Article from Echo related to amoritisation :
Liverpool's £107m transfer outlay and Philippe Coutinho fee explained
How Liverpool's amortisation figures compare to rivals as recently published accounts reflect quieter transfer period
ByDave PowellBusiness of Football Writer05:00, 18 JUL 2021
When a player arrives at a club on the back of a big money deal it makes an impact on the balance sheet of a football club.
In the case of Philippe Coutinho's move from Liverpool to Barcelona in 2018 for a whopping £142m, that money didn't drop into the Reds' bank account and allow them free reign to head out and buy Alisson Becker and Virgil van Dijk, that money was actually received over time, with Liverpool selling the debt eventually to a third party.
For Barcelona, though, that outlay was shown on their accounts as an amortisation expense on their profit and loss accounts over five years, a figure of £28.4m per year. That was the expense of his £142m fee over his five-year contract.
Liverpool's own transfer policy has often come under scrutiny from fans under the ownership of Fenway Sports Group, the Reds owners' transfer strategy around buying undervalued players and being able to drive a high price for those that they move out of Anfield is something that has been both lauded and derided.
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In the case of the Coutinho move, selling a player for £134m than you paid for him was remarkable business. It also enabled them to do the kind of business that was required in order to address the deficiencies in the squad that were clearly holding Jurgen Klopp's men back from taking the next step to silverware under the German's tenure. And with the additions of Alisson and van Dijk it worked.
Since that flurry of big business it has been relatively quiet for FSG up until they added Diogo Jota from Wolverhampton Wanderers for £45m last summer and also paid £25m to prise Thiago Alcantara away from Bayern Munich. But those two deals didn't form part of Liverpool's most recent accounts, published back in April, that showed the club made a £46m pre-tax loss during a financial period that included three months of the hugely significant impact of the coronavirus pandemic on the club's bottom line.
In among the figures was the club's amortisation costs for the 2019/20 campaign, the cumulative monies spent on transfer fees for players over the remaining life of their initial contracts.
Liverpool's figures stood at £107m, a 4.5 per cent £5m decrease on the £112m that had been in the 2019 accounts. The previous year's accounts had included the significant transfer activity that FSG undertook, the amortisation costs in 2019 rising from £77m in 2018 and £58m in 2017. The jump from 2018 to 2019 in terms of amortisation was 45.5 per cent while from the period two years before it was a rise of 93.1 per cent.
The Reds' dip in terms of their amortisation costs for the financial year ending May 2020 was largely down to a quiet transfer window that saw them sign only Takumi Minamino and Sepp van den Berg for a fee, paying £7.25m and £1.3m respectively. They did also add Harvey Elliott but the fee to be paid was only determined by a tribunal in February, the Reds to pay Fulham up to £4.3m for his services, a cost that will be amortised from the next financial statements for the year ending May 2021.
There were some deals that had run their course and no longer featured in the numbers, such as Divock Origi's £10m 2014 move from Lille no longer being accounted for, but it was the lack of spend that drove down the figure.
When you compare how Liverpool's amortisation costs stack up against their rivals, a good indicator of how much has actually been invested in transfer spend over a period of time, the Reds come in at fifth, the second lowest of the so-called 'big six' in the Premier League, with only Tottenham Hotspur beneath them with figures of £74m per year when it comes to amortisation.
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Manchester City topped the list with £146m, followed by Chelsea with £129m, Manchester United £127m and Arsenal £109m.
Liverpool's amortisation costs for next year will increase. As well as having Elliott, a signing from the previous summer, including in the costs it will also amortise the costs of the permanent signings of Jota (£45m), Thiago (£25m), Kostas Tsimikas (£11.75m), Marcelo Pitaluga (£1.8m) and Ben Davies (£1.6m). In the case of Jota, amortising his transfer cost will be around £9m, with around £6.25m for Thiago and Tsimikas £2.35m.
There will be some fees that no longer feature, however, with Sadio Mane's move from Southampton, the now-departed Gini Wijnaldum's switch from Newcastle United and Loris Karius' switch from FSV Mainz 05 no longer appearing in the amortisation costs.
Manchester City will see a rise in their amortisation costs for next season through the signings of Ruben Dias, Nathan Ake and Ferran Torres, but it will likely be Chelsea who see the steepest rise owing to their summer spending spree in 2020 where they added Kai Havertz, Timo Werner, Ben Chilwell, Hakim Ziyech and Edouard Mendy for a combined £222.5m. Their heavy spend last summer was born from having been unable to sign players the two previous windows due to a transfer ban handed down by FIFA.