Liverpool financials for the 2018-19 campaigns have been released and as in previous years, Deloitte has put together a wonderful report to show where teams stand compared to each other.
Liverpool is doing well financially, having revenue exceeding €600M, putting them in 7th spot, mixed into a pack with Bayern, PSG and Man City, but well behind the big 3 of Barcelona, Real Madrid and Man U.
Liverpool’s increase in revenue of 18% is strong and well ahead of teams in front of them like Real Madrid and Man U, however it is behind the 22% increase of Barcelona who is leading the pack, and Tottenham who is right behind LFC in spot number 8.
Fortunately Deloitte offers a more detailed breakdown of the numbers and breaks them into the three main categories to help understand how Liverpool are performing in general and against other top teams.
The Good – Commercial
So good news first, Liverpool had an impressive growth in commercial revenue which is the best of the three revenue types to see growth in. While overall Liverpool are well behind the teams in front of them in terms of commercial revenue, it is important to realize how important this revenue stream is, and as such why impressive growth in this area is important. Commercial revenue is the highest growth potential because it is not bound by the number of seats in the stadium or by the broadcast sales numbers which are controlled by the league. The commercial revenue can grow (or fall) based on how the team does and how well the team is marketed.
Liverpool showed higher growth than the 6 teams above them in the rankings, posting a growth of 23% over prior year. PSG and Barcelona were in second and third in growth with 19% and 16% but the rest of the teams saw no growth. However a bit of a negative for LFC is the fact that Tottenham in 8th position in revenue and Juventus in 10th grew at 30% so they are closing the gap on Liverpool.
This high growth in the commercial category is clearly a function of Liverpool working had to market the successful team team that is on the pitch and work to improve the Liverpool brand. And the importance of the growth in the commercial category is clearly something Liverpool is working to further improve on by signing a deal with Nike that has a focus on future growth over current revenue.
Going forward it will be important for Liverpool to keep working on building the commercial revenue with not only the Nike products but also building the brand through their Inside Anfield films and their hilarious YouTube clips.
The Bad – Broadcast
Liverpool Broadcast revenue grew an absurd 19% from year to year. Part of the revenue growth is from having so man EPL games on TV and also from the improved Champions League broadcast revenue share for teams. In fact Liverpool had the highest broadcast revenue of any team in the world! All of that sounds great making it hard to believe that this would be a bad, however in the larger picture it does not look as good as it seems.
Firstly all the top 8 teams grew in revenue, with only Real Madrid growing less that Liverpool. Everyone else matched or exceeded the 19% growth in matchday revenue, primarily because the increase in Champions League revenue split. And while Real was lower than us, Barcelona almost had almost double growth compared to Liverpool, so while the 19% is a strong number, it loses its shine when comparing to other top teams.
Additionally, this is probably near the maximum that Liverpool can hope to earn through broadcast revenue. The broadcast revenue in the EPL is limited by the current TV deals and with Liverpool already having virtually all their games broadcast, will not get much more additional money in 2019-20. Also, a large portion of the broadcast revenue also comes from Champions League where Liverpool won the final and so there cannot be any additional growth expected there.
The Ugly- Matchday
Matchday revenue is definitely an area of concern as the growth from the prior year was only 3%. While it is difficult to grow this revenue in general, some teams managed to have hefty increases including Barcelona, PSG, Tottenham and Juventus who grew at double digits.
With Anfield selling out consistently, the only increase possible in this area would be significantly increasing prices which could potentially turn off fans, or adding new seats. Clearly the only option is to add seats which is why Liverpool are looking at doing just that.
In fact the opening of the Main Stand expansion was the only significant increase quite a while and so the hope would be that another expansion of the stand would have a similar effect. Overall Liverpool are well behind Real Madrid and Barcelona and while the expansion won’t completely cover that difference, it will at least help a bit.
Overall
The financial report is neither good news nor bad news from a financial comparison to prior year. Liverpool remain in 7th spot, closing a bit on Manchester City but also having Tottenham in 8th get closer as well. Barcelona was head and shoulders ahead of the class with €840M which is almost a quarter of a billion more than Liverpool.
There is still significant work to be done and there should be some awareness and potentially concern that should Liverpool not advance far in Champions League there will be a drop in the broadcast revenue that could be significant, so the pressure to defend their Champions League crowd is not just about the team winning, but about the bottom line as well.
However the long term outlook for the team is primarily based on how Liverpool manage to market themselves and how much they can increase their commercial revenue. Currently they are well behind the teams in front of them in the revenue standings, however the deal with Nike and the run of fantastic play will help to market the team and hopefully gain a larger share of new fan spending in future.
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.
