As the pandemic raged in 2020 there was genuine concern that football may implode.
Even the biggest clubs, those so reliant on the ever-increasing nature of media rights, their global brands and being able to sell out stadiums at will and shift their merchandise in all corners of the globe were facing unprecedented challenges due to the impact of COVID-19.
The paused Premier League season of 2019/20, the worry over whether the next cycle of media rights would be strong and concern over how commercial revenues would fare given that big business was also feeling the considerable pinch made for an uncomfortable period for those behind the scenes.
Liverpool, like the rest of the footballing world, were facing uncertain times, something demonstrated by the fact that in the 2019/20 pandemic-affected financial results there was concern over just what would happen if there were to be a second suspension of the Premier League, as was seen in the title-winning season of 2019/20.
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A paragraph in the 2019/20 accounts read: "The Directors acknowledge that due to continued Covid-19 pandemic, which is outside of management control, there is a material uncertainty that exists as a result of the possibility of an extended delay or a curtailment to the current 20/21 playing season and / or a delay in the commencement of the 21/22 playing season without committed funding currently in place - and therefore this may cast significant doubt on the Group’s ability to continue as a Going Concern."
The results from those set of accounts saw Liverpool hit with a £46m pre-tax loss and a fall in revenues, a massive swing from the £42m pre-tax profit and record £533m turnover that was seen in the 2018/19 accounts that included the Champions League victory for the Reds.
The 2019/20 accounts only showed the first three months impact of the pandemic, with the majority of the financial year having hummed along as normal for the biggest clubs who went about their business carefree up until the early months of 2020 when COVID-19 began to wreak havoc.
The delay in the season saw media revenues slump and rebates needing to be paid to broadcasters, while fans being unable to attend matches impacted matchday revenues significantly.
Liverpool have now announced their financial results for the 2020/21 period, up to May 31 of last year.
And while the dial continues to be pointing in the wrong direction after a £4.8m loss, the strength of the club as business has enabled them to ride out a season and make financial improvements year on year despite almost an entire campaign taking place behind closed doors.
Overall revenue was down £3m to £487m, but the media rights missing from the last set of accounts meant that those rights increased by £64.5m to £266.1m.
Only the last game of the 2020/21 season saw fans in the stadium, where 10,000 were allowed into Anfield to watch the Reds against Crystal Palace, meaning that matchday revenues slumped 95 per cent from £70m to £3m, although the rise in media rights for the period linked to the paused season effectively cancelled this out.
But it had a knock on in other areas. Commercial revenues had risen £29m in 2019/20 but that figure was reduced to a £0.2m rise for 2020/21. But that doesn't tell the whole story with the club having still seen a rise to £217.6m despite the impact to matchday and non-matchday commercial revenues during the period, including retail stores, stadium tours and the museum closing due to the pandemic.
The Nike deal also had little time to truly make an impact through its structuring that sees Liverpool make 20 per cent on the sale of Nike/LFC branded merchandise globally. Retail outlets around the world were shuttered for long periods, the club shop did not generate the footfall owing to a lack of supporters attending games at Anfield and business was done largely based on what was achieved online.
There was also the £15m reduction in the guaranteed fee that Nike were paying when compared to the previous New Balance deal, which didn't have the same kind of revenue split that Liverpool believe will pay off handsomely with Nike in time.
That said, the period also saw record breaking kit sales with the new Nike partnership and mobile transactions increased by 89 per cent on the club’s online retail store. Three new physical stores were opened in Thailand and Singapore.
The club's wage bill fell by £11m to £314m, the first fall under Fenway Sports Group ownership, despite the additions of Diogo Jota and Thiago Alcantara to the wage bill, as well as contract extensions for 12 players including Virgil van Dijk, Fabinho and Trent Alexander-Arnold, all of which were signed during the 2020/21 financial year but announced after the commencement of the 2021/22 financial year.
There was concern in 2020 that the Reds' losses due to COVID-19 could end up passing the £120m mark. What has happened is a £50m loss over two years despite continued improvements to on-field and off-field set up, with work now well underway on the £60m Anfield Road redevelopment.
Looking at what has happened across much of the football world, both at home and abroad, and Liverpool's robustness as a business has allowed them to get through the most unprecedented of times and be in a position to, from 2021/22, to be in a real position to forge ahead and be in a strong financial place far sooner than their rivals.
Tottenham Hotspur posted losses of £80.2m for the 2020/21 period and Manchester United made a loss of £92.2m. Manchester City, buoyed by their Champions League performance and commercial income largely derived from businesses based in the country where City's ownership resides, the UAE, made a modest £2.4m profit. That doesn't tell the full story, though, with City having actually lost £126m in 2019/20, meaning the pandemic has still seen them incur losses of around £74m more than Liverpool due to the pandemic.
Liverpool have the full benefits to be realised of the Nike deal to come in the next set of financials, while they have also afforded themselves headroom to invest in the playing squad in the future without fear of Financial Fair Play breaches.
The arrival of capital into the FSG business as a whole last year, where RedBird Capital Partners took an 11 per cent stake for $750m investment brought liquidity into FSG at a crucial time to allow them to push ahead with their plans as if it were a normal financial year for their businesses and not ravaged by the worst healthcare crisis in a century.
That money was never earmarked for making moves in the transfer market, although its arrival into the FSG business meant that funds that otherwise would have been held on to, and projects such as Anfield Road that will generate far greater revenues annually for Liverpool to aid reinvestment into the first team at some stage were able to press ahead.
The Reds have managed to cope with the effects of the pandemic better than most clubs across Europe and without the need to draw down money from such facilities as the Bank of England's Covid Corporate Financing Facility, which Arsenal and Spurs used to borrow a combined £295m to get them through the pandemic.
For the Reds their approach means they are better equipped to get back to normal sooner than many of their rivals, something that will aid their bid to reassert their dominance on English football.
