I have spent the last few weeks enjoying the shots that pundits and talking heads have been taking at Liverpool Football Club over the decision to not put every effort into the Carabo Cup and the FA Cup. There seems to be a lot of talk and opinion, but virtually no logic or fact based decision making being provided. Somehow in the real world we all make decisions based on numbers and facts, but for the Cups we should just go for broke because … well, you know … yeah, reasons.
That doesn’t really work for me, so I started actually thinking of good reasons to push to win the Cup:
- Adding a cup to the trophy case
- Exposure for LFC
- Historical Value of the Cups
- Monetary benefits
So let’s tackle each of these one by one (hint, it’s the monetary benefits).
Adding a cup to the trophy case
Not to be a snob or anything (I’m totally being a snob, but hey, Liverpool fans are allowed to be at this point) but winning a domestic cup doesn’t really hold a lot of appeal right now (check the trophy case above, we’re doing good, thanks). We have 7 FA Cups and 8 League Cups, is another or two changing anything, not really. And it’s not just that we’ve won a lot of them already, but we’re going for bigger and better.
The EPL Champions and the Champions League Championship. If you’re winning those, the two English Cups don’t really matter that much. If on the other hand you’re not winning the bigger titles and need something to hold up (looking at you Manchester United) then going for the domestic cups makes sense. Also if you were hired to spend gobs and gobs of money to win the Champions League and you’re not winning that or the EPL (hey Pep, how’s life treating you these days) then you need the domestic cups to keep your job (maybe). So as far as the domestic cups, our trophy case is good, we want bigger and better.
Exposure for Liverpool
Winning trophies is the best way to get your name out there and make new fans. Don’t believe me, look at Manchester United. They were winning year after year during the Alex Ferguson era and those 20 years happened to coincide with the explosion in popularity of the EPL, so they created a whole generation of fans. That explosion of EPL popularity already happened, so Liverpool can’t ride that wave any more, so the question is, what exposure are we getting for winning the Cups? I’m not seeing much, because there aren’t a lot of people walking around England trying to figure out which team to cheer for, and around the world the English Cups aren’t significant, so exposure would be limited.
Historical Value of the Cups
History has value and it can build beautiful memories and traditions, but in the modern game, what you’re winning now is more important than what you won previously. Having a great history means nothing if you can’t generate revenues and keep the club moving. Just look at Bury F.C. who sadly folded in the summer of 2019 after 125 years in operation and 2 FA Cup titles to their name. History is nice and can have value, but there has to be more. There was a time the FA Cup offered more. In the 1960’s when televised sporting events was a relatively new thing that the FA Cup final would be the only televised match in the whole calendar, so the exposure would be huge. But that simply isn’t the case any more.
Monetary Benefits
It’s all about the money. For Liverpool, with owner John Henry not being a bottomless pit of money for team operations, it’s especially always about the money. And to be blunt, there’s not a lot of money in the cups.
Let’s take the Carabo Cup first. The winner of the Carabo Cup gets £100,000. In addition to that is ticket revenue (only 45% of the ticket revenue, not all of it) which is much less than a regular EPL game as the ticket prices are significantly lower. Making the final does provide some ticket revenue which is approximately £1 million, while the TV rights revenue, while not published publicly, is not a significant amount as per sources. So all in winning the Carabo Cup is maybe £2 million for playing 6 games. That’s not great value for the team.
Looking at the FA Cup, things are better, but still, not all that rosy. The winner of the cup is taking home £3.6 million in prize money plus half of the gate that games, however again, the gate for the games is significantly lower than for a regular game, with the Shrewsbury match having seats going for £1 to youth and no ticket over £15. And if you make it to the final but don’t win, your take is £1.8 million with the semifinalists making less than £1 million in prize money. Again, for the FA you need to win 6 matches, and there might be more if like Liverpool with Shrewsbury you have any ties which need a replay. While you’re probably looking at just under £5 million if you win the FA Cup, it’s still not a financial windfall for a team like Liverpool who are making revenue over £500 million.
By contrast, focusing on the EPL can generate more money more easily. All clubs get various amounts, with many equally shared pools, however there are two amounts that vary by team: Merit Payments (based on where you finish in the standings) and Facility Fees (based on how many games are shown on TV). By finishing in first this year, we get about £2 million more than we did last year for finishing second. Additionally, by being a top table team that is exciting and entertaining to watch, Liverpool make over £1 million for each match that is televised.
So the idea that playing an extra 6 matches (at least) to win a cup whose prize money is either around £2 million or £5 million just doesn’t make sense when you can put your effort into the EPL matches (or the Champions League Matches which ooze money) and get paid far more handsomely. (As a side comparison, winning the Club World Cup was a $5M US payout for 2 matches).
So to the original question, should we be competing in the Cups and going all out to win, it doesn’t really have any compelling reason for us to do so and it makes a lot more sense to give the younger team a full run allowing them to gain experience so we can keep the EPL train rolling further down the line. Klopp and the Liverpool management have already made this analysis and it’s not about respect or pundit opinions, it’s all down to the numbers and facts telling the story that the Cups aren’t worth the first team effort.
Daniel is a professionally designated accountant who has spent 20 years in the finance and data analytics field which has skewed his view of the sporting world. Instead of seeing simply an athletic competition, he sees a financial exercise waiting to be unlocked by data analysis. He enjoys reading professional publications such as the annual deloitte football report and team financials as well as spending hours putting together and analyzing football data, which saves his readers from having to do it themselves.
