movers in the Deloitte Money League, rising four places from 7th to 3rd, to overtake Manchester United in the rankings for the first time. The gap to the top two (Manchester City and Real Madrid) was negligible.
In fact, Liverpool had the highest year-on-year revenue growth of any club in the Money League Top 20 with their £106m increase comfortably outpacing Manchester United £89m, Tottenham £82m and PSG £61m.
This is pretty good going for a club that was languishing in 12th place in Deloitte’s rankings as recently as 2013.
Broadcasting Revenue
Liverpool’s broadcasting income fell £5m (2%) from £266m to £261m, despite reaching three finals (and winning two of them), as the previous year included some revenue for games played after the 2019/20 accounting close after the season was extended due to COVID delays.
The resulting reduction more than offset the increase in Champions League earnings after Liverpool reached the final last season.
Because of the deferred TV money in 2020/21, comparisons against many other clubs are a bit meaningless, but in 2021/22 Liverpool’s £261m was the highest in England (and indeed Europe), ahead of Manchester City £249m.
My estimate is that Liverpool’s prior year broadcasting revenue was inflated by £35m, due to the deferrals from 2019/20. Clubs with a May year-end (like Liverpool) had the largest revenue deferrals, while those with a July accounting close deferred nothing into their 2020/21 accounts.
Liverpool received £152m from Premier League central TV distribution, which was £2m higher than prior year, mainly thanks to finishing one place better (2nd vs. 3rd), which meant a higher merit payment.
Liverpool’s popularity meant that they were televised live no fewer than 29 times, which was the most of any club (along with Arsenal), generating the largest facility fee payment.
Liverpool should earn more in 2022/23 from the new Premier League deal, which I estimate is 11% higher than the current agreement. Although domestic rights are flat, overseas rights have surged 25%, including the spectacular NBC deal in the US.
However, this would be partly offset by if they finish below second place, which seems likely at this stage.
Europe TV
I estimate that Liverpool earned €118m for reaching the Champions League final, which was €30m more than the previous season, when they only got to the quarter-finals.
Unsurprisingly, Liverpool’s €118m was the highest earned by an English club from Europe in 2021/22, ahead of Manchester City’s €108m. Liverpool’s prize money was obviously higher, but City did better in both the TV pool (after finishing top in the previous season’s Premier League) and UEFA coefficient.
Qualification for the Champions League is very important for Liverpool’s business model, as the earnings are significantly lower in the Europa League (average £28m) and the Europa Conference (only €9min 2021/22).
The Champions League has been an important driver of Liverpool’s revenue growth with an impressive €478m earned in the last five years, around the same amount as Manchester City, but much more than other English clubs.
As Jürgen Klopp said, “We played five years in a row in the Champions League, which is massive money, and went to the final three times in that time.”
The contrast with Liverpool’s European exploits in the previous five years is stark, as they only earned €59m in that period, despite reaching the Europa League final in 2016, as they failed to qualify on two occasions.
Unless there is a minor miracle in the second leg in Madrid, Liverpool will exit this season’s Champions League at the last 16 stage, which will hit their revenue. My model suggests that they will earn €82m, which would be €36m lower than 2021/22. This figure was boosted by winning five games in the group (each victory worth €2.8m).
Commercial Revenue
Liverpool’s commercial income rose £29m (13%) from £218m to a club record £247m, due to strong growth in sponsorships and increased revenue from the re-opening of non-match day operations such as the retail stores and the Tour and Museum Centre.
A total of eight new partnerships were signed, including Sonos, Kodansha, Vistaprint and Wasabi.
Liverpool’s £131m growth in commercial revenue since 2016 has kept pace with Manchester City, with Tottenham just behind, while their increase was significantly better than Chelsea, Arsenal and particularly Manchester United, whose revenue actually dropped over this period.
This has led to the commercial gap between United and Liverpool reducing from £153m to just £11m.
Nevertheless, Liverpool’s £247m remains the third highest commercial revenue in England, still a fair way behind Manchester City £309m, though Reds fans will no doubt raise an eyebrow about this comparison.
Liverpool Finances 2021/22
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Liverpool’s 2021/22 financial results covered a season when the club was successful in winning both English domestic cups, namely the FA Cup and the EFL Cup. However, it was a case of “so near, yet so far” in the two major competitions, as they finished runners-up to Manchester City in the Premier League and were beaten in the final of the Champions League by Real Madrid.
The financial results were boosted by this being the first full season after the COVID pandemic.
Profit/(Loss) 2021/22
Liverpool swung from a £5m pre-tax loss to a £7m profit, as revenue shot up £107m (22%) from £487m to a club record £594m, but this was partly offset by operating expenses rising £85m (16%) to £612m and profit on player sales falling £11m from £39m to £28m.
Profit after tax was lower at £2m, due to a £5m tax charge.
The main reason for Liverpool’s revenue increase was the return of fans to the stadium, which led to significant increases in both match day, up £83m from just £4m to £87m, and commercial, which rose £29m (13%) from £218m to £247m. Both of these were new club highs.
However, broadcasting fell £5m (2%) from £266m to £261m, despite the success on the pitch, as the prior year included some revenue deferred from 2019/20 after that season was extended beyond the club’s accounting close.
However, Liverpool’s significant revenue growth did not directly feed into the bottom line, as expenses also grew substantially. Wages shot up £52m (16%) from £314m to £366m (another club record), while other expenses rose £36m (38%) from £96m to £132m, mainly due to the higher cost of staging games with fans.
On the other hand, player amortisation fell £5m (5%) from £108m to £103m, while net interest payable was cut by a third to £2m.
Only half the Premier League has so far published accounts for 2021/22, so comparisons with other clubs are a bit misleading, as the prior year figures were severely impacted by the pandemic with almost all games played behind closed doors.
That said, Liverpool’s £7m pre-tax profit is the third best to date last season, only surpassed by Manchester City £42m and West Ham £12m. This sustainable approach is in stark contrast to some other leading clubs, as large losses were reported by Manchester United £150m, Tottenham £61m and Arsenal £45m (plus Chelsea £156m in 2020/21).
In the previous two seasons, Liverpool’s revenue was significantly impacted by COVID. I estimate that they lost £114m, split between £27m in 2019/20 and £87m in 2020/21, largely from match day, as games were played behind closed doors.
To further place Liverpool’s small £2m post-tax profit into context, some other leading European clubs have reported considerably worse results for 2021/22, including PSG £327m (per French newspaper L’Equipe), Juventus £212m, Roma £190m, Barcelona £157m, Inter £124m and Real Madrid £119m.
Note: the Spanish clubs’ figures have been adjusted for their famous economic levers.
Liverpool’s profit from player sales fell £11m from £39m to £28m, mainly from Harry Wilson to Fulham, Marko Grujic to Porto, Xherdan Shaqiri to Lyon, Taiwo Awoniyi to Union Berlin and Kamil Grabara to FC Copenhagen. They also lost Georginio Wijnaldum to PSG on a free transfer.
The ability to realise profits was hit by the depressed transfer market, as budgets were impacted by the financial pressures of the pandemic, but some clubs have still managed to generate good money from payer trading, especially Aston Villa £97m, Manchester City £68m and Leicester City £44. Despite the decrease, Liverpool’s £28m was still one of the better results.
Pre-tax Profit/(Loss)
This is the first time that Liverpool have made a profit since 2018/19, having lost £51m in the preceding two years. The pandemic obviously hit the Reds finances, as they had been consistently profitable beforehand. They managed to generate nearly a quarter of a billion profit in the preceding five years, which is good going in the fiercely competitive world of football.
That included a huge £125m profit in 2018, which is the third highest profit ever in the Premier League. Liverpool’s profits of £42m in 2019 and £40m in 2017 also feature in the top 20 financial results.
Exceptional Items
In recent years Liverpool 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.
However, since then, they have only booked a £4m profit on the sale of their former training ground at Melwood.
Profit from Player Sales
Like many other clubs, Liverpool have become increasingly reliant on profit from player sales, generating nearly £400m from this activity since 2015. In the early years under FSG, it was very different story, as they actually posted losses from player trading for three consecutive seasons, while they cleared out some deadwood.
The accounts note that the profit made since year-end from player sales is £36m, including Sadio Mané to Bayern Munich, Neco Williams to Nottingham Forest, Takumi Minamino to Monaco and Ben Davies to Rangers. A few players left as free agents, including Divock Origi to Milan and Lorius Karius to Newcastle United.
A key element of Liverpool’s strategy is to be a club that sells well, as can be seen by the profit from player sales in the five years up to 2021, where only Chelsea made more than the Reds with £413m. Liverpool’s £274m was far ahead of the rest of the Big Six.
That said, other clubs are beginning to do better in this space, while Liverpool have suffered from a few players running down their contracts, so they cannot rest on their laurels.
Operating Profit/(Loss)
Liverpool’s operating loss (i.e. excluding player sales, exceptional items and interest payable) narrowed from £40m to £18m. The club used to be one of the very few that managed to achieve (small) operating profits, but this changed in 2020, largely due to the impact of COVID.
Most football clubs post losses at the operating level, which was the case for all but two clubs in the top flight in 2020/21, when some suffered massive losses, e.g. Chelsea £159m and Everton £118m.
Only West Ham have managed to make money from day-to-day business so far in 2021/22, but Liverpool’s £18m operating loss is the second best result to date in the Premier League.
EBITDA
Liverpool’s EBITDA (Earnings Before Interest, Tax, Depreciation & Amortisation), which is often considered a proxy for cash operating profit, as it strips out player sales and exceptional items, improved from £77m to a very healthy £96m, albeit a fair bit lower than their £124m peak pre-pandemic.
Nevertheless, Liverpool’s £96m EBITDA is still the third best in the Premier League, only behind Manchester City £131m and Tottenham £114m. It is better than both Arsenal £83m and Manchester United £81m.
Revenue
Liverpool’s £594m revenue is the club’s highest ever, £61m (11%) more than the previous £533m pre-pandemic peak in 2018/19. Interestingly, virtually all the growth since then has come in commercial, as match day only rose £3m, while broadcasting was flat.
Nevertheless, broadcasting remains the most important revenue stream at 44%, closely followed by commercial with 42%. Match day only accounts for 15% of total revenue.
In fact, Liverpool have enjoyed by far the largest revenue growth of the Big Six in the last five years, rising £230m (63%) from £364m to £594m. The next highest increases were Manchester City with £160m, followed by Tottenham £137m and Chelsea £120m. Manchester United were basically unchanged over this period, while Arsenal actually dropped £54m.
Liverpool’s revenue outperformance is perhaps best illustrated by the comparison with Manchester United, where the £217m shortfall in 2017 has been converted to an £11m surplus in 2022, i.e. a massive swing of £228m.
As a result, Liverpool’s £594m revenue is now the second highest in England, only behind Manchester City £613m. United are within touching distance at £583m, but there is then a huge £100-200m gap to the next clubs: Chelsea £481m, Tottenham £443m and Arsenal £369m.
In other words, in revenue terms, there is competitive imbalance even within the Big Six .
Comparing Liverpool with Manchester City, we can see that the Reds are better in two revenue streams, namely match day and broadcasting, but the significant commercial deficit is enough to put City ahead overall.
Money League
Liverpool were the biggest movers in the Deloitte Money League, rising four places from 7th to 3rd, to overtake Manchester United in the rankings for the first time. The gap to the top two (Manchester City and Real Madrid) was negligible.
In fact, Liverpool had the highest year-on-year revenue growth of any club in the Money League Top 20 with their £106m increase comfortably outpacing Manchester United £89m, Tottenham £82m and PSG £61m.
This is pretty good going for a club that was languishing in 12th place in Deloitte’s rankings as recently as 2013.
Broadcasting Revenue
Liverpool’s broadcasting income fell £5m (2%) from £266m to £261m, despite reaching three finals (and winning two of them), as the previous year included some revenue for games played after the 2019/20 accounting close after the season was extended due to COVID delays.
The resulting reduction more than offset the increase in Champions League earnings after Liverpool reached the final last season.
Because of the deferred TV money in 2020/21, comparisons against many other clubs are a bit meaningless, but in 2021/22 Liverpool’s £261m was the highest in England (and indeed Europe), ahead of Manchester City £249m.
My estimate is that Liverpool’s prior year broadcasting revenue was inflated by £35m, due to the deferrals from 2019/20. Clubs with a May year-end (like Liverpool) had the largest revenue deferrals, while those with a July accounting close deferred nothing into their 2020/21 accounts.
Liverpool received £152m from Premier League central TV distribution, which was £2m higher than prior year, mainly thanks to finishing one place better (2nd vs. 3rd), which meant a higher merit payment.
Liverpool’s popularity meant that they were televised live no fewer than 29 times, which was the most of any club (along with Arsenal), generating the largest facility fee payment.
Liverpool should earn more in 2022/23 from the new Premier League deal, which I estimate is 11% higher than the current agreement. Although domestic rights are flat, overseas rights have surged 25%, including the spectacular NBC deal in the US.
However, this would be partly offset by if they finish below second place, which seems likely at this stage.
Europe TV
I estimate that Liverpool earned €118m for reaching the Champions League final, which was €30m more than the previous season, when they only got to the quarter-finals.
Unsurprisingly, Liverpool’s €118m was the highest earned by an English club from Europe in 2021/22, ahead of Manchester City’s €108m. Liverpool’s prize money was obviously higher, but City did better in both the TV pool (after finishing top in the previous season’s Premier League) and UEFA coefficient.
Qualification for the Champions League is very important for Liverpool’s business model, as the earnings are significantly lower in the Europa League (average £28m) and the Europa Conference (only €9min 2021/22).
The Champions League has been an important driver of Liverpool’s revenue growth with an impressive €478m earned in the last five years, around the same amount as Manchester City, but much more than other English clubs.
As Jürgen Klopp said, “We played five years in a row in the Champions League, which is massive money, and went to the final three times in that time.”
The contrast with Liverpool’s European exploits in the previous five years is stark, as they only earned €59m in that period, despite reaching the Europa League final in 2016, as they failed to qualify on two occasions.
Unless there is a minor miracle in the second leg in Madrid, Liverpool will exit this season’s Champions League at the last 16 stage, which will hit their revenue. My model suggests that they will earn €82m, which would be €36m lower than 2021/22. This figure was boosted by winning five games in the group (each victory worth €2.8m).
Commercial Revenue
Liverpool’s commercial income rose £29m (13%) from £218m to a club record £247m, due to strong growth in sponsorships and increased revenue from the re-opening of non-match day operations such as the retail stores and the Tour and Museum Centre.
A total of eight new partnerships were signed, including Sonos, Kodansha, Vistaprint and Wasabi.
Liverpool’s £131m growth in commercial revenue since 2016 has kept pace with Manchester City, with Tottenham just behind, while their increase was significantly better than Chelsea, Arsenal and particularly Manchester United, whose revenue actually dropped over this period.
This has led to the commercial gap between United and Liverpool reducing from £153m to just £11m.
Nevertheless, Liverpool’s £247m remains the third highest commercial revenue in England, still a fair way behind Manchester City £309m, though Reds fans will no doubt raise an eyebrow about this comparison.
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