Last month saw Liverpool post its financial results for the 2023/24 period. An accounting period that saw record revenues also saw record losses under owners Fenway Sports Group.
The Reds’ turnover stood at £614 million, the largest ever for the club, for the financial year ending May 31, with commercial revenue and matchday revenue both reaching record highs of £308m and £102m, respectively, the latter being due to the completion of the Anfield Road redevelopment and the increase in capacity to just north of 61,000.
But a lack of UEFA Champions League money for 2023/24, a season when the Reds had to settle for competing in the Europa League after finishing fifth in 2022/23, was impactful and led to a pre-tax loss of £57m. However, having returned to compete in the Champions League in 2024/25, and with a Premier League title in their sights, the club will likely surge toward, if not past, the £700m revenue mark in the current financial year and back into the black. The 2023/24 accounting period can be explained away due to the impact of missing out on the top four the season before.
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The rest of the results were fairly unremarkable in terms of what was expected, although the increase in other expenses was a notable rise, shooting up £30m (22%) from £137m to £167m, which means that this cost category has increased by £67m (68%) in just five years. High inflation impacts the cost of utilities, as is the case at all clubs, with matchday costs increasing 80%.
But among the figures, one thing that seemed to stick out for some fans was the rise in the club’s wage bill, up 4% year on year from £372.9m in 2023, to £386.1m in 2024.
It came in a period where the club had no Champions League participation and had lost big-wage earners such as Fabinho, Jordan Henderson, Roberto Firmino, Alex Oxlade-Chamberlain, Naby Keita and James Milner, moves that would have taken over £50m off the wage bill annually. The exits of Joel Matip and Thiago last summer fall into the current financial year.
With those departures, allied with a lack of Champions League football, some have questioned just why the wage bill has increased in the manner that it has.
While the rise has seen some sections of the internet dive right into wild conspiracy theories involving yachts and all other kinds of erroneous nonsense, the reality is that there were a number of financial triggers that simply outpaced the previous financial year.
Yes, it is true that there was no Champions League football for Liverpool in 2023/24 and the lack of revenue that comes with a seat at European football’s top table was significant in terms of the overall financial picture. But Liverpool finished third in 2023/24, thus qualifying for the Champions League this year, and with that qualification came bonuses paid to the squad which would likely have totalled the tens of millions combined. That is very much part of the FSG wage model, where salaries are heavily incentivised when it comes to success, just in the same way that bonuses paid for winning the Champions League in 2019. The prize pot is bigger than ever now due to the revamped ‘Swiss Model’, and being a part of it has never been more important.
Then we have the not-so-insignificant development of Alisson Becker reaching a point where he triggered a clause in his contract that entitled him to a handsome pay rise in the summer of 2023, one that put him behind only Mohamed Salah and Virgil van Dijk in terms of the club’s top earners. His deal runs for another two years. It is likely that Alisson’s deal, that was £150,000 per week, now runs closer to £250,000 per week, in line with what the top earners at the Reds make.
The club also filled the void of those who departed with the additions of the likes of Dominik Szoboszlai, Alexis Mac Allister, Ryan Gravenberch and Wataru Endo. While the quartet would have been on smaller sums than some of those who left, notably Fabinho, the former two, in particular, are among the higher earners among the Reds camp.
Conor Bradley’s first major deal with the club would have carried a significant rise from where it was, while Kostas Tsimikas’ extension and that of Ben Doak will have only seen the wage bill head in one direction. There was also the matter of a full season of the wages of one of Liverpool’s key front men, Cody Gakpo, whose wages were only accounted for five months after he arrived in January 2023, with the 2023/24 accounts taking into account a full year, and likely an additional sum of around £3.5m, based on reported wages of £120,000 per week.
All these things, with the added inflationary pressures, allied with the increase in headcount among non-playing and management staff, where staff numbers rose by 12 to 782, and part-time staff numbers increasing by 47 to 2,109, come into consideration when assessing just why Liverpool’s wage bill has shot up.
Should Liverpool go on to win the Premier League this season, which they are red-hot favourites to do, then there would be further bonuses attached, as there would be for Champions League qualification once again. This is seen as a cost of business by FSG, one where the success that the players have delivered opens up revenue streams to be able to accommodate bonus payments, with merit payments from the Premier League likely to be around £56.4m for winning the league, up from £50.7m the previous year for finishing third.
Liverpool’s wage bill, with bonus payments likely to be fairly heavy, could exceed the £400m mark for 2024/25 for the first time. The Reds will have far greater revenues arriving thanks to a season of success on and off the pitch that will meet those costs, but payroll is a cost that looks set to keep on climbing, and if that is the case within the confines of the FSG model, it will be aligned with competitive success.
