Liverpool's move to renew Mohamed Salah's contract during the summer was an expensive move but one that they could ill afford to get wrong. The clamour for Salah to extend his stay at Liverpool was great among Reds fans, the Egyptian so crucial to the club's recent successes, his time at Anfield seeing him join the Premier League's hundred goals club, the second fastest player in Liverpool history to reach a century of goals for the club, behind only the late, great Roger Hunt.
Salah's new deal, which now runs until 2025, makes him the highest player in Liverpool history by some margin, his annual wages reported to be in the region of £350,000 per week.
Football fans have almost become desensitised to those kind of numbers in recent years as the money into the game has boomed and transfer fees and wages have risen dramatically as a result. A weekly wage of around that figure for Salah would place him among the elite bracket of world footballers but still some way behind the likes of Cristiano Ronaldo at Manchester United, the 37-year-old still commanding around £480,000 per week.
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United's move to re-sign Ronaldo last summer was one that it was hoped would help them end their Premier League title drought that stretches back nine years. As it happened, after a period of tumult on and off the pitch at Old Trafford, sixth place was all United could muster and had to settle for the Europa League instead of the far more lucrative Champions League this season.
On Thursday, United published their accounts for the 2021/22 financial year, the first time the signing of Ronaldo was taken into account, as well as the costly additions of the likes of Jadon Sancho and Raphael Varane. The accounts painted a rather gloomy picture with losses reaching a club record £115.5m despite a rise in revenues, while the club's wage bill leapt forward 19 per cent from £323m in 2020/21 to £384m in 2021/22.
The wage bill standing at £384m is the largest in Premier League football and one that has not been proving value for money. It is, though, still well within the recommended 70 per cent wages to turnover ration that UEFA work on, with the club's revenues of £583m meaning that wages are 66 per cent of turnover, a percentage point above where Liverpool's ratio stood in the 2020/21 financial year.
Liverpool won't be publishing their annual accounts for 2021/22 until early next year, although forecasting from analysts at Off The Pitch has predicted that the club will see a rise in revenues to record levels of around £602m and a pre-tax profit of £76m. Off The Pitch's forecasting predicted revenues of £581m and losses of £117m for Manchester United prior to the release of their financials, only very slightly off the forecast figures.
Liverpool's wage bill for 2020/21 stood at £314m, dropping from the £326m it had been the year before, although that higher figure was due to the payments of bonuses related to the winning of the Champions League in 2019. The 2021/22 wage bill isn't expected to leap significantly but will likely see a small rise, not yet taking into account the signing of Salah on a new deal that was concluded after the Reds' financial year ended at the end of May.
Using a conservative estimate of £320m for the 2021/22 payroll, Liverpool would be spending 53 per cent of turnover on wages, well below UEFA's recommended 70 per cent limit and 13 per cent lower than the previous season for the Reds, who have operated around the 60 to 65 per cent mark when it comes to the wage to revenue ratio during the tenure of Fenway Sports Group as owners.
Even with the addition of Salah's new deal it would likely still be outpaced in terms of revenue growth that Liverpool will deliver in the 2022/23 financial year, which they are now operating in, which means that there will be significant wriggle room for the club to add players to the wage bill, especially with additions such as Darwin Nunez coming in and not immediately placing among the very top bracket of Reds earners like Salah and Virgil van Dijk.
Whether FSG green light the funds for manager Jurgen Klopp to head into the market next summer, something that they will likely have to do in a significant way due to the ageing nature of parts of their squad and the need to maintain competitive on all fronts, will be known in due course. But there will be plenty of scope for both adding to the wage bill and remaining totally compliant with UEFA's guidelines. For context, should Liverpool operate a ratio of 65 per cent against revenues of £602m then they would have a payroll of just over £391m, £77m higher than what was seen last year, or £1.48m per week extra.
Of course, FSG are a club that values strategy and does not spend blindly, and more conservative estimates over wages and revenue will likely be taken. But even erring on the side of caution there is scope for Liverpool to add players to the wage bill, as well as having the room to amortise transfer cost over the lifespan of a players contract, the club's amortisation costs favourable when compared to their rivals.
Whether it is Jude Bellingham or someone else, Liverpool have the financial ability to spend money in this financial year, and with the worries around the pandemic and the potential shuttering of sport again having been long removed, and the media landscape booming at new levels for football, the ownership will likely feel more emboldened than they did 12 months ago.
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