For a number of Premier League clubs, the impending end of the financial year on June 30 means that the coming days will be busy affairs as they look to player-trade themselves out of a sticky spot.
The Premier League’s much-maligned profit and sustainability rules (PSR) have become a focus of much attention over the last 12 months, with Everton hit with two penalty deductions for breaches occurring in the 2021/22 and 2022/23 financial periods last season. Also hit were Nottingham Forest and newly-promoted Leicester City.
Everton have a little more work to do to remain PSR compliant, Forest and Aston Villa do too, but for clubs such as Newcastle United and Chelsea there is a considerable amount left to do over the course of the week to ensure that they avoid the kind of sanctions that the Toffees and Forest were landed with last season.
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But what does the situation look like for Liverpool?
Reds owners Fenway Sports Group’s approach to running the club hasn’t always been universally popular with some fans, with the criticisms being that they don’t invest enough into the on-field product compared to their rivals at times when they feel they should be doing so.
The mantra has been one of the club being run sustainably, within the financial controls, growing organically to enable additional spend and investment in the playing squad, but not one that will be willing to incur heavy losses in order to take part in the arms race of the transfer market. It is for that reason that so much weight was put behind the data analytics side of the club, looking to find undervalued talent, but providing themselves the financial flexibility to act and spend when the time called for it, as happened in the past with the likes of the additions of Virgil van Dijk, Alisson Becker, and Darwin Nunez.
It would be easy to assume that given the significant revenue disparity that exists between the big six clubs and the rest of the Premier League that PSR are concerns that needn’t keep the owners of those clubs up at night. But Chelsea’s mammoth transfer spend since 2022, with more than £1bn committed in transfer fees, has seen them have to sell off academy graduates for pure profit and player trade their way out of a fairly big hole. They still have some way to go before the end of the current financial year next week, to the tune of some £100m, which may end up arriving from the sale of a tangible asset such as property to a company part of the ownership group to raise the funds, as happened last year with the sale of one of the hotels to a related party.
Manchester United, while not PSR negative, will likely have to move players on if they want to seriously invest in the market given their high transfer debt of £277m. United have not been good at player trading in recent years despite having routinely spent large sums, and minority owner Sir Jim Ratcliffe is wanting to see that addressed, meaning that it could be a lean summer unless someone with no book value, such as a Marcus Rashford, departs the club for a handsome fee.
Liverpool’s position, like Manchester City and Tottenham Hotspur, is one of health, where significant PSR flexibility exists, even if it is something that likely won’t be tested to its limit.
According to figures presented by football finance expert Swiss Ramble, Liverpool have a PSR capacity of some £173m based on rough estimations made for the three-year assessment period up to the 2023/24 financial year, which ended for the Reds on May 31.
Those estimations see Liverpool with the third-highest PSR capacity, behind Manchester United at £299m, and Brighton & Hove Albion at £305m, with the Seagulls’ figure boosted heavily by selling high-profit talent such as Moises Caicedo for £115m.
PSR rules, which will be replaced from next season by financial controls akin to UEFA’s squad cost ratio rule, allow for clubs to make a maximum loss of £105m over a three-year period, with losses attributed to investment in infrastructure, the women’s team, the academy, and community projects allowed to be deducted from the figure. The financial impact of the pandemic, no longer featuring in the three-year rolling period, was also an allowable deduction.
Over the previous two seasons, Liverpool, without taking into account allowable deductions, had made a combined loss of just £2m. Compared that to the £211m Chelsea have lost over that same period, and the £182m Manchester United have lost, it is easy to see why the Reds have breathing space when it comes to PSR.
The ability to spend won’t be a change in approach from FSG with regards to its transfer strategy, but the flexibility exists when it comes to the current financial controls should they wish to engage in a significant deal.
Back in the Champions League again for next season, the financial health of the club is only likely to improve when the 2024/25 accounts are revealed.