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Liverpool are only the sixth most valuable club in the Premier League despite having the third highest wage bill, according to a new economic analysis.
The club has ambitions to be a regular top-four team on the pitch and to compete financially with the most highly valued teams in the league.
But a study by Liverpool University football finance expert Kieran Maguire shows the club are £1.79 billion behind the most valuable club, Manchester City.
The Reds are valued at £589million, according to the academic’s analysis, compared to Man City’s massive valuation of £2.29billion.
They are also significantly behind all their major rivals on the pitch.
City are followed by Man United (£2.23billion), Arsenal (£1.3billion), Tottenham Hotspur (£1.15billion) and Chelsea (£1.05billion).
The total valuation of Premier League clubs was £11.6billion.
It is in stark contrast to a valuation by Forbes last year which put Liverpool as the eighth most valuable club in the world on £1.04billion.
Of English clubs, the two Manchester clubs, Arsenal and Chelsea still surpassed Liverpool in the Forbes list but they were well ahead of Spurs who were valued at £685million.
Mr Maguire, part of the Football Industries MBA group at the university, used a formula developed by one of the MBA graduates, Dr Tom Markham.
Dr Markham is now the head of strategic business development at Sports Interactive, the makers of the popular Football Manager games.
The figures, for 2015-16, use clubs’ annual accounts and include income, profits, wage control, net assets and unsold seats at games, among other factors, in the valuation.
Liverpool’s valuation has already provoked some ire on social media, where one person questioned how Liverpool could be worth half a billion less than Spurs.
Mr Maguire replied on Twitter: “Because they lose money by paying over £200million in wages, twice as much as Spurs, and don’t qualify for CL [Champions League].”
He admitted on social media that all valuations are as much art as science but pointed out that Forbes do not share their formula while the Markham analysis is open source.
He told the Echo the model he used is “far from perfect, just as all models are, but as a start point it’s a good one”.
The economist said that Liverpool have let their wage control “go a little bit loose”.
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Taking the proportion of income paid out in wages, for every £100 Liverpool brought in, they paid £69 in wages.
That was similar to Chelsea (£67) but behind Arsenal (£55), Man City (£50), Spurs (£48) and the club with the best wage control for 2015/16, Man United (£45).
Liverpool also had the third highest wage bill (£208million) despite finishing eighth in the league.
Only Man United and Chelsea spent more on their players wages - £232million and £222million.
Liverpool’s annual bill was more than double that of Spurs (£100million) and ahead of Arsenal (£195million) and Man City (£198million).
Mr Maguire, a chartered accountant, said: “Some Liverpool fans think [the formula] should have come out with a higher figure [for Liverpool] than it did.
“FSG [Fenway Sports Group] bought Liverpool for £300 million in 2010. [So] they have nearly doubled their money in that period.
“If we’re being realistic, Liverpool haven’t really pushed on in terms of winning trophies and qualifying for the Champions League. They [FSG] have done well to double their money in that period.
“The reason they’re falling quite far behind the likes of Spurs and Chelsea is that being in London allows you to generate more money because London is more popular than Liverpool.
“And these clubs have got far less debt. [Chelsea owner Roman] Abramovich uses Chelsea as a personal plaything and Spurs are probably the smartest run club in the Premier League, in my opinion. [Spurs executive chairman] Daniel Levy is very good at running things.”
http://www.liverpoolecho.co.uk/spor...liverpool-premier-leagues-sixth-most-13020888
Liverpool are only the sixth most valuable club in the Premier League despite having the third highest wage bill, according to a new economic analysis.
The club has ambitions to be a regular top-four team on the pitch and to compete financially with the most highly valued teams in the league.
But a study by Liverpool University football finance expert Kieran Maguire shows the club are £1.79 billion behind the most valuable club, Manchester City.
The Reds are valued at £589million, according to the academic’s analysis, compared to Man City’s massive valuation of £2.29billion.
They are also significantly behind all their major rivals on the pitch.
City are followed by Man United (£2.23billion), Arsenal (£1.3billion), Tottenham Hotspur (£1.15billion) and Chelsea (£1.05billion).
The total valuation of Premier League clubs was £11.6billion.
It is in stark contrast to a valuation by Forbes last year which put Liverpool as the eighth most valuable club in the world on £1.04billion.
Of English clubs, the two Manchester clubs, Arsenal and Chelsea still surpassed Liverpool in the Forbes list but they were well ahead of Spurs who were valued at £685million.
Mr Maguire, part of the Football Industries MBA group at the university, used a formula developed by one of the MBA graduates, Dr Tom Markham.
Dr Markham is now the head of strategic business development at Sports Interactive, the makers of the popular Football Manager games.
The figures, for 2015-16, use clubs’ annual accounts and include income, profits, wage control, net assets and unsold seats at games, among other factors, in the valuation.
Liverpool’s valuation has already provoked some ire on social media, where one person questioned how Liverpool could be worth half a billion less than Spurs.
Mr Maguire replied on Twitter: “Because they lose money by paying over £200million in wages, twice as much as Spurs, and don’t qualify for CL [Champions League].”
He admitted on social media that all valuations are as much art as science but pointed out that Forbes do not share their formula while the Markham analysis is open source.
He told the Echo the model he used is “far from perfect, just as all models are, but as a start point it’s a good one”.
The economist said that Liverpool have let their wage control “go a little bit loose”.
CLICK TO PLAY
WATCH NEXTLiverpool U23 4-1 Mansfield U23 - Andy Kelly with
LIVERPOOL TRAIN AHEAD OF SUNDAY'S GAME AT WEST HAM
Taking the proportion of income paid out in wages, for every £100 Liverpool brought in, they paid £69 in wages.
That was similar to Chelsea (£67) but behind Arsenal (£55), Man City (£50), Spurs (£48) and the club with the best wage control for 2015/16, Man United (£45).
Liverpool also had the third highest wage bill (£208million) despite finishing eighth in the league.
Only Man United and Chelsea spent more on their players wages - £232million and £222million.
Liverpool’s annual bill was more than double that of Spurs (£100million) and ahead of Arsenal (£195million) and Man City (£198million).
Mr Maguire, a chartered accountant, said: “Some Liverpool fans think [the formula] should have come out with a higher figure [for Liverpool] than it did.
“FSG [Fenway Sports Group] bought Liverpool for £300 million in 2010. [So] they have nearly doubled their money in that period.
“If we’re being realistic, Liverpool haven’t really pushed on in terms of winning trophies and qualifying for the Champions League. They [FSG] have done well to double their money in that period.
“The reason they’re falling quite far behind the likes of Spurs and Chelsea is that being in London allows you to generate more money because London is more popular than Liverpool.
“And these clubs have got far less debt. [Chelsea owner Roman] Abramovich uses Chelsea as a personal plaything and Spurs are probably the smartest run club in the Premier League, in my opinion. [Spurs executive chairman] Daniel Levy is very good at running things.”
http://www.liverpoolecho.co.uk/spor...liverpool-premier-leagues-sixth-most-13020888
