It has been a case of trading places for Liverpool and Arsenal.
Having led the Premier League for 248 days last season, pipped to the post down the final stretch by a relentless Manchester City side, Arsenal will play Champions League football this coming season.
It is the first time since 2016/17 that the Gunners will be in European football’s elite knockout club competition, with the riches that come with it emboldening the ownership of the North London club to spend big this summer, the club targeting the £105m capture of West Ham United’s Declan Rice in the coming days.
In contrast, this season for Liverpool means Europa League football and the first campaign since 2016/17 that they won’t be part of the Champions League. But while the flip side of that may suggest that the Reds, who will be faced with significantly less in terms of revenue generating potential by being in the Europa League, may have to pull back on transfer spending it has prompted the opposite.
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Liverpool owners Fenway Sports Group have long implemented a leaner transfer strategy when it comes to spending, something that has been both lauded and lambasted over the years. But with an ageing squad and a need to reinvest in key areas unavoidable if the club were to be serious about returning to the top four next season, FSG have sanctioned summer spend this season that will take them into their heaviest negative net spend since they arrived as owners in 2010.
The arrivals of Alexis Mac Allister and Dominik Szoboszlai have seen them spend £95m already, while Southampton’s £50m-rated midfielder Romeo Lavia is on the hit list next, as is a centre back.
FSG know full well the value that being in the Champions League brings, and being out of it for too long can cause significant problems financially that have ramifications for long-term competitiveness.
But FSG are likely to be using Arsenal’s own failings prior to last season as an example of what not to do. The Reds have a wage bill that sits as the second highest in the Premier League, some £154m higher than Arsenal’s last season, albeit inflated due to significant bonuses and a lot of contract renewals.
“You have to run to stand still in the Premier League,” explained football finance expert, University of Liverpool lecturer and Price of Football author Kieran Maguire when speaking to the ECHO.
“Liverpool will have looked at what Arsenal had done during their period away from the Champions League and the impact that it had on them longer term.
“You only need to look at the difference in wage bill between both clubs to see the way things have gone. After falling out of top four contention Arsenal, while they kept spending in the transfer market but they put a lot of focus on keeping the wage bill down. In terms of the chances of success it is more closely linked to wage spend than it is to transfer spend.
“But in focusing on keeping wages low they lost ground on the likes of Liverpool who continued to increase their wage bill. It has taken Arsenal a long time to get back and the challenge will be for them to remain there now.
“For owners like FSG they will know that Liverpool can’t be out of the Champions League for a prolonged period so they’ll be trying to find a way to invest enough that gets them back to where they need to be, because the Champions League is an important part of the business model for the club.”
Liverpool’s wage bill for the 2022/23 financial year, which ran to the end of May, will likely see a fairly significant reduction due to the lack of bonus payments made, although the contract extension that Mohamed Salah signed last summer will be included for the first time. However, wage spend for the Reds will still likely challenge that of the main top four spending rivals of Manchester City, Manchester United and Chelsea.
