Finance Expert: “Liverpool in healthy position ahead of summer transfer window” | OneFootball

Liverpool’s Financial State: Expert View on Wages, Spending and Future Growth

Liverpool Football Club is a well-oiled financial machine. With every new set of accounts comes scrutiny, analysis, and, inevitably, debate. The latest figures have raised eyebrows, particularly concerning the wage bill, amortisation, and overall financial health.

I recently had the opportunity to discuss Liverpool’s latest financial accounts with Greg Cordell on Money Talks from Anfield Index, and the conversation provided fascinating insight into the club’s financial situation. Greg’s analysis, backed by hard figures, shed light on key topics that fans and analysts alike have been debating.

Photo: IMAGO

Rising Wages: Surprising Revelation

One of the biggest talking points from Liverpool’s financial accounts is the staggering wage bill, which has increased significantly. It now stands at £386 million, a figure that caught many—including Greg and myself—by surprise.

“We both speculated on what the wage bill could be last season,” I said to Greg, “but neither of us was anywhere near £386 million.”

Liverpool’s wage structure has evolved over the years. There was a time when bonuses related to Champions League participation were a major part of contracts. However, the structure appears to have shifted, with more guaranteed payments being built into deals. Greg pointed out that this is reflected in Mohamed Salah’s contract negotiations, as revealed in a Harvard Business School case study.

“Mo’s agent made a big point about how the guaranteed portion was a key negotiating element,” Greg said, explaining how fixed wages seem to have taken precedence over incentive-based pay.

What’s particularly intriguing is that several high earners, including Jordan Henderson, James Milner, Fabinho, and Roberto Firmino, left the club, yet the overall wage bill continued to rise. Factoring in their departure and the loss of Champions League bonuses, the expectation was that wages would drop. Instead, they soared.

“It’s hard to piece together,” Greg admitted. “Liverpool’s player wage structure isn’t quite as variable as it was in 2018 or 2019. There’s been a shift toward more fixed guaranteed compensation.”

Amortisation and Squad Cost Control

Amortisation is another key financial metric, particularly in relation to new UEFA squad cost control measures. Liverpool’s amortisation figure rose slightly to £114 million, but it remains significantly lower than some of their main rivals.

Greg broke down the numbers: “Manchester United are at £187 million, Arsenal at £171 million, and Chelsea well over £200 million.”

Liverpool has maintained a cautious approach to transfer spending compared to clubs that rely heavily on expensive signings. The club’s amortisation costs have remained lower, which, when combined with strong revenue streams, puts them in a good position for the upcoming financial regulations.

“I estimated Liverpool’s squad cost ratio at around 63% for this season, well below the new UEFA limit of 70%,” Greg noted.

This is crucial as UEFA’s new regulations aim to control spending, ensuring clubs don’t commit an unsustainable percentage of revenue to wages and transfer costs.

The Dynasty Equity Investment: Where Did the Money Go?

Another major talking point was the Dynasty Equity investment, announced after Liverpool’s 2022/23 accounts were signed off. At the time, there was plenty of speculation regarding how the funds were being used, with some fans suspecting they were being funnelled away from footballing operations.

Now, the accounts have provided some clarity. Greg explained:“The funds came in via an intercompany loan—£127 million from the owners—and were used to normalise external debt rather than clear the main stand loan.”

This essentially means that Liverpool used the funds to stabilise cash flow rather than making dramatic changes to their financial position. Some of the money likely went towards infrastructure projects such as the Anfield Road Stand expansion and the Melwood buyback.

“It wasn’t coincidental,” I remarked, referring to the timing of the investment announcement. “We always said we’d have to wait 18 months for the accounts to confirm where the money went.”

Now that we have more visibility, it’s clear that the funds played a key role in balancing the books rather than providing an instant boost to transfer spending.

Future Financial Projections: What’s Next for Liverpool?

Looking ahead, Liverpool’s financial outlook appears strong. With Champions League football returning next season, revenue is expected to rise above £700 million. If the club enjoys success in Europe and the Premier League, Greg believes that number could push towards £750 million.

“I’m confident revenue will be over £700 million for 2024/25,” Greg said. “With a deep Champions League run, we could see it in the mid-£700m range.”

This financial strength should give Liverpool the flexibility to invest in the squad this summer. While the club has been relatively conservative in spending, the conditions are there for a big transfer window.

As Greg put it: “By the end of the season, I expect Liverpool to be in a strong position, with reduced debt and plenty of capacity for squad investment if needed.”

That will be music to the ears of fans wondering whether the club has the funds to strengthen the squad under Arne Slot.

Final Thoughts

Liverpool’s latest financial accounts tell a fascinating story. While the club has reported a loss on paper, the underlying fundamentals remain solid. The wage bill increase was unexpected, but the club remains in a healthy position thanks to strong revenue growth and a measured approach to spending.

The next few months will be crucial as Liverpool prepares for another summer transfer window. With a positive financial outlook, Champions League revenue returning, and the potential for squad reinforcements, the club looks set to continue competing at the highest level.

As always, the financial landscape in football is ever-changing, and Liverpool’s ability to adapt will be key. But for now, the signs remain encouraging.