71% of Expenditure on Player Transfers: Decoding Liverpool F.C.’s Treasury Game Plan
£594M total revenue in 2023, 19 league titles, current ratio of 0.92, & more.
Liverpool F.C. isn't just dominating the Premier League — they're also making waves off the pitch. With a complex mix of revenue streams, earnings, spending trends, liabilities, and assets, its financial strategy is as intriguing as its performance.
Here’s an overview of its treasury performance in the last 5 years:
£594M total revenue in 2023, with a YoY dip of 0.07%
71% of CapEx allocated to acquiring new players
9.2% YoY decline in Cash Flow from Operations (CFO)
Current ratio of 0.92, outperforming rivals like Manchester Utd
Despite some financial challenges, Liverpool has room to adjust and leverage their global brand. But how strong is their financial game as they climb the Premier League table?
Can strategic asset investment and global expansion offset the decline in cash flow to secure long-term financial stability? Read the full article to find out. 🔍
Liverpool F.C.: The 3rd Biggest Club in English Football ⚽
Liverpool F.C. has won 19 league titles, 8 FA Cups, and 6 European Cups to date.
In 2023, the club earned £593.8M, a slight dip of 0.07% from the previous year. In comparison, Arsenal made £466.6M, Chelsea £512.5M, Manchester United £780M, and Manchester City £712.8M. Recent financial struggles, including over 5 years without a Premier League title, have impacted their finances.
Revenue Streams: 95% Comes from the UK 💰
Liverpool ranks 4th in the Premier League and 5th globally for revenue.
Here’s a revenue breakdown for 2023 :
Commercial revenue (45.9%) netted £272.5M in 2023, with a 5-year CAGR of 9.63%
Media income (40.7%) brought in £241.6M, with a decline of -1.9% CAGR
Matchday revenue (13.4%) added £79.8M, with a decline of -1.35% CAGR
Geographical distribution:
95% of the total revenue is accounted by the UK, 3.6% by the rest of the world, and 1.4% by the EU
Over the past 5 years, the fastest growth was noticed by the category “Rest of the world,” with a growth of 14.67% CAGR
Cash Flow from Operations: -9.2% YoY decline reported 📉
Liverpool's Cash Flow from Operations (CFO) declined by 9.2% annually, from £131M in 2019 to £89M in 2023. In 2023, Liverpool's CFO was lower than that of its competitors (see graph): Arsenal (£137M), Chelsea (£174M), and Manchester United (£115.2M).
💡 What led to the drop in Liverpool F.C.’s CFO?
Drop in Matchday Revenue (2021): COVID-19 led to a 95% reduction in matchday revenue despite gains in media and commercial streams.
Drop in Working Capital: Liverpool F.C.'s working capital fell by 70% in 2021 (£53M) compared to 2020 (£175M), impacting its CFO.
Growth in Current Liabilities: Current liabilities rose 59% in 2021 (£111M) and reached £176M in 2023, nearing 2019 levels (£181M).
Expenditure: 71% Spent on Player Transfers 🏆
In 2023, Liverpool spent £172.1M on two key areas: acquisition of tangible fixed assets and player registrations, with 71% directed to player acquisitions. Year-over-year changes include:
22% increase in tangible fixed assets
-8.5% decline in player registrations
This shift indicates increased investment in physical assets and a slight reduction in player spending.
💡 Where exactly did Liverpool allocate these funds?
Stadium Expansion: The Anfield Road Stand expansion added 7,000 seats and improved facilities, and despite delays, it was completed by February 2024.
Transfer Market: Liverpool F.C. spent £94M in 2023, becoming the 5th biggest spender as they continue investing in recruits.
Short-term Liquidity: Liverpool’s Current Ratio Outperforms Man Utd by 2.5x 📊
Liverpool F.C.'s financial health is mixed. Its 2023 current ratio is 0.92, below the ideal ratio of 1.0 but better than rivals like Manchester Utd and Arsenal. In 2020, the ratio declined from 3.50, signaling a strain on short-term liquidity. While stronger than some competitors, it lags behind Chelsea (3.38) and Manchester City (1.24).
💡 Explore the latest trends in Current Assets and Current Liabilities here.
What Does the Future Hold for Liverpool F.C.’s Treasury?
Liverpool F.C. faces a mixed financial future. While its strong brand and global expansion offer growth, recent revenue dips and declining cash flow signal the need for strategic adjustments.
Balancing asset investment with player acquisitions is key to aligning financial performance with on-field success.