Future transfer fees, player profits and five things spotted in Liverpool accounts
Liverpool released their accounts for the 2020/21 financial year on Friday, a period which included the Reds crowned Premier League champions and a season played almost entirely without fans due to the pandemic.
Indeed 2019/20 started as usual but then felt the brunt of the onset of the pandemic which led to a season being suspended before ending after the financial year ended Liverpool saw their profit 2018/19 pre-tax loss of £42m change to a pre-tax loss of £46m.
In the latest accounts there was another loss, but at £4.8m it was a fraction of that seen by some of their Premier League rivals for the same period. The combined losses of the Premier League’s ‘big six’, the clubs scrambling to form a new European Super League last year, stand at £775million over the two pandemic-hit seasons. Of that figure, Liverpool, whose losses over the past two seasons amount to £50.8m, equates to around 6.5%.
A more focused business approach and less exposure due to a lack of recklessness that has been seen at some clubs in Europe, notably Barcelona, has helped the Reds weather the storm better than most under Fenway ownership. Sports. Group.
Among the headline figures, media revenue rose by £64.5m to £266.1m due to payments made to clubs for matches shown when the Premier League resumed after the end. from the 2020 financial year. Premier League clubs have seen healthy increases as a result of this.
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The results, which cover the period to 31 May 2021, inevitably had a huge impact on matchday revenue, which fell by almost 95% to just £3million. Overall revenue was down £3m to £487m year-on-year, while commercial revenue was flat, posting a modest increase of £0.2m to 217, £6 million.
The detailed account breakdown has now been published by Companies House.
In the 2019/20 accounts, with uncertainty over whether further suspensions of seasons would occur due to the pandemic, Liverpool underlined the seriousness of the situation.
A paragraph from the 2019/20 accounts reads: “The directors recognize that due to the continuing Covid-19 pandemic, which is beyond management’s control, there is material uncertainty which exists due to the possibility of an extended delay or reduction to the current 20/21 play season and/or a delay in the start of the 21/22 play season without committed funding currently in place – and therefore this may throw significant doubt about the Group’s ability to continue as a going concern.”
The return of fans to the stadiums and the change in image in relation to the pandemic due to the vaccination program saw this change in tone 12 months later.
The 2020/21 financial statements state: “Based on our work, we have not identified any significant uncertainties related to events or conditions which, individually or collectively, could cast significant doubt on the ability of the group or parent company to continue its activity. worry.”
The club highlighted changes in the economic environment which have impacted revenue streams, the return of fans to stadiums and the changing COVID-19 situation as a result of vaccinations, meaning that seasons and competitions are expected to end as scheduled as key factors behind this.
FUTURE TRANSFER COSTS
In the accounts, it is stated that £23.8million may have to be paid in future transfer fees, linked to the activation of the clauses. In 2020, that figure was £10.8m. Since the end of the year, £1.8m of those payments have crystallised.
In the 2020/21 accounting period, Liverpool signed Diogo Jota for £42million from Wolverhampton Wanderers and Thiago Alcantara from Bayern Munich for £20million. Jota’s deal was paid in installments.
As for players heading in the opposite direction, Liverpool say £7.3m in future charges could materialise, including £1.4m already crystallized since the end of the financial period.
PROFIT ON PLAYER SALES
Liverpool’s profit on the sale of player registrations in the 2020/21 period was £39.3m. The previous accounting period for 2019/20 saw that figure rise to £26.9m.
Players who were sold in the 2020/21 accounting period included Rhian Brewster to Sheffield United for £23.5million; Ki-Jana Hoever to Wolves for £13.5m; Dejan Lovren to Zenit St Petersburg for £10.9million and Ovie Ejaria to Reading for £3million.
Gain and loss on disposal of player contracts is calculated as the difference between the value of the transfer fee recovered and the net book value of the player, calculated by amortizing the cost of the player over the term of a contract, less any direct costs transfer costs.
Since the end of the financial year, the Reds have entered into contracts for the purchase and sale of player registrations, with net profit amounting to £7.7 million, which means the cumulative total is a profit of £21.4 million, with the figure of £7.7 million included in the financial results for the year ended 31 May 2022.
Amortization of player registrations increased by £1.8m, from £106m in 2020 to £107.8m in 2021.
Amortization is something that figures heavily whenever accounts are reviewed. It’s when a transfer fee is spread over the length of a contract, so the £36m paid for Konate by RB Leipzig will actually be shown at £7.2m a year in the accounts for each of the five years of his contract. Similarly, Luis Diaz’s £36.5m move would appear as an annual outlay of £7.3m in the accounts.
The latest set of accounts includes new transactions for Virgil Van Dijk and Fabinho, reducing their amortized cost by spreading the remaining book value over an extended period in accordance with their new transaction.
But with new additions such as Jota, Thiago and Kostas Tsimikas that figure has risen slightly, although still £4million below the 2019 accounts figure.
There was also an impairment on player registrations in this year’s accounts of £461,000, which was nil in 2020’s accounts.
Depreciations correspond to the loss of value of a player. This may be due to long-term injuries or a prolonged first-team exclusion. At the end of each financial year, football clubs are required to value each player and determine if their market value is lower than on the balance sheet. If so, it should be expensed as an impairment charge. It is not specified which player(s) the Liverpool handicap charge relates to.
The club took out an intercompany loan with their holding company and subsidiary of Fenway Sports Group LLC, UKSV Holdings Ltd, of £110m to fund the redevelopment of the Main Stand at Anfield, which was completed in 2016.
Monies have been repaid since that debt, but the balance remains at £71.4m for FSG’s holding company, the same level as it was in last year’s accounts, with the fee loan d interest, which has no set repayment date, not repaying for the two years affected by the pandemic.
Bank indebtedness has decreased over the 12 months.
Liverpool refinanced their current facility in January 2020 for a period of five years, giving them access to up to £200m of credit which could be used for general corporate purposes, including working capital.
Up to £198million was taken from the 2020 accounts to ease the impact of the pandemic on revenue, but the latest accounts show £70million has already been refunded, with the amount now rising at £128 million.