As Liverpool F.C. soars to the top of the Premier League, fans are thrilled—but how strong is the club’s financial footing off the pitch? Treasury metrics hold the answer to this question.

About a third of the Premier League season has zipped by, and guess who’s sitting pretty at the top? That’s right—Liverpool F.C. With 28 points from 11 games and 9 impressive wins, the Reds are leading the pack. Hot on their heels is Manchester City, trailing with 23 points and 7 victories from the same number of matches.

There’s a buzz among fans and pundits alike[1]. People are starting to say there’s something different about this Liverpool team, thanks to the tactics and on-field magic that’s setting them apart this season.

But as we experience this brilliance, a thought crosses the mind: Does this excellence extend beyond the stadium lights and into the club’s treasury?

Let’s explore Liverpool’s earning and spending trends, how they manage liabilities and assets, and stack them up against rivals like Arsenal, Chelsea, Manchester United, and Manchester City. 

Liverpool F.C.: The 3rd Biggest Club in English Football

Liverpool F.C. boasts a rich history of success, winning 19 league titles, 8 FA Cups, and 6 European Cups, among other trophies.

They have a massive fan base both in the UK and internationally. In 2023, the club reported a total revenue of £593.8 million, a slight dip of 0.07% from the previous year.

In comparison, Arsenal reported a revenue of £466.6 million, Chelsea £512.5 million, Manchester United £780 million, and Manchester City £712.8 million. However, the club has recently experienced some heartbreaks on the field, translating into financial challenges. It’s been more than five years since the club last won the Premier League.

Revenue Streams: 95% Comes from the UK

Liverpool ranks fourth among Premier League clubs and fifth globally in terms of revenue generation—only Manchester City and Manchester United from the UK are ahead.

Liverpool’s income streams:

• Commercial revenue (45.9%) netted £272.5 million in 2023. It’s been on a steady rise, with a 5-year CAGR of 9.63%.
• Media income (40.7%) brought in £241.6 million but is dropping at a CAGR of -1.9%.
• Matchday revenue (13.4%) added £79.8 million but is decreasing at a CAGR of -1.35%.

Geographical revenue distribution:

• In 2023, the UK accounted for 95% of the total revenue, followed by the rest of the world at 3.6% and the EU at 1.4%.
• Over the past five years, the “Rest of the World” category has shown the fastest growth at 14.67%, outpacing the EU’s 6.16%.

Cash Flow from Operations: -9.2% YoY decline reported

Liverpool’s Cash Flow from Operations (CFO) has seen a declining trend. Analyzing its CAGR, we find that CFO has been decreasing by 9.2% yearly from 2019 (£131 million) to 2023 (£89 million).

Compared to its on-field competitors in 2023, Liverpool’s CFO is lower: Arsenal had £137 million, Chelsea £174 million, and Manchester United £115.2 million.

What led to the drop in Liverpool’s CFO?

1. 95% Reduction in Matchday Revenue in 2021: In 2021, Liverpool’s matchday revenue was reduced by 95% due to the COVID-19 lockdown in 2020. Mass gatherings were banned, leaving the stadium empty. Despite a healthy jump in cash from media and commercial revenue streams, the negative growth in matchday revenue left a dent.
2. 70% Drop in Working Capital: When calculating CFO, measuring the change in working capital is crucial. There was a 70% dip in Liverpool’s working capital in 2021 (£53 million) compared to 2020 levels (£175 million). This significant reduction likely affected Liverpool’s CFO.
3. Growth in Current Liabilities: In 2020, the club’s current liabilities stood at approximately £70 million. This number ballooned to around £111 million in 2021—a 59% increase. By 2023, this number rose again to about £176 million, very close to 2019 levels (£181 million).

Also read: The Manchester Derby: City’s $355M FCF against United’s $800M Debt

Expenditure: 71% Spent on Player Transfers

Liverpool’s consolidated statement of cash flow reveals two key areas of expenditure under investing activities: “Acquisition of Tangible Fixed Assets” and “Acquisition of Player Registrations”.

In 2023, Liverpool allocated £172.1 million to these two categories. Notably, 71% of this sum went towards the acquisition of player registrations. 

Year-over-year changes show:

• A 22% increase in the acquisition of tangible fixed assets.
• An -8.5% decline in the acquisition of player registrations.

This shift suggests Liverpool is ramping up investment in physical assets—stadiums, training centers, and club facilities—while slightly reducing player transfer spending.

Allocation of Funds

1. Stadium Expansion: The Anfield Road Stand expansion, completed in the 2023/24 season, added 7,000 seats to Anfield’s capacity. Despite setbacks, including a change in contractors, the project was finished by February 2024. The upgrade not only increased seating but also enhanced the overall fan experience with improved facilities and modern technology.[2]
2. Transfer Market: Liverpool’s transfer window expenditure has been climbing steadily, with £94 million spent in 2023 alone. Over recent years, they’ve invested heavily in new recruits to strengthen their on-field position. In 2023 they were the 5th biggest spender.[3]

Also read: Financial Impact of Super Bowl Ads: $7 million for 30 seconds

Short-term Liquidity: Liverpool’s Current Ratio Outperforms Man Utd by 2.5x

Liverpool F.C.’s financial health presents a mixed picture, reflecting both resilience and areas of concern. 

The club’s current ratio of 0.92 in 2023, while outperforming rivals like Manchester United and Arsenal, still falls short of the ideal 1.0 mark.

This suggests a slight strain on short-term liquidity. What’s particularly intriguing is the fluctuation in Liverpool’s current ratio over the past five years. From a robust 3.50 in 2020, it has steadily declined to its current level.

While Liverpool maintains a stronger position than some competitors, it lags behind Chelsea’s 3.38 and Manchester City’s 1.24. 

Let’s dive deeper into the trends for Current Assets and Current Liabilities, as changes in these two quantities directly impact the Current Ratio:

In Pound sterling, millions	2023	2022	2021	2020	2019	CAGR
Current Assets	161,315	172,057	163,732	244,475	183,168	-3.13%
Growth Rate	-6.24%	5.08%	-33.03%	33.47%	–	–
Net Current Liabilities	-176,255	-154,970	-111,259	-69,878	-181,055	-0.67%
Growth Rate	13.73%	39.29%	59.22%	-61.41%	–	–
Current Ratio	0.92	1.11	1.47	3.5	1.01	–

1. 3.13% YoY decline reported in Current Assets: The most significant drop in Liverpool’s current assets occurred in 2021—a 33% decrease from 2020 levels. After this drop, the current assets have been fluctuating.
2. 0.67% YoY decline reported in Current Liabilities: Liverpool’s current liabilities have been decreasing YoY, but at a lower rate. The only major decline was reported in 2020. Since then, current liabilities have been steadily increasing.

Also read: 61% TV Rights, 20% Reserves: The Magic Behind Olympics’ $5.3B Fund?

Final Thoughts: What Does the Future Hold for Liverpool F.C.’s Treasury?

Liverpool F.C.’s financial future is complex, with both opportunities and challenges.

As the third-biggest club in English football, it has a solid foundation, but recent trends suggest a need for strategic adjustments.

While total revenue has slightly dipped and Cash Flow from Operations shows a concerning decline, strong commercial revenue, and increasing global presence offer the potential for expansion. The club’s shift towards investing in tangible assets could yield long-term benefits, but balancing this with player acquisition spending is crucial.

In short, the club faces a pivotal period requiring astute financial management to leverage its strong brand, expand globally, and carefully manage assets and liabilities. This strategic approach is essential to align financial performance with on-field success.

Source links:

1. Gov.uk (filing history): The Liverpool F.C. & Athletic Grounds Limited (link)
2. The Athletic FC: How did Liverpool get so good so quickly? (link)
3. Anfield Index: Anfield Expansion Update (link)
4. Football 365: Premier League five-year net spend table (link)