Liverpool’s lack of spending in past two transfer windows finally explained

Liverpool are set to kick off their Premier League title defence against Leeds on Saturday – but the Anfield faithful don’t have many new recruits to get excited about.

So far in the summer transfer window, Jurgen Klopp has only bolstered his squad with the £11.75million signing of Kostas Tsimikas – who has been brought in to provide competition for Andy Robertson at left-back.

With the likes of Chelsea, Manchester United and Manchester City all splashing the cash, Reds fans have been left slightly baffled by their club’s inactivity in the transfer market, especially having won the Premier League and the Champions League over the past two seasons.

But influential football finance blog, Swiss Ramble, has given Liverpool supporters some answers in a lengthy and detailed thread on Twitter.

The financial expert said: “To date this summer Liverpool have only spent £12m on Olympiacos full-back Tsimikas, while Chelsea have splashed £201m.

“Others have been more prudent, but still been more active than the Reds: Manchester City £71m, Tottenham £59m, Manchester United £35m and Southampton £31m. LFC actually have £3m net sales.

“This is somewhat puzzling, given that LFC have been highly profitable in recent years, so let’s look at what is behind their revenue growth and the impact on the bottom line.

“As well as the last published accounts (2018/19), we will take a broader view of the last 3 years.

“LFC posted an impressive £42m pre-tax profit in 2019, which meant £207m profits over last 3 years (£40m in 2017 and £125m in 2018).

“This was the second highest in the Premier League in that period, only surpassed by Tottenham £278m, but twice as much as the next highest Man Utd £110m.

“However, worth noting that this £207m pre-tax profit is entirely due to £207m profit on player sales. Excluding these profits, LFC would have broken-even. LFC have spent everything they earned on expenses: revenue £1,353m less operating expenses £1,338m plus interest £15m.

“To reinforce this point, LFC operating profit was just £1m in 2019 and £15m over the last 3 years. That said, most football clubs actually lose money at the operating level, though Tottenham and Man Utd are exceptions to the rule with £205m and £120m respectively over last 3 years.”

Swiss Ramble claim Liverpool have also generated £207m from player sales, while seeing their revenue and matchday revenue soar.

Nevertheless, the thread eventually explains why such sums have not equated to large outlays in the transfer market this summer.

“However, here’s the thing,” the thread continues.

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“Much of the revenue growth has been eaten up by higher costs. In fact. Since 2015 LFC wages have grown 87% (£144m), i.e. at a faster rate than revenue 79% (£235m), the highest in the Big 6, due to recruiting better players and higher bonus payments.

“LFC have also spent £90m on capital expenditure, including the Main Stand expansion and Kirkby training ground. This outlay is only reflected in the profit and loss account via depreciation. Second highest in Big 6, though dwarfed by Tottenham £1 bln investment in new stadium.”

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