Thread by @SwissRamble

Liverpool’s 2019/20 financial results covered a season when they won the Premier League, UEFA Super Cup and FIFA Club World Cup, but were eliminated in the last 16 of the Champions League. Finances adversely impacted by the pandemic. Some thoughts in the following thread #LFC

#LFC swung from £42m profit before tax to £46m loss, as impact of COVID-19 resulted in revenue falling £43m (8%) from £533m to £490m, while expenses increased £31m (6%). Profit on player sales fell £18m to £27m, but £4m gain from sale of Melwood. Loss after tax was £39m.

The main driver of the #LFC revenue reduction was broadcasting, which fell £59m (23%) from £261m to £202m, while match day dropped £13m (16%) from £84m to £71m. This was partially offset by commercial rising £29m (16%) from £188m to £217m.

Despite #LFC revenue decline, there was sizeable cost growth with wages rising £16m (5%) from £310m to £326m and other expenses increasing £23m (23%) from £100m to £123m. However, player amortisation fell £6m (5%) to £106m and net interest payable was down £1m to £3m.

Although #LFC £46m loss is obviously not great, it is actually not too bad compared to others, as all clubs have been adversely impacted by COVID with no fewer than 11 in the Premier League posting losses above £50m to date in 2019/20, including #EFC £140m and #MCFC £125m.

Clearly, #LFC figures have been significantly hit by the pandemic, which has resulted in money lost from a rebate to broadcasters and games played behind closed doors, while revenue for games played after 31st May accounting close has been deferred to 2020/21 accounts.

My rough estimate is that COVID resulted in £60m reduction to #LFC revenue, split between £25m lost (match day £11m, TV rebates £14m) and £35m broadcasting deferred to 2020/21. Without this, revenue would have been a club record £550m and the club would have made £10m profit.

#LFC also hit by profit on player sales falling £18m from £45m to £27m, mainly Danny Ings to Southampton, Ryan Kent to Rangers and Simon Mignolet to Club Brugge. That’s not bad, but a fair way below #CFC £143m, #LCFC £63m and #AFC £60m.

This is the first time #LFC have posted a loss since 2016. In fact, even with the chunky loss in 2020, their profits in last 6 years add up to around £200m. The preceding 4 years (2011-14) saw total losses of £139m, so the improvement in the club’s financial position is evident.

#LFC have also benefited from the absence of exceptional charges, which had increased costs by £113m in the decade up to 2016, mainly stadium development £61m and sacked managers £47m. Instead, 2020 included £4m profit from sale of Melwood training ground (proceeds £9.7m)

#LFC have become increasingly reliant on profit from player sales, generating an impressive £333m from this activity since 2015, compared to just £28m in the preceding 4-year period. This season will include sales of Rhian Brewster to #SUFC and Dejan Lovren to Zenit.

A core part of #LFC strategy is they have become a club that sells well. In last 6 years only #CFC have made more from player trading than the Reds with £475m. However, Liverpool £333m is miles ahead of the rest of the Big Six: #AFC £230m, #THFC £188m, #MCFC £187m and #MUFC £87m.

#LFC EBITDA (Earnings Before Interest, Tax, Depreciation & Amortisation), which strips out player sales and exceptional items, dropped from £124m to £42m, though this is still third best in the Premier League to date, only below #MUFC £132m and #THFC £106m.

At an operating level (i.e. excluding player sales and interest), #LFC slumped from £1m profit to £74m loss, though this is only mid-table in the Premier League with 5 clubs having operating losses above £100m: #MCFC £160m, #EFC £144m, #LCFC £122m, #CFC £112m and #AVFC £103m.

Despite the decrease in 2019/20, #LFC revenue has still grown by £188m (62%) in the last four years, largely due to commercial £102m and broadcasting £78m. Thanks to the TV rebate and revenue deferral, commercial is now the largest revenue stream with 44%.

In fact, #LFC £188m revenue growth since 2016 is the highest of the Big Six, just ahead of #THFC £182m. The rest of the Big Six has grown at a far slower pace: #MCFC and #CFC are only up £87m and £78m respectively, while #MUFC and #AFC have both actually fallen.

#LFC £490m revenue is the second highest in England, within touching distance of #MUFC £509m, having overtaken #MCFC £478m last season. There is then a fair gap to the following clubs: #CFC £407m, #THFC £392m, #AFC £343m and #EFC £186m.

It is also worth noting that #LFC have been more impacted by COVID-19 than many others, as their accounts close relatively early on 31st May, so more revenue has been deferred to the 2020/21 accounts than clubs whose accounts close on 30th June or 31st July.

Nevertheless, #LFC 8% revenue decrease is one of the better performances in 2019/20 with the average being 13%, though the fall in absolute terms (£43m) is towards the higher end. Note: #EFC small 1% decrease is due to once-off £30m for stadium naming rights option.

#LFC climbed 2 places to 5th in the Deloitte Money League, which ranks clubs globally by revenue. This is the first time they have been in the top five since 2002 and means they have improved 4 places in 3 years. However, still miles behind Barcelona and Real Madrid, both £627m.

#LFC broadcasting income fell £59m (23%) from £261m to £202m. Premier League significantly impacted by revenue from 9 games slipping to 2020/21 accounts and rebate to broadcasters. However, still highest in England and second highest worldwide, only surpassed by Barcelona £218m.

As the 2019/20 season was extended beyond the 30th June accounting close, #LFC Premier League TV money was less than prior year, offset by better league position, though most of the revenue decrease has been deferred into the 2020/21 accounts, so is only a timing difference.

#LFC earned £70m (€80m) after reaching Champions League last 16. This was £28m less than previous season when they won the competition, but still second highest of English clubs. In addition, received £4m for 2018/19 final (played after financial year-end), but £2m COVID rebate.

The Champions League has been an important driver of #LFC revenue growth with an impressive €272m earned in the last 3 seasons alone (in last 5 years only behind #MCFC in England). On the other hand, as Klopp said, if they fail to qualify, “it would mean a huge financial loss.”

#LFC commercial income rose £29m (16%) from £188m to £217m, due to “significant uplift in sponsorship and merchandising revenue”. Their £102m growth in last 4 years is only behind #THFC £103m (from a much smaller base). #MUFC growth has stalled at around £275m for last 5 years.

As a result, #LFC £217m is the third highest commercial revenue in England, though still a fair way behind #MUFC £279m and #MCFC £246m. However, they are now well ahead of #CFC £170m, #THFC £162m, #AFC £142m and #EFC £76m.

#LFC Standard Chartered shirt sponsorship worth £40m, while New Balance £45m kit supplier deal replaced by Nike 2020/21: lower £30m base, but 20% merchandising royalty (usually 7.5%) takes it to estimated £70m. AXA training kit reportedly £20m expanded to include training centre.

#LFC match day revenue fell £13m (16%) from £84m to £71m, as they played 2 fewer CL games plus 4 behind closed doors due to COVID. Has grown from £62m since main stand expansion and is now 4th highest in the top flight, but £24m less than #THFC £95m after move to new stadium.

#LFC average attendance of 53,143 (for games played with fans) is 6th highest in the Premier League. Club has announced plans to expand Anfield Road End to increase capacity to 61,000 at an estimated cost of £60m. Ticket prices frozen in 2019/20 for fourth consecutive season.

Despite the revenue fall, #LFC wage bill rose £16m (5%) from £310m to £326m. Highly incentivized bonus scheme for winning the Premier League, Champions League, etc. Wages have increased by £117m (56%) in the last 3 years, the highest growth of the Big Six.

Following this growth, #LFC £326m wages are now second highest in the Premier League, only below #MCFC £351m. They overtook #MUFC £284m last season and are also ahead of #CFC £283m, #AFC £225m, #THFC £181m and #EFC £165m. Should fall this season, due to lower performance bonuses.

#LFC wages to turnover ratio worsened from 58% to 66%, the club’s highest since 2016, though this was still one of the better results in the Premier League. If we adjust for the estimated COVID revenue loss, it would have been a highly respectable 59%.

Remuneration for #LFC highest paid director was cut by 26% from £1.8m to £1.3m. That’s still a lot of money, but in fairness it’s a long way below Ed Woodward at #MUFC and Daniel Levy at #THFC, who both trousered around £3m.

#LFC player amortisation, the annual charge to expense transfer fees over a player’s contract, fell £6m (5%) from £112m to £106m, which is relatively low compared to the other Big Six clubs (except #THFC), especially #MCFC £146m, #CFC £127m and #MUFC £123m.

#LFC only spent £29m on player purchases, including Takumi Minamino, Sepp van den Berg and Harvey Elliott, with zero net spend. This followed record purchases of £223m the previous season, but was miles below #MUFC, #AFC and #MCFC, who were all above £180m.

That said, #LFC have spent a lot of money in the transfer market with a £761m outlay in the last six years (net spend £337m). They did more last summer, bringing in Jota, Thiago and Tsimikas, but didn’t exactly push the boat out.

In fact, #LFC £278m net spend over the last five years is only 6th highest in the Premier League, far below #MCFC and #MUFC (both around £700m). Gross spend of £626m is in 4th place, but around £300m less than the two Manchester clubs and Chelsea.

#LFC gross debt more than doubled from £129m to £268m, mainly due to the secured bank loan increasing by £147m from £49m to £197m, while the owner’s loan (to fund stadium expansion) was reduced by £8m from £79m to £71m.

#LFC £268m debt is now 5th highest in the Premier League, though a fair way behind #THFC £831m (new stadium), #MUFC £526m (Glazers’ leveraged buy-out), #EFC £409m (Moshiri funding) and #BHAFC £306m (new stadium and training ground)

#LFC inter-company loan is interest-free, while the new bank loan is 1.21% (prior loan was at 1.96%), so #LFC only paid £2m interest. Some Premier League clubs had much higher interest payments: #MUFC £20m, #THFC £14m and #AFC £11m.

#LFC don’t separately report transfer debt, but assuming 90% of Trade Creditors, this is down from £167m to £76m, which is on the low side for Premier League, e.g. #AFC have £154m. Since then, have done a few deals with low payments upfront, e.g. Diogo Jota from #WWFC.

#LFC £70m operating loss became £94m cash flow after adding back £116m amortisation/depreciation and £48m working capital movements. Spent £90m on players (purchases £122m, sales £32m), £39m on new training centre and £8m FSG loan repayment. Funded by £147m external loans.

As a result, #LFC cash balance increased from £38m to £149m, second highest in the Premier League, mainly thanks to the new bank loan. Still a lot lower than #THFC £226m (boosted by £175m COVID government loan).

Since FSG acquired the club, #LFC have had £913m available cash: £586m from operations, £191m from bank loans and £136m from owner loans. £485m went on players (net), £233m capital expenditure, £38m stadium loan repayment and £26m interest payments.

#LFC fans will point to the relatively low financing provided by FSG, who have only put in a net £22m in the last 5 years, in stark contrast to the sums provided by the owners at their neighbours #EFC £348m and another set of American “custodians” at #AVFC £337m.

FSG have sold 10% of their company to Red Bird Capital, which should help strengthen the #LFC balance sheet, cover COVID losses (estimated at £120m) and fund Anfield expansion. This might facilitate some transfer spending, but is unlikely to go towards a massive “war chest”.

#LFC success on the pitch, both domestically and in the Champions League, has driven significant revenue growth and profitability, but they have been adversely impacted by the pandemic (like all other clubs). Champions League qualification is important to future prospects.