SPORTS LAW AT THE CROSSROADS

Exclusive: Liverpool look primed to post club football’s first €100m-plus profit

By David Owen

January 21 – Liverpool may be about to become the first football club in history to report an annual net profit of more than €100 million.

The Merseyside club are clear at the top of the Premier League in pursuit of their first English top-tier title since 1990. But their financial success has more to do with their transfer dealings, along with last season’s exploit of finishing runner-up in the Champions League

That European run, which saw them lose the final to Real Madrid, earned the Reds €81.3 million. Since the club did not participate in European competition in 2016-17, this should constitute pure top-line growth.

The other big positive should be Philippe Coutinho’s January 2018 transfer to Barcelona. Having spent nearly five years with the club since joining from Internazionale, one would expect the bulk of the fee for the Brazilian – assessed by Transfermarkt at £117 million – to pass direct to the bottom line.

Liverpool also bought a quartet of first-teamers comprising Virgil van Dijk, Mohamed Salah, Alex Oxlade-Chamberlain and Andrew Robertson during the course of its financial year ending 31 May 2018. But one would expect aggregate fees of something like £150 million for these new arrivals to be spread over the length of their respective contracts for accounting purposes.

One can never be quite certain until the accounts arrive at Companies House, which in Liverpool’s case tends to happen in early-March, but my back-of-envelope arithmetic goes like this.

Turnover, which reached £364 million in 2016-17, could soar to more than £450 million, thanks to that Champions League money supplemented by smaller increases in matchday revenue, domestic media payments and perhaps commercial.

However, amortisation and I would think wages – £207.5 million in 2016-17 – would be substantially higher. So operating profit, while likely to be higher than last time’s £6.9 million might not be hugely eye-catching.

Profit on player sales, though, may be enormous – conceivably more than £100 million. While there might be unforeseeable one-off charges, making allowance for interest payments and tax still leaves me with a figure for bottom-line profits in excess of £100 million.

This would surpass Leicester City’s remarkable achievement of posting a pre-tax profit of £92.5 million in 2016-17, a record year for Premier League club finances.

UEFA has actually dropped a heavy hint that the Merseysiders have indeed broken the Foxes’ record. Hidden away in its latest European club benchmarking report is the following sentence: “UEFA Champions League prize money of €82m drove Leicester City FC to the highest net profit in history in FY2017 (€98m), beating the previous record of €78m set by Tottenham Hotspur FC in FY2014 (with Liverpool FC set to break that record again in FY2018).”

It seems the days when clubs had to choose between financial and on-field success are well and truly behind us.

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