Liverpool’s Financial Woes and the Championship
Aug 25th, 2010 • No Comments • Coaches • Players • Results • Teams • UEFA Champions League
Strapped for Success:
Following their disastrous league campaign last season which saw them finish in the 7th spot on the tables, a new day of reflection has dawned at Anfield. The best way back to the top is debated by the Liverpool faithful far and wide, but in order to really understand how to move forward, Roy Hodgson and his staff have to take a good hard look at the past. There is more than enough blame to go around, from the seemingly hapless ownership, to the spendthrift managers and staff, and the players poor performance on the pitch, each have played their part. But the true culprit behind the Reds’ downfall is financial.
Tom Hicks and George Gillett have never been loved in the stands of Anfield, but as the true scope of Liverpool’s financial problems come to light, it seems the anger was justified. It has become clear that years of mismanagement, and poor planning, have put the club years behind the Top 3 and may put them out of the Premiership entirely.
Liverpool’s most recently published accounts, for the financial year of 2009, showed the Reds’ earnings swallowed up by interest repayments of £40 million, a reported loss of almost £53 million. And this figure represents a period where there were no new signings, and overall expenditures were cut back. Without new investment it is impossible for Liverpool to ever get out from this mountain of debt.
How did it go so wrong?
The issue goes back to the way in which the club has been run over the last couple of decades. Galling as it is for fans to acknowledge, the success of Manchester United on the pitch in the Premier League era has gone hand in hand with a slick commercial operation that left the men in Liverpool jerseys far behind. By a mixture of exploiting a new Asian fan base and clever management, United are far stronger financially and as a result can sustain more debt.
For almost two decades, previous Liverpool owner David Moores struggled to bankroll the heavy net transfer spending of the club. When he ran out of money, a search for new owners began. Whether or not this was the reason for choosing the Americans, Moores placed Liverpool in the hands of men who bought a club with debt.
The simple fact is “Liverpool’s is not a long-term business model,” Philip Long of accountant PKF told theTelegraph recently. “There simply is not a happy ending to leveraged buy-outs. The burden of the interest outweighs any profits the club make, and that becomes unmanageable.”
All of which begs the question: Why would anyone want to buy Liverpool?
If no buyer can be found by the October deadline, then the prospect of administration becomes a real possibility. Beyond the crushing financial penalties this would involve, the automatic 9 point deduction, and subsequent sale of players, may be enough to knock Liverpool out of the running for a top 10 finish, or even result in a nightmare, relegation.
On the Pitch
On the pitch, there has been a lack of consistent performances from the men from Anfield. While the likes of Javier Macherano and Stephen Gerrard have been rightly praised for their efforts, in the end, the game is played with 11 men, and the others just haven’t been there. Confidence was shattered last season as they lost their way under Benitez and a seventh-place finish was their lowest for 11 years. Remember, the first team was soundly beaten by Wigan last season. If the club goes into administration, no one can say how many top players will have the confidence to stay. Roy Hodgson recently said that the Reds’ are a long way behind the top 3, how much further would they find themselves in administration?
The uncomfortable truth is that in the Premiership, financial success translates to the success on the pitch. Until Liverpool is bought by someone willing to make a large investment in the franchise, the hope for a return to the glory of the past will remain faint.
Written by: Matthew Wall Sports Correspondent for soccerpro.com
Matthew gets all his soccer jerseys at soccerpro.com







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