The case for Liverpool (and City) domination

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

  Pts Win rate Trophies
Man.City 264 78.0% 6
Liverpool 261 73.4% 2
Man.Utd 202 54.1% 0
Chelsea 199 54.1% 2
Tottenham 193 53.7% 0
Arsenal 182 47.7% 0

Source: GOTP

Difference

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.

Growth

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

Year Turnover
£m
Pre-Tax Profit £m Wage-to-income ratio
2019 533.0 33.4 58%
2018 455.1 124 58%
2017 364.5 39 57%
2016 301.8 (21.4) 69%
2015 297.9 58.6 56%

Source: LFC Financial Statements

Market activity

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)

  Spent £m Recouped
£m
Man.City 887.49 285.51
Man.Utd 752.49 267.62
Chelsea 663.84 550.16
Liverpool 515.59 408.02
Arsenal 479.65 209.16
Tottenham 382.05 275.43

Source: TransferMarkt

 

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

  Liverpool Man.City
Av.
Age
27.2 27.6
home grown 9% 2.9%
expats 72.1% 81.9%
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.

 

@GameofthePeople

 

Crowd reaction – why English and German fans are more loyal

RELEGATION is often a big blow to clubs in Europe’s top leagues, mostly because it comes with financial implications, despite parachute payments. TV money and legacy wage bills are the biggest issue, but income at most clubs is affected by lower attendances. Or is it?

Football fans are known for their undying loyalty and a major setback often brings out the best in them, particularly if the club in question has made a strong stand against relegation and has been seen to have tried, perhaps against the odds. Even a relegated team can get applauded off into the summer, with the fans defiant that the club will bounce back and win promotion in a year’s time. “We’ll support you ever more.”

Given the fans feel they have something of an intimate relationship with the players, the blame for a team’s fall from grace is often directed at the club’s board rather than individuals on the field. In many cases, those very players will look to leave a Championship-bound team which is somewhat ironic. Badge kissing and thumping the heart mean nothing when an agent looks to move his man on to avoid playing at a lower level. Loyalty is less than skin deep!

In the big five European leagues, relegation can really hit a club hard at the turnstile, but in some cases, it can also lead to bigger attendances in relegation+1, especially if a promotion campaign is immediately mounted. The most loyal fans appear to be in Germany and England if you consider a stable attendance as a sign of devotion to the cause.

The Bundesliga has seen some very big clubs suffer relegation to 2.Bundesliga in recent years. Hamburg and Köln went down in 2017-18 and both have been among the front-runners for promotion in 2018-19. Hamburg’s gates have declined by 3.82% but Köln’s have actually risen by 1.5% – which does prove that the audience will return for a winning team.

Over the course of the past five years, the average drop in crowds for a relegated side in the first year outside the Bundesliga is 10.8%. There are exceptions, with Ingolstadt losing 29.9% of fans in 2017-18 and Paderborn falling by 26.4% in 2015-16. The big clubs, such as Hamburg, Köln and Stuttgart don’t seem to lose so many, most probably because their sheer size gives people the confidence for a quick return.

The German second tier has an average crowd of 19,029 in 2018-19, which represents 44% of the top division. Only the Championship in England has a better percentage among this group – 52% with an average of 20,181.

The average drop for Premier clubs after relegation over the past five years has been 13.6%. Not many clubs have seen crowds go up, but one notable exception is Newcastle United, whose loyal fans stuck with them in 2016-17 in a promotion winning campaign. Some clubs have not been so lucky – Sunderland lost 33% in 2017-18 and Hull and Fulham fell by 27% in 2015-16 and 2014-15 respectively. A significant decline can be a symptom of a club in turmoil, with disillusioned fans and deep-rooted problems.

The cruellest gap between the top and second tier can be found in Italy, where relegated clubs, on average, lose around 30% of their core attendance. There have been some dramatic drops that undoubtedly have a crippling effect on club finances. In 2016-17, Carpi’s gates went down 73% after a brief spell in Serie A, while Empoli hemmorhaged 48% in 2017-18. One explanation is the big gap between Serie A and B in terms of general crowd appeal – the 2018-19 average for Serie B is just 7,225 – which represents less than 30% of Serie A’s average. This is the lowest differential among the big five leagues.

In France, relegation from Ligue 1 can be transformational in a negative way, with a five-year average of over 27%. It is noticeable that Troyes, who have suffered relegation twice in that period, appear to lose their public when they drop into Ligue 2. In 2018-19 and 2016-17, their gates fell by more than 40%. Ligue 2’s overall average crowd is 6,600 versus Ligue 1’s 22,500.

Spain’s Segunda Divisíon has an average of less than 10,500 which is around 38% of La Liga’s top flight. A relegated club can expect to see gates go down by 17%, not bad considering the club will no longer have the likes of the big two, Real Madrid and Barcelona, on their fixture list.

Returning to the Premier, one of the big financial problems is the cost of thwarted ambition – what it has cost a club to get to the very top. Championship clubs spend far too much money on wages and often the bill exceeds club revenue. So when promotion is followed by relegation, the harsh truth can come home to roost. Clubs do everything they can to reach the promised land because the rewards are very lucrative – take a look at Fulham’s transfer expenditure last summer – but unless you have the resources to sustain life among the elite, the longer-term fiscal consequences can be desperate and damaging.

For some clubs, relegation can be an appropriate time for reinvention and reassessment. It has been encouraging the way clubs like Hull City, Norwich City and Burnley have been able to return after relegation, although the parachute payments have obviously helped. Conversely, Sunderland have had those same benefits but dropped another step to League One. The Championship is full of clubs who may feel their rightful place is in the Premier, but much depends on how a club handles relegation. It will be interesting to see how Cardiff City, Fulham and Huddersfield Town react next season to falling through the trapdoor in 2018-19.

The pragmatist would argue that breaking the bank can break hearts and clubs and may only deliver short-term benefits. People often fail to recognise that some clubs spend their lives in lower divisions for a reason, that their “deserved” place is not where they would like to be. Keeping calm, prudent, realistic and focused are obviously vital, but how many clubs can truthfully say they have those qualities in abundance?

Photo: PA

 

English success no surprise and overdue

FOUR clubs in the last eight of the UEFA Champions League is a welcome sight for the Premier League’s grandees, particularly as a couple of years ago, people were quick to write-off England after a string of sub-optimal seasons in Europe’s premier club competition.

Is it really so remarkable given the financial power of the Premier? You could say that, hitherto, underperformance has characterised English clubs’ record in the Champions League – since the European ban was lifted in 1990, England has won the competition just four times: Manchester United in 1999, Liverpool in 2005, United again in 2008 and Chelsea in 2012. In the same timeframe, Spanish clubs (to be precise, Real and Barca) have won 12 Champions League titles and Italy five.

Four clubs is something that only England could provide given the increasingly visible strength-in-depth of the Premier. Spain could, feasibly stretch to four, but realistically, you could expect Real, Barca and Atleti to make it that far. This season, the Madrid duo went out in the last 16, with both spurning the opportunity after winning their first legs.

If money determines football success, then the Premier is now the dominant force in European football. Using Deloitte’s Football Money League as the benchmark, six of the top clubs by revenue generation are from the Premier, and they include the four quarter-finalists: Manchester United, Manchester City, Liverpool and Tottenham. In the top 30, there are 13 clubs from the Premier, a significant sign given that the other “big five” leagues account for 14 clubs between them.

But this season, English clubs have also surprised the rest of Europe with their confidence and durability. Tottenham easily disposed of one of the teams of the season, the Bundesliga’s Borussia Dortmund, and earlier came through a group that included PSV Eindhoven, Internazionale and Barcelona. Liverpool pulled off an excellent 3-1 win at Bayern Munich in the last 16 after being written-off following their 0-0 home draw with the German champions. Their group included PSG, Napoli and Red Star Belgrade.

Manchester United were also dismissed as contenders when they were beaten at home by PSG, but came back to win through. English teams, one or two years ago, would have struggled to get through these games, but the fact this trio of clubs won through indicates something has definitely changed. Perhaps they have become more savvy in Europe, but most likely, it is a reflection of the financial clout of English clubs that has finally tipped the balance.

Manchester City, in contrast, were expected to have a good European campaign this season. Their
7-0 win against Schalke made it a clean sweep for English clubs against German opposition in the round of 16. Nobody will fancy meeting Pep Guardiola’s rampant and goal-happy side in the quarter-final, not even Liverpool, who seemed to have sussed the City style last year.

Draws being draws, the likelihood of two English clubs meeting is now very high, but nobody really wants an all-Premier clash because over-familiarity will dilute the internationality of the occasion.

The last eight, even though Real and Bayern fell at the first knockout hurdle, does reflect the current power in European football. Of the eight, three are league leaders in their respective countries – Juventus, Barcelona and Manchester City. Three are in second place – Porto, Ajax and Liverpool – and Tottenham and Manchester United are in third and fifth place respectively in the Premier. Only Porto and Ajax are not in Deloitte’s top 30, but all are in the top 22 by UEFA club rankings.

There are six former winners of the competition remaining: Barcelona and Liverpool, five wins apiece; Ajax four wins; Manchester United three; Juventus and Porto two each. Manchester City and Tottenham, while winners of major European prizes, have never reached a Champions League final.

With the enormous TV money enjoyed by the Premier and the equally substantial wage bills, the Premier League’s time may have arrived in terms of major European success. But with Real and Bayern out of the way, the competition could still become the final Messi v Ronaldo shoot-out – the latter’s hat-trick against Atletico Madrid was a memorandum to the rest of Europe that he wants another stab at winning the title to justify his move to Turin. It is probable that if an English team wants to win the UEFA Champions League, Messi or Ronaldo will have to be beaten on the way to the Wanda Metropolitano. It’s also worth recalling that often, England produces unexpected winners – Nottingham Forest (1979 and 1980), Aston Villa (1981), Liverpool (2005) and Chelsea (2012).

The final in Madrid will now lack the awkward scenario of a local club playing in its home city, but Barca could still make it to extend Spain’s run beyond the five successive years that La Liga clubs have won the trophy.

Ultimately, the English Premier needs a winner to cement its claim to be the top European league rather than merely the most hyped competition. And for one or two English clubs, their position among the elite needs affirmation – Manchester City, for example, covet a Champions League victory to look their peers in the eye, not to mention their rivals across at Salford.

Photo: PA