Liverpool are facing losses of ‘up to £200 million’ due to the widespread impact of the coronavirus, justifying their caution in the transfer market.
With the pandemic having caused football to come to a standstill on March 13, Premier League clubs and those of all levels are facing financial strains on an unprecedented level.
And while the action is set to resume on June 17, 96 days after the topflight postponed all fixtures indefinitely, it will not return in the same state as they left it.
Fans will, of course, be unable to attend and social distancing protocols will be in place, not to mention the broadcasting of each of the 92 fixtures remaining – which is still set to see all 20 clubs pay a rebate of up to £330 million to Sky and other broadcasters due to contractual obligations not being fulfilled due to the suspension.
That in conjunction with a loss of matchday revenue and other budgeted income could see Liverpool record a loss of anywhere between £70m and £200m in the next financial year.
The Mirror‘s David Maddock spoke of the financial predicament facing the Reds and other clubs in an interview with The Redmen TV, following their withdrawal from the pursuit of Timo Werner.
“They’re looking at a loss of anywhere between £70 million and quite possible £200 million in the next year, the current financial year – as will all the top clubs,” Maddock explained.
“I’ve had some stick and I’ve seen so much on Twitter from Liverpool fans saying ‘get rid of the board’, ‘get rid of FSG, they have no ambition’.
“The reality is all clubs are going to be, with one or two exceptions, facing a huge loss because of this coronavirus crisis.
“A loss of revenue will equal a big loss for nearly all clubs. If you look at Premier League finances, even Liverpool who recorded a record profit, if you like, that was only on the balance sheet at the end after accounting was about £20 million – so basically breakeven.
“Nearly all Premier League clubs only breakeven. And when I say losses there will be losses because they’ve already budgeted for this season’s income but, of course, this season’s income is now hit.
“They’ve had to give TV money back, quite a significant amount and the bigger clubs are hit more because they were going to get a larger share.
“And obviously gate receipts but matchday income, which for Liverpool with their fairly extensive hospitality boxes etc. that runs into millions of pounds per match.
“Even if the fans come back in September when the new season starts, they will have run into losses, running into the 50, 60, 70 million on this season’s outlay which they have already budgeted for.
“So any profit they made last season is turned into a significant loss.”
It is a reflection of the uncertain financial environment that Liverpool are facing and more than justifies their unwillingness to commit £54 million, in addition to wages, on securing Werner this summer.
It left the door open for Chelsea to trigger his release clause and he now looks certain to make the move to Stamford Bridge, leaving many to question as to how Chelsea are prepared to take the plunge but Liverpool are not.
And Maddock reveals that they are in a “unique position” which comes from “bad management,” where a transfer ban and the sale of Alvaro Morata has opened the door for them to capitalise on the market.
“They did one deal last summer which was a bad deal at the time but has worked out really well for them. They sold Alvaro Morata to Atletico Madrid for £58 million, the deal was signed but the money was due this summer after a year-long loan period,” he added.
“So Chelsea, by a fluke, have got £58 million to spend because that money is coming. It will be structured and not in one lump sum but they will no doubt be paying Tim Werner’s release fee over a structured deal.
“Plus they have two really big money players out of contract this summer, Pedro and Willian and they will not renew either of those now.
“I’d say both of those would be on close to the money that they will be paying Werner and so they’re actually still going to save wages, cut budgets that way.
“They’ve seen an opportunity where, in a normal market, they’d have no chance of getting him but nobody else has come in for him.
“The release clause was considered low but now everybody is saying too high, too high and it’s right because the market is contracting.