The case for Liverpool (and City) domination
Posted on July 6, 2020
LIVERPOOL’s 2-0 win against Aston Villa gave the newly-crowned Premier champions 89 points from 33 games, a record win rate of 87.88% and points per game of 2.7 – all astonishing figures. While Manchester City have slipped a little from their highs of 2018 and 2019, other members of the so-called “big six” have certainly lost ground on the front two. The gap between second-placed City and Leicester City in third is now 31 points, underlining that Liverpool and City really are the dominant forces at present.
Over the past three seasons, City have accumulated 264 points from 109 games in the Premier, while Liverpool have notched-up 261. The nearest to the top duo are Manchester United on 202 and Chelsea on 199. That’s some way behind.
The big six – past three seasons
At a seminar held within University of London at the back end of 2019, a well-known football journalist forecast that City and Liverpool would stand astride the game over the coming three to five years due to their financial advantages and business acumen. Given these clubs have managed to acquire not only top class squads, but also, the best managers in the business, it is no surprise they are flourishing at the moment.
It is important to understand that Liverpool are very different to City in terms of the money that underpins the club. City’s backing, as we all know, comes from Abu Dhabi, but Liverpool are owned by the Fenway Sports Group, who took the club over in 2010 for £ 300 million.
US investors are different from the type of owner that throws large sums of money into a club in order to fast-track success. Clubs like Paris Saint-Germain, City and Chelsea all fall into this category. US owners want success, but they also want a solid business model that delivers good returns.
It was somewhat revealing that Liverpool missed out on Leipzig’s Timo Werner because they couldn’t justify the outlay when they had asked players and staff to take pay cuts during the coronavirus crisis.
The US approach always make owners popular with the fans – an example would be Stan Kroenke at Arsenal and, to some extent, the Glazers at Manchester United.
Liverpool, however, appear to hit on the right approach and a Champions League win followed by their first league title since 1990 will undoubtedly have done FSG no harm with the fans.
In 2009-10, Liverpool’s revenues totalled £ 184 million and their wage bill was £ 121 million (66% wage-to-income ratio). In 2018-19, turnover had broken the half billion barrier for the first time (£ 533 million) and wages had risen to £ 310 million (58% wage-income ratio). This was the third highest in the Premier League after Manchester United (£ 332 million) and Manchester City (£315 million).
Interestingly, while the current narrative around football wages says players are paid too much, it is worth noting that in 1990, Liverpool’s last title pre-Premier, their wage-to-income ratio was 72% and in 1988, the first year of the Barnes-Beardsley-Aldridge team, the ratio was a surprisingly high 85%.
Liverpool’s revenue growth rate over the decade has been 289% and over the last five years, the club’s 79% increase in revenues is the highest among Europe’s top clubs – City, for example, saw a 52% rise, while Manchester United grew by 59%.
Arsenal, the straggler among the “big six” English clubs, only rose by 19%. Tottenham and Barcelona are the only clubs to come close to Liverpool, a rise of 78% and 74% respectively.
Liverpool lost money on an annual basis between 2010 and 2013, peaking at £ 50 million in 2012-13. But in four of the past five seasons, they have made impressive profits, notably the £ 124 million pre-tax generated in 2017-18.
Key to Liverpool’s growth has been the rise of TV monies, with an increase from £ 86 million to £ 261 million. The club has also enjoyed a near trebling of commercial income, climbing from £ 62 million in 2010 to £ 188 million in 2019. Matchday revenues, undoubtedly boosted by an 11,000 increase in average gates at Anfield, have gone from £ 43 million in 2010 to £ 84 million in 2019.
The redevelopment of the stadium accounted for much of the £ 30 million injected into the club by the owners, a relatively modest figure compared to some rivals.
Liverpool key figures
|Pre-Tax Profit £m||Wage-to-income ratio|
Source: LFC Financial Statements
Liverpool have not been afraid to spend on new talent in the Jürgen Klopp era, but they’ve also been exceptional at trying to keep net expenditure down. Over the past five years, their net spend has been £ 108 million, which places them very low in the Premier League and represents only a fraction of the net spend of most of their peer group. Manchester City’s net outlay has been £ 601 million, Manchester United £ 485 million, Paris Saint-Germain
£ 368 million and Barcelona £ 319 million. Even local rivals, Everton, have a higher net spend (£ 225 million). In five seasons, Liverpool have made around £ 300 million in player sales, notably the huge profit made on Philippe Coutinho in 2018.
Big six transfer activity (2015-16 to 2019-20)
There was talk that Liverpool may not be tempted to bolster their squad this summer, but they would be foolish to be complacent, however good their core squad might be, as six members of their team are 28 or older. In theory, the first choice side is arguably at its very peak – like City, the average age is over 27.
But Liverpool could benefit from what could happen to Manchester City if their appeal against a two-year European ban is unsuccessful. The impact of being excluded from the UEFA Champions League may compromise the club’s ability to add fresh talent to their squad. Money talks at the end of the day, but if a player is in his late 20s and cannot play in the Champions League, it may deter them from joining City. Regardless, you have to fancy that 2020-21, when it does eventually arrive, will be Liverpool versus Manchester City part three.
How the Liverpool and City squads compare
|Av. months per player||39.2||42.7|
Source: CIES Football Observatory
It’s clear that Liverpool have established the optimal set-up around their playing resources – the unsung heroes of the club right now are people like Michael Edwards and Mike Gordon, who are influential in the acquisition of new players. But they’ve also got a genuinely charismatic and people-orientated manager in Klopp, a man that will surely be on every major club’s shopping list over the next couple of years. When you add that to sound financial management and a long-term perspective, Liverpool have clearly developed a model that will not only mean regular visits to the trophy cabinet, but also show other clubs that a move towards balancing the books can yield spectacular results.