Thread by @SwissRamble

Some Liverpool fans are understandably unhappy with their team’s performances this season, identifying a lack of investment as one of the factors, particularly compared to Manchester City. This short thread will look at whether this is indeed the case #LFC #MCFC

Most supporters focus on how much a club spends in the transfer market, so let’s start by looking at this. Unfortunately, the most recent accounts are only for the 2020/21 season, so we shall use Transfermarkt for transfer details in the last 2 years (2021/22 and 2022/23).

#LFC have a net spend of £60m in the last 2 years, as gross spend of £164m has been partly offset by £104m sales. The largest purchases were Darwin Nunez £72m, Luis Diaz £42m and Ibrahim Konaté £36m, while they did not have any major sales, the highest being Sadio Mané £29m.

#MCFC actually had £4m net sales in the last 2 years, as high player purchases of £266m were compensated by £270m sales. Largest purchases were Jack Grealish £106m, Erling Haaland £54m and Kalvin Phillips £44m. They made many sales, including Sterling, Torres, Jesus & Zinchenko.

#LFC gross and net transfer spend have been steadily falling since 2019, from £223m and £163m respectively, which is partly due to the adverse impact of the COVID pandemic. Zero net spend in 2020 is quite striking, though did not prevent them winning the Premier League that year.

Interestingly, #MCFC net spend has also been declining from the £250m peak in 2018 with the club actually making £54m net sales in 2022/23. Gross spend has held up pretty well, though the club has generated more from player sales, including good money from academy products.

#LFC had higher net transfer spend than #MCFC this season and for the last 2 years, 3 years and even 5 years, which might come as a surprise to some. However, City were building from a stronger base, spending much more than Liverpool over a longer 10-year period: £941m vs. £564m.

It’s a different story for gross spend with #MCFC consistently outspending #LFC. For example, in the last 3 years City’s £460m is 53% more than Liverpool’s £300m. Over the last 10 years it’s also around 50% more: £1.6bln compared to £1.1bln.

Another driver for a club’s success, arguably more important than transfer spend, is wages, where #LFC are much closer to #MCFC. For example, their £950m total wages in the 3 years up to 2021 were only 7% lower than City’s £1.0bln, though the difference was 11% in 2021 itself.

What we really need to is to look at the overall cost of a squad by combining transfer fees and wages. One way of doing this is to add together wages and player amortisation, which is the way that football clubs account for transfer fees.

On the basis of wages and player amortisation, the difference is larger than wages alone, but it is still not huge, e.g. in the 3 years up to 2021 #LFC £1.3bln was only 11% less than #MCFC £1.4bln.

However, the difference has been growing, so #LFC £422m in 2020/22 (wages £314m & player amortisation £108m) was 16% less than #MCFC £500m (£355m & £146m). We will have to wait for the 2021/22 and 2022/23 accounts to see whether this trend has continued since then.

One area where #LFC are unequivocally behind #MCFC is owner funding (share capital + owner loans). Liverpool actually partly repaid loans in last 5 years, but the real difference came much earlier with City’s £684m in last 10 years being significantly more than Liverpool’s £110m.

As always, when comparing finances of football clubs it is best to look at more than one metric, then consider the impact over different time periods. This thread has shown that people can use a single statistic to “prove their point”, but the full story is often more nuanced.