Liverpool Football Club, LFC, is a legendary team with a trophy case that is the envy of the world and a brand that is among the best in Football. But it is not at the top, in fact last year Barcelona had almost twice the commercial revenue of the Reds. While the brand is impressive, growth is needed, both on and off the field.
Liverpool under Jurgen Klopp has been a revelation on the pitch. First the smiling German brought a stabilizing influence to the team. Then he introduced the exciting, crowd pleasing, gegenpressing style of football. Finally Klopp partnered all that with the defensive excellence of Virgil Van Dijk and Alisson to dominate in England and in Europe.
But what is happening off the pitch is what will lay the groundwork for The Reds to one day rival Barca and Mardid as the heavyweights of Football. As per Deloitte’s annual football team analysis, Liverpool made the most money of any teams in broadcast revenue, but found themselves well behind their rivals off the pitch in revenue, due to the huge disparity in commercial revenue. Rest assured, team management have noticed, and they are aiming to narrow the gap and build the brand.
Commercial Revenue Growth
As evident from the graphic above, Liverpool’s commercial numbers are a problem. They lag significantly being their rivals and their growth over the last few years has not been good. Liverpool has been showing consistent single digit commercial revenue growth for years … but then something happened.
There has been a clear course correction that has happened to rectify this situation. Last year the Reds commercial revenue grew at 23% which is more than the growth from several preceding years combined. The product on the field is helping, but there is more to the puzzle, and it’s not just about maximizing money in the short term.
Liverpool is looking to partner with the right companies, not just the ones that offer the most money. Evidence of this is the deal signed with Nike, where Liverpool are taking less money up front in exchange for other compensation that can help in the long term.
Liverpool have now signed 30 partners with more than just money as the focus. As the team’s chief commercial officer Billy Hogan stated about signing on with new partners, “If done right it all works in concert to create a halo effect, not just for the partner but for the club as well.” And that halo effect is to raise the brand of the team.
This brand building is not just in the traditional markets we associate with Football like beer and kits, but in non-traditional markets as represented by the partnership with Avon for the Liverpool Women’s team. And the groundwork that has been laid over the last few years finally came to fruition in 2018-19 with a huge growth in commercial revenue for the first time a long time, and looks poised to continue going forward.
Social Media Growth
Today the concept of social media is well known and accepted, but there was a time that was not the case, and unfortunately for Liverpool that was all too recent. As recently as 3 years ago, the team had less than a tenth the twitter followers that Barca and Real had, and a third the Instagram followers and facebook likes.
Deloitte only started to note social presence in their reports 5 years ago, for the first time adding twitter followers to the report. They have since added Instagram followers, Facebook likes, and for the first time in the current report have added YouTube followers.
Unfortunately while Liverpool lagged behind originally, the team has made progress in some areas, but is still far behind rivals in terms of followers and likes on social media platforms. This represents a problem in terms of building the brand and of course in terms of negotiating better commercial partnership deals, as teams like Barca and Real who have 4 times the Instagram followers are more likely to get move advertising money, with followers being a tangible representation of the team’s popularity.
YouTube Growth
The one bright spot on the social media map is Liverpool’s YouTube account, which has the third most followers. YouTube is a relatively new outlet for football teams as evidenced by the fact that Deloitte only started including YouTube followers for this year’s report for the first time. And while Liverpool may have been late to the game with other social media tools, they have been early and strong with YouTube.
Much of what teams post on YouTube is generic: game highlights, player interviews, standard behind the scenes footage. The more successful teams try to do more and have more appealing content, and the success is evident. Instead of standard player interviews, one player interviews. Instead of standard behind the scenes footage, show real training sessions and coach interactions, including a coach calling his players “idiots”.
With stakes being so high, even these ideas aren’t enough. The new standard has become two players comparing notes. Liverpool have “bezzies”, Barcelona has “most likely to” and Real has “guess who”. And the most watched YouTube clips are those where players surprise fans. Recently Liverpool looked to raise the stakes with a player skit about a sponsor product which would not have been out of place on any comedy sketch show.
This level of work and creativity has helped Liverpool to see fantastic growth in YouTube subscribers, and as of this writing the team has seen the most growth in subscribers of any of the top teams in football, gaining on the leaders Barca and Real, and in the case of the latter gaining double the new subscribers. All of this helps to build the brand and sell the team to a new generation of fans that look to get to know players through online content rather than standard interviews.
Growth Outlook
While Liverpool brand growth over the last few years has been slow, the foundation was set and the 2018-19 financial results demonstrated that the team is heading in the right direction. A fantastic product on the field and a smart push off the field can help to get Liverpool closer to the leaders in La Liga in terms of commercial revenue.
The need for this commercial revenue has only been highlighted by the recent cononavirus cancellation of games, with teams losing out on broadcast and matchday revenue without games being played, however still maintaining some form of income from commercial partners (levels of which are dependent on specific clauses in the agreements). Additionally, the online tools have been essential for players to maintain a presence and connection with fans during the break in play and to keep teams connected to their followers.
Hopefully Liverpool can build on the exceptional commercial revenue growth from last year and can continue to develop new and inventive ways to connect with fans. Gaining more fans and growing the Liverpool name is a slow and long process, but down the line there now seems to be hope that the team could finally catch up to the top teams off the field and not just beat them on the field.
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.
