Sometimes when we report that a club has financial problems their fans react negatively, but there are times when one has to face unpalatable truths. I have tried to maintain a positive tone about Liverpool in recent postings. I am not a Liverpool supporter, but the club is one of the giants of football that has contributed a great deal to the game.
Sometimes when we report that a club has financial problems their fans react negatively, but there are times when one has to face unpalatable truths. I have tried to maintain a positive tone about Liverpool in recent postings. I am not a Liverpool supporter, but the club is one of the giants of football that has contributed a great deal to the game.
The latest accounts for the period ending July 2009 make for worrying reading. So much so that it is being reported that the club has had to provide assurances that it can carry out its fixtures next season. The club has now made a loss of £95m over two seasons. This is against the background of buoyant turnover, £185m in the accounting period. Nevertheless, a record loss of £54.9m was reported. Next year the loss of a Champions League place will depress revenues.
Wages have gone through the £100m barrier, but they are not disproportionate given the level of turnover. What is of real concern is that interest payments amounted to over £40m and that debt now stands at £185m. What has been evident for some time is that the current American owners, despite their experience in running sport ‘franchises’ in North America, have made a real mess of things. Although the club has had the cash flow and financial backing to keep trading, one reading of these accounts would be of a business that is in danger of going into administration. I don’t think that will happen, but the extent of the financial problems should not be underplayed.
The challenge now is whether someone with sufficiently deep pockets will step in to put the club back on the right track? Or will potential purchasers regard the debt problem and the cost of building the new stadium as overwhelming? What still has to be kept in mind is that Liverpool is among the leading brands in football with a real global following. Good management could realise its full potential and bring success on the pitch.