Thread by @SwissRamble

Liverpool’s 2018/19 financial results covered a season when they won the Champions League for the 6th time and finished runners-up to #MCFC in the Premier League with 97 points, the most scored without winning the title. Some thoughts in the following thread #LFC

#LFC profit before tax fell from £125m to £42m, as profit on player sales dropped £79m to £45m, though revenue rose £78m (17%) to a record £533m. This was offset by £83m cost growth following significant investment in the squad. Profit after tax down from £106m to £33m.

All three #LFC revenue streams increased, particularly broadcasting, which rose £41m (19%) to £261m, mainly due to the Champions League triumph, and commercial, up £34m (22%) to £188m. Match day was slightly higher at £3m (4%) to £84m.

However, the price of #LFC success was high cost growth: investment in the squad saw the wage bill surge £46m (18%) to £310m and player amortisation rose £35m (45%) to £112m, while other expenses were up £3m (3%) to £100m. On the other hand, net interest payable fell £2m to £4m.

Despite the decrease, #LFC £42m profit before tax is still the highest reported to date in the Premier League in 2018/19, a fair way ahead of #MUFC £27m and #WWFC £20m. In stark contrast, #EFC and #CFC have both posted losses above £100m.

Although #LFC profit on player sales fell £79m from £124m to £45m, this was still pretty impressive. In fact, it is the third highest reported to date in the 2018/19 Premier League, only surpassed by #CFC £60m & #LCFC £58m. Mainly from Dominic Solanke, Danny Ward & Ragnar Klavan.

It is hardly surprising that there was a steep decrease in #LFC profit on player sales, as their £124m gain the previous season, driven by Philippe Coutinho’s lucrative sale to Barcelona, is actually the highest ever made by an English club.

A core part of #LFC strategy is they have become a club that sells well. In the last 5 years, they made a hefty £306m from this activity with only #CFC £332m ahead of them. They are miles above the rest of the Big Six: #AFC £170m, #THFC £161m (4 years), #MCFC £147m & #MUFC £69m.

#LFC have now made a profit 5 times in the last 6 years, including £207m in the last 3 years alone. The preceding 4 years (2010-13) saw total losses of £160m, so there has clearly been “a stable and sustained improvement in the club’s financial position over recent years.”

In fact, #LFC have been responsible for four of the top 20 profits ever reported in the Premier League, including the second highest in 2017/18 with £125m, only beaten by #THFC £139m the same season. Last year’s £42m is the 15th best ever.

#LFC recent profitability has also benefited from the absence of exceptional charges in the last 3 years. These had increased costs by £113m in the decade up to 2016, mainly (unsuccessful) stadium development expenses £61m and compensation for sacked managers £47m.

As we have seen, profit from player sales is having an increasing influence on #LFC. Between 2010 and 2014, Liverpool had £51m profit here, but this has shot up to £306m in the 5 years since then. COO Andy Hughes: “Financial results do fluctuate depending on player trading.”

That said, #LFC EBITDA (Earnings Before Interest, Tax, Depreciation & Amortisation), considered as a proxy for cash operating profit, as it excludes player sales and exceptional items, has risen from £35m in 2016 to £124m in 2019, the highest in Liverpool’s history.

Following this growth, #LFC EBITDA of £124m is the second highest in the Premier League in 2018/19, only below #MUFC £186m, but just above #MCFC £118m. In contrast, local rivals #EFC EBITDA was negative £15m.

#LFC revenue has shot up by an amazing 77% (£231m) in the last 3 seasons, mainly due to reaching the Champions League two years in a row. The growth mainly came from broadcasting, up £137m, but there were also notable increases in commercial, up £72m, and match day, up £22m.

#LFC £231m revenue growth in the last 3 years is only surpassed by #THFC £250m (from a much smaller base). The rest of the Big Six has grown at a far slower pace: #MCFC £143m, #CFC £118m, #MUFC £112m and #AFC £44m.

#LFC £533m revenue is the third highest revenue in England, within touching distance of #MCFC £535m. Still a long way behind #MUFC £627m, but there is a genuine chance of overtaking their rivals, as United forecast £560-580m in 2019/20 after only qualifying for the Europa League.

#LFC retained 7th place in the Deloitte Money League, which ranks clubs globally by revenue, having climbed two places the season before. However, it is worth noting they are still a long way behind the Spanish giants, Barcelona £741m and Real Madrid £667m.

#LFC enjoyed the 4th highest year-on-year revenue growth of the top 20 Money League clubs with their £78m increase only beaten by Barcelona £129m (mainly due to taking merchandising in-house), PSG £81m and #THFC £80m.

#LFC broadcasting income rose £41m (19%) to £261m, the most of any club in the world from this revenue stream, just ahead of Barcelona and #MCFC. Their £98m Champions League money was boosted by a 50% increase in the new UEFA rights deal in 2018/19.

#LFC Premier League TV money up £6m to £152m, largely due to a higher merit payment (2nd vs. 4th place). Actually received more than champions #MCFC, as were shown live 3 more times. Will see further growth in 2019/20, as the overseas rights increase is split by league position.

#LFC earned £98m for winning the Champions League final, only behind Barcelona £104m. Restricted by finishing 4th in 17/18 Premier League, so they only got 10% of first half of the TV pool. Although final was played day after accounts, this was only worth €4m (€19m less €15m).

However, #LFC £98m was still the highest European TV money earned by an English club, ahead of #THFC £90m, #MUFC £82m and #MCFC £82m. The difference with the Europa League is marked, as #CFC and #AFC only earned £41m and £34m respectively, despite both clubs reaching the final.

In 2018/19 UEFA introduced a new payment element called the coefficient ranking, based on performances in Europe over 10 years. #MUFC €31m actually earned more than #LFC €23m here, largely based on former glories.

Jürgen Klopp beautifully described the Champions League as a “money-throwing competition”, which has earned #LFC €192m in the last 2 years. This has meant the Reds have received €264m in the last 5 years, only behind #MCFC €337m, despite missing out on Europe one season.

#LFC match day income rose £3m (4%) to £84m, despite staging 2 fewer home games, due to higher pre-season revenue. Has grown from £62m since main stand expansion. This is 3rd highest in the PL, only behind #MUFC and #AFC, and is nearly twice the £43m when FSG bought the club.

#LFC average attendance of around 53,000 is the 6th highest in the Premier League. Club has announced plans to expand Anfield Road End to add 7,000 seats at an estimated cost of £60m in time for 2022/23. Ticket prices have been frozen for four consecutive seasons.

#LFC commercial revenue rose 22% (£34m) to £188m, due to record retail sales plus Champions League bonuses. This is 3rd highest in England, having overtaken #CFC £18Om, though still behind #MUFC £275m and #MCFC £227m. However, well ahead of #THFC £134m and #AFC £111m.

In the last 3 years, #LFC commercial income has grown by an impressive £72m, just behind #THFC £75m, but better then the rest of the Big Six, especially #MUFC and #AFC, who have only grown by £7m and £4m respectively in this period. Will further grow over next 2 years.

In 19/20 new #LFC training kit deal with AXA is reportedly twice £8m BetVictor deal. The following year Nike replace New Balance £45m with a base £30m plus 20% royalty on net merchandising (usually 7.5%) worth estimated £70m. Standard Chartered shirt sponsorship extended at £40m.

#LFC wage bill climbed £46m (18%) from £264m to £310m, though basically in line with revenue growth, so wages to turnover ratio unchanged at 58%. Included sizeable Champions League bonuses, while 11 player contracts were extended.

#LFC have had the second highest wages growth of the Big Six in the last 3 years with their £102m only outpaced by #MCFC £118m. Their increase is three times as much as #AFC £36m, which helps explain the divergent fortunes on the pitch recently.

So #LFC £310m wage bill is now the 3rd highest in England, only behind #MUFC £332m and #MCFC £315m, though some will argue that the latter figure is under-stated, due to Coty’s innovative corporate structure (i.e. the use of City Football Group Ltd).

#LFC wages to turnover ratio has improved from 69% in 2011 to a healthy 58%, which is much the same as #MCFC 59% and #AFC 59%. It’s a fair bit higher than #MUFC 53% and #THFC 39% (2017/18 metric), but lower than #CFC 64%.

Remuneration for #LFC highest paid director increased by a third from £1.329m to £1.764m, presumably for chief executive Peter Moore. That’s a lot of money, but a bargain compared to the £3.160m paid to Manchester United’s Ed Woodward.

The extent of #LFC investment in the squad is shown by player amortisation, the annual charge to expense transfer fees over the length of a player’s contract, rising £35m (45%) to £112m. This expense has tripled from £34m in 2012.

Despite the increase, #LFC player amortisation of £112m is still only the 4th highest in England, significantly less than big-spending #CFC £168m, but just a bit lower than #MCFC £127m and #MUFC £126m. Interestingly, the next highest is #EFC with £95m.

#LFC made record player purchases of £223m (including Alisson, Naby Keita, Fabinho and Xherdan Shaqiri), though only 2nd highest in the Premier League, behind #CFC £281m. However, well ahead of #MUFC £103m and #MCFC £87m. Have spent a chunky £731m in last 5 years.

On a cash basis #LFC annual net spend rose to £49m in last 5 seasons, only £16m more than 2010-14 £33m. However, gross spend doubled from £61m to £124m, offset by increase in sales from £29m to £75m. However, have spent hardly anything in 2019/20, so could be a big summer ahead.

#LFC gross debt fell £26m to £129m, as FSG stadium loan cut by £21m to £79m and bank loans down £6m to £49m. Cash rose from £10m to £38m, so net debt down from £145m to £91m. Transfer fees debt not shown in accounts, but likely reason for trade creditors rise from £148m to £174m.

#LFC £129m is 8th highest debt in Premier League, way behind #MUFC £511m, even after all the Glazers’ re-financings, while others have taken on debt for new stadiums, e.g. #THFC £466m, #BHAFC £280m and #AFC £209m. Worth noting that #EFC debt is up to £337m.

#LFC inter-company loan is interest-free, while the bank loan is 1.96%, so #LFC only paid £1.9m interest, while other clubs have had to pay more substantial sums, e.g. #MUFC £19m, #THFC £14m and #AFC £11m.

#LFC generated an impressive £131m cash from operations, allowing them to spend £59m on player purchases (net) and £23m capex (part of a £50m outlay on new Kirkby training ground), as well as paying down £20m debt and £2m interest, resulting in £27m cash inflow.

As a consequence, #LFC cash balance increased from £10m to £38m, one of the highest in the Premier League, but far below the likes of #MUFC £308m, #AFC £167m and #MCFC £130m. Board invests almost all profits back into the club.

Since FSG acquired the club, #LFC have had £680m available cash: £492m from operations, £144m from owner loans and £44m from bank loans. £396m went on players (net), £203m capital expenditure, £38m stadium loan repayment and £25m interest payments.

#LFC success on the pitch, both domestically and in the Champions League, has driven significant revenue growth and profitability, which has enabled the club to make substantial investments in player recruitment and infrastructure in a bid to create a virtuous cycle.