Ever since Fenway Sports Group took over Liverpool, there has been this goal of financially stabilizing the club and bringing the financial standing of the club to a new era of success. FSG has succeeded in achieving the first of the goal, and is right on track in beginning the second goal. The most impressive aspect of FSG’s financial renaissance of Liverpool has been that it has all been done within the means of the club. Unlike clubs such as Manchester City and Chelsea, where accusations of financial doping ( *cough* oil) have been the norm, FSG are ensuring that Liverpool gain all the financial resources necessary to win in a way that is central to the game, and economically sound.
To begin, let me give a quick primer on the situation. European football (UEFA) has become known for the enormous amount of money that circulates in and out of its leagues. With this reputation comes the reputation that there is an inundation of “financial doping” that occurs within European leagues. Teams that are not financial powerhouses simply cannot maintain top of the table success. The repercussions of this handling of money in the sport have rippled negatively through the leagues and clubs have racked up millions of pounds in debt, inflated the transfer market, and, as stated before, made it nearly impossible for clubs working within their own means to succeed within their respective leagues.
Liverpool Becoming Financially Viable in all the Right Ways
Don’t get it confused. Financial viability is not the issue. The issue is the way a club receives and operates with its money. If a club racks up millions of dollars through its own means, i.e match day sales, league placement, sponsorship deals, television compensation packages, or whatever have you, then that club deserves the benefits of its revenue. But if a club is gaining millions of dollars from external sources such as oil revenue, and is then spending the money in such a way that it is harming the league, or harming the club to the point where the exit of an owner will surely bankrupt club, then that is a different story.
UEFA has seen the dangers in the egregious spending of certain football clubs and thus instilled the Financial Fair Play system (FFP). The system was agreed upon in 2009 and was first implemented in the 2011-2012 football season. The system was created to prevent clubs from going bankrupt, to increase parity within European Football, and to prevent clubs from spending more than they earn. Currently, a club is only allowed to report losses of up to €45 million, or £37.2 million. Just recently, both Manchester City and PSG have been slammed by the system because of their unsustainable spending.
Liverpool were thought to have been slammed as well, when they reported a hefty £50 million loss over the past fiscal year. Yet Liverpool are seen by many as safe from FFP’s regulations due to FSG’s laborious work of shoveling out Liverpool from their shallow financial grave. FSG have spent millions in the past couple of years eliminating debt, and specifically the stadium debt which was collected by the previous owners of Liverpool. This type of spending , which is allocated to infrastructure, among other things, is exempt from FFP’s rules. This would virtually eliminate Liverpool’s FFP applicable losses, with a cash injection of £46.8 million being made by FSG in order to pay off the stadium debt. Hence, the stabilizing of the ship has been accomplished, but there has been so much more happening for Liverpool that is allowing Liverpool to take off as one of the most lucrative (FFP safe) clubs in Europe.
As stated before, revenue is not the issue. The issue is how this revenue is being gained, and how a club operates with it. It is important that a club operates with the money in a wise fashion (i.e. not overspending).
Sponsorship deals a big winner for Liverpool
The first way Liverpool is getting loads of revenue is by way of sponsorship. In 2012 the club signed a league leading £25 million per year deal with Warrior, which eclipsed Manchester United’s kit deal with Nike of £23.5 million. But that was just one of many. Commercial revenues rose from £63.9 million to £97.7 million in 2013, and that wasn’t counting this past season’s astronomic commercial success. This season sponsorships deals have been raining from the sky. In the 2013-2014 season new deals were signed with Standard Chartered, Garuda Indonesia, Carlsberg, Dunkin Donuts, and Subway to name a few. These deals have all contributed to Liverpool’s massive commercial success, and it’s only growing.
The Most Televised Club in the Premier League
The second major way which Liverpool have gained revenue, and specifically this past season, has been through television partnerships. This past year, Liverpool announced nine new global television partnerships which were intended to boost global revenue for the club. But what is most shocking was the television revenue that was acquired by the club at the end of this season due to its already in place television deals.
Due to Liverpool being the most televised club of the season, Liverpool won the most revenue out of any club in the Premier League this season. Liverpool earned in total a whopping £97.5 million in league revenue, which is split between league placement, television, league sponsorship, and radio revenue. They were the most televised club in the Premier League, earning £77m in television revenue, more than any of the final top four this season, and more than the previous champions, Manchester United. The league and television earnings are in fact the largest of all time for a Premier League side.
These are just a couple of examples of how FSG have been outstanding in gaining revenue for Liverpool. This isn’t even counting Champions League revenue that will spill into the club next year, and a new stadium expansion project which will largely increase match day sales in the future.
All in all, in a European football arena that is dominated by the financial elite, few clubs are able to state that they have earned and spent this money within their own means. FSG is a rare ownership that has proven that it can keep Liverpool up with the financial elite in a way that is sustainable and beneficial to the club. This is a very encouraging for the future of Liverpool Football Club.
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