Liverpool’s Financial Smoke and Mirrors: Time for the Premier League to Act
Financial fair play is paramount to the integrity of football, alarming figures have surfaced regarding Liverpool Football Club’s financial dealings. Liverpool would be over £735 million in debt today if not for what appears to be artificial inflation of their accounts through preferential loans provided by their owners, Fenway Sports Group (FSG). This figure is a staggering twenty times greater than the Profitability and Sustainability Regulations (PSR) allegations levelled against Manchester City.
Even more concerning is that Anfield, Liverpool’s iconic home, is now listed as a separate asset of FSG, distinct from Liverpool Football Club. This raises serious questions about the financial reasoning behind such a move. Why would FSG choose to classify Anfield as a separate entity? The most likely answer is that a significant debt is secured against the stadium, keeping it outside the club’s direct finances. This arrangement appears designed to protect the club from liability while allowing FSG to manage a large debt load secured on Anfield itself. Such financial manoeuvring not only raises doubts about Liverpool’s financial transparency but also about the Premier League’s oversight of these activities.
The ramifications of such financial manipulation reach far beyond balance sheets. The £400 million outlay Liverpool made in 2018 to sign Virgil van Dijk, Naby Keïta, Fabinho, Alisson, and Xherdan Shaqiri would never have been possible under fair market conditions. It is unlikely the football club would have had the oney to buy Mo Salah either. This spending spree was a pivotal factor in their ability to challenge for, and win, major trophies. Without this, Liverpool would likely never have secured the Champions League title, the Premier League title, or the other trophies that defined Jurgen Klopp’s era. Their successes on the pitch are inextricably linked to these questionable financial practices.
The gravity of potentially breaching PSR on such a colossal scale cannot be underestimated. It not only undermines the financial equilibrium intended by these regulations but also raises serious questions about the Premier League’s commitment to enforcing its own rules.
A Deep Dive into the Numbers
When FSG acquired Liverpool in 2010, they cleared two significant debts: one owed to Kop Holdings (the remnants of the Hicks and Gillett era) and another to NatWest Bank. The Kop Holdings debt was settled via an owners’ loan of £240 million at an astonishingly low interest rate of 0.5% per annum. To put this into perspective, clubs like Manchester United and West Ham were paying commercial interest rates of around 8% on their loans at that time.
Had Liverpool been subjected to a fair market interest rate, they would have paid an additional 7.5% annually on the £240 million loan—amounting to £18 million extra each year. Instead, they paid just £1.2 million in interest, when the true market value should have been £19.2 million.
Liverpool’s accounts from that period typically showed a net profit of £3 million per year after paying the minimal interest. However, under a fair market interest rate, this modest profit would have transformed into a significant annual loss of £15 million (£18 million in additional interest minus the £3 million profit). This scenario suggests that the club’s financial stability was artificially maintained through these preferential loan terms.
The Compounding Effect
Over 14 years, the financial implications compound dramatically:
Starting with a £15 million loss in the first year and adding the annual £19.2 million (the fair interest payment), compounded at 8% interest over each subsequent year, the total debt balloons alarmingly.
£15m x 1.08^13
+ £19.2m x 1.08^12
+ £19.2m x 1.08^11
+ £19.2m x 1.08^10
+ £19.2m x 1.08^9
+ £19.2m x 1.08^8
+ £19.2m x 1.08^7
+ £19.2m x 1.08^6
+ £19.2m x 1.08^5
+ £19.2m x 1.08^4
+ £19.2m x 1.08^3
+ £19.2m x 1.08^2
+ £19.2m x 1.08^1
= £495m
Obviously Liverpools’s P&L has varied, but it would be in a much worse state now.
Calculations indicate that the accumulated debt from these compounded losses and fair interest payments would now be approximately £495 million. Adding the initial £240 million loan brings the total to £735 million.
The annual interest at 8% on this accumulated debt would be a whopping £58.8 million.
Over the three-year PSR assessment period, Liverpool could have had an additional cost of £176.4 million factored into this year’s PSR calculation.
These figures are not just abstract numbers; they represent a significant distortion of financial fair play principles. Moreover, it implies that Liverpool would have breached PSR almost every year since the system was introduced.
A Call for Action
The pressing question remains: When will the Premier League take action against Liverpool, this is blatant cheating?
The Premier League has a duty to enforce its financial regulations uniformly across all clubs to maintain the sport’s integrity. Ignoring such substantial allegations not only tarnishes the league’s reputation but also sets a dangerous precedent that financial manipulation is tolerated.
Other clubs have faced severe penalties for lesser infractions. The disparity in treatment is glaring and unacceptable. If the Premier League fails to address these issues promptly and transparently, it risks eroding trust among fans, stakeholders, and the clubs that adhere to the rules despite the competitive disadvantages it may bring.
The Road Ahead
Transparency and accountability are the cornerstones of fair competition. It is imperative that:
An Independent Investigation: The Premier League should commission an independent audit of Liverpool’s financial dealings over the past 14 years to ascertain the extent of any PSR breaches.
Uniform Enforcement of Regulations: Any violations discovered should be met with penalties consistent with those imposed on other clubs, ensuring fairness and discouraging future misconduct.
Review of Ownership Loan Policies: The league must scrutinise the use of owners’ loans at non-commercial rates, closing loopholes that allow for artificial inflation of financial health.
The integrity of English football is at stake. Fans deserve a competition where success is earned on the pitch and financial rules are not bent to favour certain clubs. The Premier League must demonstrate that no club is above the law and that financial fair play is more than just a slogan—it’s a commitment to the sport’s fair and equitable future.
Conclusion
Liverpool’s alleged financial manoeuvring raises serious concerns that cannot be swept under the rug. The Premier League’s response will either reinforce its dedication to fair play or expose a reluctance to hold all clubs to the same standards. For the good of the game, these issues must be addressed decisively and without delay.
This is especially urgent now, given Manchester City’s precedent-setting win today. The APT ruling has clarified that excluding owners’ loans and preferential interest rates is unlawful. The Premier League must follow through and ensure that no club, including Liverpool, can bypass financial regulations with impunity. Without these financial loopholes, Liverpool would not have been able to make their £400 million 2018 outlay, and the trophies won under Klopp’s tenure would have been a distant dream. And what of Anfield? Why is it listed as a separate asset from the club itself? It raises the very real suspicion that FSG has saddled the stadium with separate debt, shielded from Liverpool’s finances, while benefiting from artificially low loan repayments. The time for excuses is over.
Not sure if this is the correct thread but I was sent this today
