LIVERPOOL may have won their first championship since 1990, but like all their competitors, the covid-19 pandemic impacted the club’s balance sheet in 2019-20 and is likely to continue doing so in 2020-21.
The club’s revenues totalled £ 490 million, some 8% down on 2019, but a figure exceeded only by Manchester United. At the same time, Liverpool’s wage bill – £ 326 million – was the second highest in the Premier League – after Manchester City’s £ 351m – and consumed 66% of the club’s earnings, the highest wage-to-income ratio since 2016. Liverpool’s biggest earners, unsurprisingly, were Mo Salah, Roberto Firmino, Sadio Mané and Virgil van Dijk.
By comparison, Liverpool’s wage bill was more than £ 40 million higher than Manchester United and Chelsea’s and £ 100 million greater than Arsenal’s.
Their revenues have grown more than any of the Premier so-called “big six”, a total of £ 188 million since 2016. Despite falling from 2019’s £ 533 million (buoyed by the club’s UEFA Champions League triumph), 2019-20 saw the second highest revenue total.
But where covid really hit home was in the club’s bottom line, where Liverpool made a pre-tax loss of £ 46 million. Given the club made a £ 42 million profit in 2018-19, there’s been a huge swing to the negative. However, Arsenal (-£ 54 m), Tottenham (-£68m) and Manchester City (-£125m) all made far bigger losses and over in Spain and Italy, Barcelona and Juventus suffered huge deficits. This was Liverpool’s first loss since 2016 and came just two years after the record £ 125 million profit. Analysts suggest the club may eventually suffer losses of up to £ 120 million from the pandemic. Liverpool’s operating performance showed a loss of £ 74 million in 2019-20.
Although media revenues were down by 21%, Liverpool still generated more than £ 200 million in this stream for the second successive season. Commercial income compensated to some extent, rising by 16% to £ 217.4 million. This was largely attributable to increased sponsorship and merchandising. The club has agreed eight new commercial partnerships, including link-ups with Nivea, Cadbury and Carlsberg. Doubtless the club’s increased presence on social media – a 32% rise in 2019-20 – contributed to this growth.
Matchday declined by 16% to £ 70.9 million, partly due to their exit in the Champions League last 16 and behind-closed-doors Premier League games due to the pandemic. This is where 2020-21 could prove to be more troublesome given the entire campaign has been played without paying spectators.
Profits on player registrations were at their lowest level over the past fiveyears, totalling £27 million compared to £ 45 million in 2018-19 and £ 124 million in 2017-18. According to Transfermarkt, Liverpool’s squad has a market value of £ 905 million, considerably higher than all Premier clubs bar Manchester City (£ 924m). Liverpool’s transfer activity in 2019-20 was relatively low, with net spend zero.
Liverpool’s tangibles increased from £ 192 million to £ 216 million, boosted by the new state-of-the-art training ground at Kirkby following the sale of Melwood to not-for-profit housing provider Torus.
Slightly concerning for Liverpool is gross debt, rising from £ 129 million in 2018-19 to £ 268 million, comprising £ 71 million due to the owners of the club and £ 196 million in bank debt. With £ 149 million of cash, Liverpool’s net debt runs to £ 119 million. The club has a £ 200 million revolving loan facility that has been available for general corporate purposes, including working capital. This facility has been drawn down in full.
Liverpool were among the 12 clubs that signed-up to the European Super League project, which underlined the concerns the big clubs have about ongoing financial performance. However, realising the negative response of their fans, the owners of the club were quick to acknowledge their misjudgement. With the pandemic, the club’s lack lustre defence of their Premier League title and the possibility of failure to qualify for the 2021-22 Champions League, Liverpool’s financial results, like many of their rivals’, may disappoint in the near term.