Topic: Liverpool Financial Overview

[Caston]

Liverpool Football Club today announced its annual financial results, with additional investment on the pitch being the key theme throughout the past financial year, demonstrating further success off the pitch is driving progress on it.

Biggest reinvestment in squad in club’s history
Continued investment in football operational infrastructure
Further growth in commercial revenue with eight new partnerships
125th season celebratory kit generated record sales
Moved up two places to seventh in the Deloitte Football Money League
Social media platforms grow to 60million followers
The financial statements show that £137m came into the club from player transfers – all of that, plus further investment, has been reinvested back into the squad taking the total outgoings on new players in excess of £190m.

During the reporting period for the year to May 31, 2018, Mohamed Salah, Virgil van Dijk, Andy Robertson, Alex Oxlade-Chamberlain and Dominic Solanke all came in, with Philippe Coutinho, Mamadou Sakho, Lucas Leiva and Kevin Stewart leaving the club. And since the reporting period last year, investments have continued with Naby Keita, Fabinho, Alisson Becker and Xherdan Shaqiri – all purchased to further strengthen the playing squad, something that the club’s ownership group, Fenway Sports Group, has consistently committed to over its tenure.

Turnover increased during the period by £90m to £455m which represents sustained growth across the club and enabled the further investment into the squad. All three revenue streams saw rises with media revenue increasing by £66m to £220m, commercial revenue increasing by £17m to £154m and match revenue increasing by £7m to £81m.

The majority of those increases are a result of qualification for the Champions League and the additional games progressing through to the final. The club did not participate in any European competition in the previous season, 2016-17. Profit before tax for the period was reported at £125m compared to £40m in the previous year.

Andy Hughes, LFC’s chief operating officer, said: “What we have seen is a stable and sustained improvement in the club’s financial position over recent years. This growth and increase in revenue has enabled us to significantly reinvest both in the playing squad and the football operational infrastructure.

“Financial results do fluctuate depending on player trading costs and timing of payments but what’s clear in these latest results is the further strengthening of our underlying financial footing and profits being reinvested in the squad and infrastructure.

“Since the reporting period, which is now nearly 12 months old, we have continued reinvesting in the playing squad from those areas of growth. In addition, the capital investment in our new training complex in Kirkby is well under way which will provide first-class amenities for our players and staff, and will vastly improve sports facilities for the community of Kirkby.”

Liverpool has moved up two places to seventh position in the Deloitte Football Money League with all three main revenue streams increasing on the previous financial year. During the reporting period, the club signed eight new partnerships, including the new shirt sleeve sponsor with Western Union and global partnerships with Falken Tyres and Joie. In addition to the eight new partners, the club renewed with four partners which further demonstrates the strength of those relationships, consistency of delivering value to partners and the global appeal of the football club. It was also during this period that the club celebrated its 125th anniversary and the commemorative jerseys were the most popular selling shirts in the club’s history.

LFC also had significant digital growth and became one of the fastest-growing football clubs on social media, including the Instagram platform gaining three million followers at a 71 per cent annual growth rate. Facebook and Twitter continued to grow and saw 27million fan interactions on Twitter during the reporting period. Overall, the club’s social media platforms had a 14 per cent growth rate taking the total to more than 60million followers across digital channels. In May 2018, LFC had the highest viewing figures on YouTube ever for a Premier League club and third of any sports club globally.

Matchday revenue increased by £7m with continued success of Anfield’s Main Stand and a result of the increased hospitality sales from the additional Champions League games last season.

Media revenue increased by £66m in the second year of a three-season Premier League broadcast deal.

Hughes added: “We’re making solid progress right across the club. Costs in football continue to rise year on year and it’s important we constantly review and manage our operating costs to ensure we’re in the right shape for future success.

“With the continued support of our ownership group, performance on the pitch and maintaining our priority of reinvesting back into the squad, we remain focused towards fulfilling all our football ambitions.”

[Ray K]

[Uncle Ronnie]

[Father Ted]

Finally, the ‘fastest growing club on social media’ trophy is ours!

[Preston lions]

Yeah, but that is from Liverpool and FSG's perspective. I  want to know what Catchintheye has to say about our finances and our debt position. According to him and Everton we're screwed with an ageing squad.

[Peabee]

How much did the new Main Stand cost? £114m? The fact that match day revenues have gone up from £62m to £81m p.a. (£74m in 2017, £81m in 2018) since then shows the shrewdness of FSG. That extra £19m p.a. will soon pay off the debt. From the loan repayments, it seems we’re repaying at 50% of additional matchday revenue, so even at that level of repayment the loan will be paid off in 10 years at the most.

The ARE (I trust FSG to make it work now) would give us a 60,000+ seat ground for a fraction of the cost of a new stadium while keeping the hallowed turf.

[Peabee]

Yeah, but that is from Liverpool and FSG's perspective. I  want to know what Catchintheye has to say about our finances and our debt position. According to him and Everton we're screwed with an ageing squad.

We’ve repaid another £10m on the stadium loan, but that debt still stands at just under £100m, so by the time we repay it, all our players will be too old...

[FlashGordon]

We’ve repaid another £10m on the stadium loan, but that debt still stands at just under £100m, so by the time we repay it, all our players will be too old...

Ki-Jana will still be here, Hoevering up the medals.*



*I'll grab me coat.

[red1977]

Whats with these Deloitte amateurs putting us as 7th on the wealthiest clubs in Europe list?. What a crock of shite. SteveO has already expertly reported how financially fucked we are.!!.

Goes to show that some bitters will just convince them selves were fucked based on the biggest load of bollocks.

[Lush is the best medicine...]

Wage to turnover is 57%, think it was around 70% not that long ago so plenty of room for manoeuvring, mostly to help fight the impending meltdown

[LFCEmpire]

Fantastic news, definitely a building block for the future. We are in a good moment ala Klopp. 

[JackWard33]

Yowzers that wage bill has grown a huge amount in the last 4/5 years....
The correlation between wage bill and on pitch success in football remains undiminished

[Clayton Bigsby]

FSG got a fantastic bargain. These figures are great

[Alan B'Stard]

FSG got a fantastic bargain. These figures are great

Some would say an Epic swindle!

[CraigDS]

Where are people getting the additional figures from? Can’t see the accounts on Companies House yet.

[nico 8]

Regardless of the outcome on the pitch, we are well placed going forward both on and off the pitch. It is a matter of time that success will follow on the pitch. We win the league this year and go deep into champs league (why not the double), there is no reason why we cannot catapult into the top 3 clubs in the world. Our squad is younger than the aging Barcelona, Real Madrid, Bayern Munich and Man City squads. Whilst they together with Man Utd can throw money at their problems, our model is sustainable and in Klopp we have the right manager. Man Utd may recover but should they fail to find the right manager they will bleed. These rich and oil funded clubs could end up the same way as Chelsea in time - struggling to find the right manager

[Lush is the best medicine...]

Yowzers that wage bill has grown a huge amount in the last 4/5 years....
The correlation between wage bill and on pitch success in football remains undiminished

wage to turnover is the more relevant metric to be honest

[JackWard33]

wage to turnover is the more relevant metric to be honest

for what?

[Charlie Adams fried egg]

Where's the profit money............
Seriously, it's all accounting with Coutinho counting in these figures, whereas the Van Dijk, Allison, Fabinho, Keita, Ox and to a lesser extent Mane, Salah and Firmino fees will have the effect of reducing future profits as their fees are written off. There's no doubt we could have afforded a bit of a splash anyway, but Coutinho has allowed it to go up a notch. The likes of Ings, Solanke, Clyne, Origi etc. when sold will offset the effects of the above, so getting good £ for squad players is important.

Media will probably drop off next year if we don't reach the CL final and headline profits will fall given we won't flog anyone big in this accounting period so ignore it when the brains trust on GOT predict doom next year. Matchday will also drop a bit for the same reason.

It's been a great turnaround from H&G but we are only starting to see realise our potential. Expect commercial to increase over the next 2-3 years as the new Standard Chartered deal kicks in, along with the new kit deal which is due, so it wouldn't surprise me to see commercial income to hit £200m and beyond. Given we are still flogging a fair few offsite hospitality packages my guess is that any new Anny Rd will include hospitality which can improve matchday revenue as well as reducing payback.

If that's the case I'd love to see some of the extra revenue put into offering cheaper tickets especially for kids and young adults. With a new and bigger Anny Rd we could either reserve a big block for 17-22's or get some of the old fellas in the Kop to swap.
Better atmosphere helps the team and the club.

It's been a while since we have been this well run.

[Paul1611]

How much did the new Main Stand cost? £114m? The fact that match day revenues have gone up from £62m to £81m p.a. (£74m in 2017, £81m in 2018) since then shows the shrewdness of FSG. That extra £19m p.a. will soon pay off the debt. From the loan repayments, it seems we’re repaying at 50% of additional matchday revenue, so even at that level of repayment the loan will be paid off in 10 years at the most.

The ARE (I trust FSG to make it work now) would give us a 60,000+ seat ground for a fraction of the cost of a new stadium while keeping the hallowed turf.

I'm no expert but there would be far less opportunities for Corporate hospitality in the ARE which i believe makes up a large chunk of the increase.  I think the numbers work but would be paid off over a far longer period, but with such bouyant results in sure FSG will do it. 
Remember the new training ground to be factored in as well

[alonsoisared]

I have no idea how to read accounts and this all sounds overwhelmingly positive, however i'm also seeing comments from supporters of other clubs about our debt. Genuine question from a complete dummy, should there be anything to worry about with the debt or are we really in this incredibly stable financial position?

[DonkeyWan]

The profit is pretty much the Coutinho sale. Which means if he hadn't gone Liverpool could still have done all the business it did and the club would have been just fine, which is excellent. Still wish they had bought a player or two in January to freshen up the league challenge.

Worth pointing out that LFC start the new training centre soon enough and the owners might also be considering further stadium expansion (why wouldn't you when ticket sales have gone up by £7 million? The £115m new stand sees a  6% return and that's before you even consider the value of 8,000 extra visitors on shop sales etc.).

Spare a thought too for the city rivals with their £200m 'equity' loan from Moshiri, paying an extra £4 million a  year just to have a site for as new stadium they can't afford.

[Lush is the best medicine...]

for what?

to whether the wage number is, relatively speaking, crazy

[FlashGordon]

Wage to turnover is 57%, think it was around 70% not that long ago so plenty of room for manoeuvring, mostly to help fight the impending meltdown

That will have taken quite a hit this summer though? Hopefully the likes of Origi, Sturridge, Moreno and possibly Lallana will be shifting some of the bigger wages off the wage bill this summer.

[JackWard33]

to whether the wage number is, relatively speaking, crazy

oh sure didn't mean it was crazy - just that its the main reason we've gone from non CL to competing for the title ... obviously in concert with great decision making but you can't really do it without a top tier wage bill (regardless of the Levy wizardry which is very much an outlier)
Ours has nearly doubled in 5 years - pretty remarkable

[CraigDS]

oh sure didn't mean it was crazy - just that its the main reason we've gone from non CL to competing for the title ... obviously in concert with great decision making but you can't really do it without a top tier wage bill (regardless of the Levy wizardry which is very much an outlier)
Ours has nearly doubled in 5 years - pretty remarkable

It still pales compared to that of United and City, and possibly Chelsea too (haven’t checked for a while).

[DonkeyWan]

I have no idea how to read accounts and this all sounds overwhelmingly positive, however i'm also seeing comments from supporters of other clubs about our debt. Genuine question from a complete dummy, should there be anything to worry about with the debt or are we really in this incredibly stable financial position?

There is significant debt at the club, but most clubs have debt on their books, since they can't just operate from a cash basis on a year by year case (so they will invest in stadiums or playing staff overtime, not just year by year revenue). It very much depends on the debt. So Liverpool have debts associated with the take over, but the owners will realise those if they ever sell the club. It's worth pointing out here that the outrage with the Man U owners wasn't the leveraged buy-out itself, rather they used profits from Man u to shore up other businesses in their empire. Fenway have always kept the various sporting franchises separate. Also, United fans piss and moan about their owners, but they did an incredible job commercially.

Other debts are legacy debts from the H&G period I think, but are much less significant than before. The net debt was about £170m last year, but most of that debt was associated with the new stand build, which cost around £115m. The Coutinho sale alone would have wiped out the vast bulk of that debt if it was needed, but the owners chose instead to invest the money back into the squad. Those are the day to day operational decisions to owners made,  realising the debt was just part of doing business, adding value to the club (as all borrowings should). If you want to look at more serious debt, look at Everton.

There their new owner has been forced to pay significant lump sums to cover operating costs because their existing debts were spiralling. It was a sensible decision, but the Everton accounts recorded that decision as equity (while every other club calls it debt) since there was no pay back date. They are also paying dead money as a holder on the site for their new stadium; the longer the delay to the stadium the greater the cost of that decision. They have also poured money into their squad (comparatively more than Liverpool since their revenue is about 35-40% of LFCs turnover) but the only outcome has been a slide down the table, managerial change and a loss of European football which would have been another boon to their finances. So even though they are using borrowings to try and grow the club, they have instead wasted it.

Are Liverpool in danger of going bust? No more than any other club. But of course mostly that is due to Klopp being good at spotting players and making LFC competitive again. If he left and another Hodgson came in then the problem of debt could become a thorny issue, but that's true for any club I guess.

[Charlie Adams fried egg]

I have no idea how to read accounts and this all sounds overwhelmingly positive, however i'm also seeing comments from supporters of other clubs about our debt. Genuine question from a complete dummy, should there be anything to worry about with the debt or are we really in this incredibly stable financial position?

Do they have a clue about reading accounts?
As DW says, a lot also depends on the type of debt. If I remember there was about 40m left over from H&G. Much of our "debt" is in the form of capital expenditure on the stadium, new shop and Kirkby. Buying players and paying wages is largely out of cash generated. As he says, compare that to others starting with the Everton.

[Floydy]

Well done FSG , never thought i wold hear myself saying that. The progress made on and off the pitch in 9 years is truly astonishing.

[Lush is the best medicine...]

That will have taken quite a hit this summer though? Hopefully the likes of Origi, Sturridge, Moreno and possibly Lallana will be shifting some of the bigger wages off the wage bill this summer.

Fully expect it to go up again but there’s a few big renewals up soon (kit being the biggie), new sponsors and hopefully more PL prize money this year, and going off how they do the training kit now more merch sales as well

[JSteve]

It still pales compared to that of United and City, and possibly Chelsea too (haven’t checked for a while).

This was posted by Swiss Ramble when analyzing Arsenal's financials. Ours is larger than Chelsea if its the reported 263 million. The City wage bill is structured differently, so I am sure that's actually much higher than shown.

[Dave D]

They need to stop selling themselves short. We've just set a world record for profits. Never before seen in world football. In your face Leicester.

https://www.theguardian.com/football/2019/feb/08/liverpool-world-record-profit-2017-18

Liverpool report world-record £125m profit for 2017-18 financial year

https://www.bbc.com/sport/football/47168032

Liverpool announce world record £106m net profit

[ABZ Rover]

But were fucked, GOT said so.......

[TheTeflonJohn]

Worrying times, it`s a shame really.

[Son of Spion]

 

[So… Howard Philips]

But were fucked, GOT said so.......

You have to take into account that Evertononomics are influenced by Sir Philip Green and the costs associated with banking in the British Virgin Islands.

[Triad]

Tbf,the whole profit is from the sale of 1 player.we will most probably be in loss like every other football club next year.

Crazy how just a single person can affect this big club.

[Son of Spion]

Tbf,the whole profit is from the sale of 1 player.we will most probably be in loss like every other football club next year.

Crazy how just a single person can affect this big club.

Without the Coutinho sale we'd have gone bust. 

[JackWard33]

This was posted by Swiss Ramble when analyzing Arsenal's financials. Ours is larger than Chelsea if its the reported 263 million. The City wage bill is structured differently, so I am sure that's actually much higher than shown.

Yup - obviously City's you can take with a pinch of salt and its always hard to be totally accurate about these numbers as accounting years differ and so on but we're 'in the mix' to the point where its hard to say we're at an obvious disasdvantage

This is a new thing for us - so you can say there's a legacy of investment at City/United and maybe they'll also increase their wage bills which they have more capacity to do but 4 / 5 years ago the wage bill was the concrete reason we weren't competing on the pitch - if we can maintain these levels that doesn't exist anymore

[killer-heels]

The wage to turnover percentage is a key factor. We extended many deals recently and you wonder what hit that has had.