Thread by @SwissRamble

Now that Liverpool have been confirmed as Premier League champions under Jürgen Klopp following the previous season’s Champions League success, I thought that it might be interesting to see how #LFC finances have developed since the big German’s arrival in October 2015.

In the season before Klopp arrived (2014/15) #LFC generated £59m pre-tax profit on £298m revenue with a £166m wage bill. 2018/19 profit was around the same level at £42m, as £235m (79%) revenue growth to £533m has been offset by £243m (83%) higher expenses, including £310m wages.

All three #LFC revenue streams have grown since 2015, especially broadcasting, up £138m (113%) from £123m to £261m, followed by commercial, up £72m (62%) from £116m to £188m, and match day, up £25m (43%) from £59m to £84m. Profit on player sales fell £9m from £54m to £45m.

However, #LFC expenses have grown at the same rate with wages up £144m (87%) from £166m to £310m, player amortisation increasing £53m (89%) from £59m to £112m and other expenses rising £41m (69%) from £59m to £100m. Deprecation has tripled from £3m to £9m.

After posting a £20m loss in Klopp’s first season in 2016, #LFC have now been profitable three years in a row. Although 2019 £42m profit before tax was much lower than the previous year’s £125m, it was still second highest in the Premier League, only surpassed by #THFC £87m.

In fact, #LFC have delivered £187m profit in the 4 years under Klopp, which is again only second to #THFC £323m, but a fair way ahead of the rest of the Big 6, especially #AFC £85m, #MCFC £40m and #CFC, who lost £88m in this period.

#LFC have become a very good selling club under Klopp, making significant money from player sales, which is a key element of their business model. The £124m profit in 2018 (largely Coutinho to Barcelona) is exceptional, but they have averaged around £40m in the other 3 years.

In fact, #LFC have made almost exactly a quarter of a billion pounds from player sales in the last 4 years, which is only beaten by #CFC £292m, but is miles ahead of #THFC £151m, #AFC £141m, #MCFC £133m and especially #MUFC £45m.

#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 £73m in 2015 to £124m in 2019, the highest in Liverpool’s history.

However, #LFC £124m EBITDA was still a fair way behind #MUFC £186m and #THFC £168m, both of whom have had higher growth than the Reds since 2015. That said, Liverpool are above #MCFC £118m well ahead of #AFC £78m and #CFC £43m.

Including non-cash expenses like player amortisation and depreciation, #LFC have delivered small operating profits (except for the blip in 2016, partly due to Rodgers’ severance payment and player impairment).

Although #LFC operating profit has dropped since 2015, the £9m fall was nowhere near as much as the significant decreases at #AFC £25m, #MCFC £26m and especially #CFC £98m. In 2019 #LFC broke-even, but three of the Big 6 reported large losses, including #CFC £(163)m.

#LFC revenue has grown by £235m (79%) from £298m to £533m in Klopp’s time. This is the second highest growth in the Big 6 since 2015, only beaten by #THFC £264m (from a far smaller base), but just ahead of #MUFC and a lot more than #MCFC £183m, #CFC £132m and #AFC £65m.

As a result, #LFC £533m revenue is now 3rd highest in England, within touching distance of #MCFC £535m. Still a long way behind #MUFC £627m, but pre-COVID there was a real chance of overtaking them, as United forecast £560-580m for 19/20 after only qualifying for Europa League.

Under Klopp #LFC have risen 2 places from 9th to 7th in the Deloitte Money League, which ranks clubs globally by revenue, narrowing the gap to 5th place from £63m to just £27m (PSG with £560m). However, still miles behind the Spanish giants, Barcelona £741m and Real Madrid £667m.

Broadcasting is the revenue stream that has seen the biggest growth at #LFC, more than doubling from £123m in 2015 to £261m in 2019, partly due to success on the pitch (Champions League winners and finalists), partly due to new TV deals (Premier League 2017 and UEFA 2019).

As a result, #LFC £261m broadcasting income was the highest in England in 2019, ahead of the other Champions League representatives: #MCFC £253m, #THFC £244m and #MUFC £241m. In fact, this was the highest in the world, just above Barcelona.

Like all other Premier League clubs, #LFC were boosted by the new 3-year TV deal in 2017, which helped increase their distribution by £60m (64%) from £92m in 2015 to £152m in 2019. Actually received more than 2019 champions #MCFC, as were shown live 3 more times.

Due to the equitable nature of the Premier League TV money distribution, #LFC £60m growth since 2015 is not much more than the rest of the Big 6. Pre-COVID, would have seen further growth in 2020, as the overseas rights increase in the new deal is split by league position.

#LFC success in Europe under Klopp has also made a significant difference to their revenue, almost tripling from £26m in 2015 (when they dropped down to Europa League after the Champions League group stage) to £98m in 2019 (when they won the CL for the 6th time).

#LFC £98m was obviously the highest European TV money earned by an English club in 2019, but their £230m is also the second most over the last 4 years (only behind #MCFC £264m), despite not qualifying for Europe in 2017.

#LFC match day income has risen £25m (43%) from £59m to £84m, since 2015, largely due to main stand expansion and more Champions League games. This growth was only outpaced by #THFC £40m, due to Spurs playing games at Wembley and their new stadium.

Despite the steep growth, #LFC £84m match day income is still a fair way behind #MUFC £111m and #AFC £96m. The gap will narrow after an additional 7,000 seats are added at the Anfield Road End, though COVID has delayed this development by 12 months.

In the last 4 years #LFC commercial income has grown by an impressive £72m (62%), but this is only around the same as #MUFC, #THFC and #CFC. New sponsorship deals and record retail sales have driven the growth, along with contractual bonuses for winning the Champions League.

As a result, #LFC £188m commercial income is third highest in the Premier League, but a long way behind #MUFC £275m and #MCFC £227m. The hope is that the new Nike deal with a base £30m plus 20% royalty on net merchandising will be worth £70m (though COVID will have an impact).

#LFC wage bill has shot up £144m (87%) since 2015 from £166m to £310m, the highest increase in England, partly due to recruiting better quality players, partly due to high bonus payments for winning the Champions League (“paying the price of success”).

This growth was the highest in the Big 6, which meant that in 2019 #LFC £310m was the 3rd highest wage bill in England, only behind #MUFC £332m and #MCFC £315m, up from 5th highest before Klopp’s arrival.

However, #LFC wages to turnover ratio has only slightly increased (worsened) from 56% to 58% in the last 4 years. This is pretty much in line with the average of the Big 6, though #CFC 64% is a fair bit higher, while #MUFC 53% and #THFC 39% are much lower.

#LFC player amortisation, the annual charge to expense transfer fees over a player’s contract, is up by £51m (83%) from £61m to £112m since 2015. On the one hand, this reflects investment in the team, on the other it’s still a lot lower than #CFC £168m, #MCFC £127m & #MUFC £126m.

#LFC net transfer spend has nearly tripled under Klopp by £105m from £58m to £163m, mainly due to an £88m increase in gross spend from £135m to £223m, but also because sales fell by £17m from £77m to £60m.

During Klopp’s tenure, #LFC £278m net transfer spend was only around half as much as #MCFC £594m and #MUFC £542m and around £130m less than #CFC £414m. From a gross spend perspective, they were around £200m below #CFC and #MCFC, so Liverpool haven’t spent their way to success.

Nor have #LFC exploits been driven by taking on significant extra debt, as gross debt only grew by £30m since 2015, while net debt actually fell £4m to £91m. In the same period, gross debt increased by £626m at #THFC (new stadium), £286m at #CFC (squad) and £100m at #MUFC (FX).

In fact, #LFC £129m gross debt is substantially less than the rest of the Big 6 with the exception of #MCFC, as #CFC owe £1.4 bln to Roman Abramovich, while #THFC and #AFC have £658m and £209m stadium loans respectively. #MUFC still owe £511m for Glazers leveraged buy-out.

On the other hand, other clubs have built up bigger cash balances in the last 4 years, as #LFC only had £38m in 2019, much lower than #MUFC £308m, #AFC £167m, #MCFC £130m and #THFC £123m. Only #CFC had a similarly small cash balance, but they are funded by the bank of Abramovich.

While they have been improving on the pitch, #LFC have not neglected their infrastructure, as they have still invested £148m in Anfield (stand expansion) and the training ground, second only to #THFC £1.2 bln capital expenditure on their new stadium.

#LFC owners have put in a net £30m financing in the last 4 years (mainly to help finance the main stand expansion at Anfield), which is dwarfed by the £393m owner funding at #CFC. On the other hand, they have not taken out £89m in dividends, as the Glazers have at #MUFC.

One benefit of #LFC low debt is they have only paid £9m interest in the last 4 years, which is significantly less than most of their rivals: #MUFC £71m, #THFC £54m and #AFC £48m.

In summary, Klopp has led #LFC to success on the pitch, driving significant revenue growth, despite the club operating a sustainable model with little owner investment. The club has increased its wages and transfer expenditure, but has still spent less than its main rivals.