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Liverpool Echo

Sport

Dave Powell

FSG transfer reality becomes clear as Liverpool set for £115m boost

Liverpool FSG UEFA Champions League Darwin Nunez EPL Football Jurgen Klopp Sadio Mane Manchester City Off Pitch

Last season for Liverpool was something of a strange one. Fighting on all four fronts until the very last day, the quadruple was within their grasp it seemed. Having bagged both the Carabao Cup and the FA Cup, a Champions League final and Premier League title shootout with Manchester City stood between the Reds and footballing immortality.

But defeat in Paris to Real Madrid in European football's most prized club event, and City overturning a 2-0 deficit against Aston Villa in the final 15 minutes of their Premier League season in May meant that Liverpool ended up being so near yet so far, a season that was on the cusp of greatness ended being just a great season.

The impact of the on-pitch success last season had a positive effect on club finances. According to a report published on Monday by renowned football finance website Off The Pitch, the Reds are forecast to make £602m in turnover when they publish their financials early next year for the 2021/22 financial period that ended at the end of May. It is a forecast rise of some £115m from the £487m that turnover that was posted earlier in the year for the significantly pandemic-affected 2020/21 accounting period.

Having posted more than £50m in losses through the two years of Covid, £4.8m of that in 2020/21, the Reds are predicted to have a pre-tax profit of around £76m, a club record.

While the numbers are forecasts from Off The Pitch, the expected rise in revenues can be attributed to a number of factors, one of the key ones being the return of fans to games for a full season that is set to see matchday revenues rise from £3.7m to £89.7m compared to the previous year, while a host of new commercial deals mean that revenues on that side of the business are predicted to rise from £217.6m to £241.2m year on year.

Wages for the 2021/22 financial year are expected to increase slightly from the £314m that it stood at in the last accounts, the payroll rising to similar levels of the 2019/20 season where the wage bill ballooned due to bonus payments for winning the Champions League. The next set of financial results won't include the new deal for Mohamed Salah or arrival of Darwin Nunez on the wage bill with both deals concluded after the end of the 2021/22 reporting period.

The projected £115m will will also have been aided in one key aspect that cannot be controlled but can certainly be aided by the ownership of Fenway Sports Group - the success on the pitch.

Finishing second in the Premier League last season delivered around £50.4m from their merit payment, around £3m less than winners Manchester City and £5m higher than third placed Tottenham Hotspur for 2021/22.

Winning the FA Cup and Carabao Cup contributed around £6m to the pot, the extra games in the competition meaning more opportunities to earn matchday revenues.

That is the same for the Champions League, the competition where Liverpool have achieved much success in recent years. Reaching the final last year, through prize money and other associated revenues, mean that the club will have delivered around the £100m mark for the season. Factoring in more games and more matchday revenues, and more scope for a slice of the broadcast pie, made it a hugely lucrative journey, even if the final hurdle couldn't be cleared.

The significance of Champions League success to Liverpool and the more self sustaining business model that is adopted under FSG cannot be underestimated.

The competition has enormous value to the club financially and any inability to make the top four or early exit in the group stages can have a significant impact on the balance sheet for the following year, and given that revenues have to underpin investment that can have a knock on effect on the ability to spend.

FSG have come in for some criticism in recent times over their lack of spend in the summer window, the addition of Nunez offset in no small part by the exits of the likes of Sadio Mane, Neco Williams, Takumi Minamino, Marko Grujic and Ben Davies. While fans had hoped for a major midfield addition the club's pursuit of Aurelien Tchouameni ended with him going to Real Madrid while Borussia Dortmund have been clinging grimly to Jude Bellingham to maintain him for one more season in the Bundesliga.

The stuttering start for Liverpool has led to more questions, with injuries to key performers like Thiago Alcantara only serving to make the calls ring louder for spend from the owners on midfield re-inforcements.

Back home in the US, FSG have struggles to contend with at their other major sporting team, the Boston Red Sox. The Major League Baseball team have been poor this season and similar questions have been levelled at FSG by Red Sox fans over a lack of investment in big players. The difference for FSG in Boston is that a bad season can be rectified the following year, the slate is almost wiped clean with some smart decision making behind the scenes. In Liverpool there is no such safety net, a bad season has the potentially to be extremely damaging in the longer term, whether that is through missed revenues against rising wage bills or through player targets choosing to ply their trade in the Champions League.

Football clubs are businesses in the modern age, no matter how unpalatable that sounds. The huge payroll obligations to players and staff have to be met somehow, as do the exorbitant transfer fees that are now commonplace in the market. A strong business ensures growth, and for Liverpool the two things are more closely entwined than they are at some of their rivals.

Champions League football is the minimum expectation of the Reds now, but with their rivals spending there will have to be an element of a business decision when it comes to January, or more likely next summer, over significant investment in the window, a window when the opportunity won't be there to cash in on a large amount of high-value player sales due to the lack of viable options available to them to move on at a big fee.

Last season and the positive impact on the balance sheet highlights the importance of sustained success at the highest level for Liverpool. Reaching the final of every competition every season may be a tough ask but ensuring that they are in the conversation in the latter stages for every competition is now an expectation, and one that requires investment for quality and squad depth.

The Reds have significant room to manoeuvre when it comes to additions next summer, but in order to ensure that they are protecting their growing business into the next five years and beyond there will have to be a major spend on key areas in order to maintain their position of strength both on and off the field.

Healthy financial figures are something that should be applauded, football on the whole should be making a more concerted effort at the top level to operate sustainably. But for any successful business there is the need for significant investment to aid a longer term plan, for Liverpool that is fast approaching.

Ownership at Liverpool did an admirable job in mitigating the impact of the pandemic at a time when some of the biggest clubs in the business faced ruin and have had to sell the family silver to survive. The 2021/22 financial period will be the first set of accounts seen that show football moving past Covid and into normality once more. For FSG, an ownership group that has been seen as risk averse, maybe they are still operating on the side of caution. But with normal service well and truly resumed there will be a heightened expectation to spend next summer, there can be few excuses on that front.

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