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Analysis of Liverpool’s £50-million loss for the year – should fans be worried?

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Liverpool are in the red, in terms of their financials for the year, reporting losses of £49.4-million, but that isn’t necessarily a bad thing if one takes a deeper look.
If one takes a look at where the Merseyside club two seasons ago and where they are now, one can see the level of progress being made off the pitch as Fenway Sports Group, the club’s new owners, try to implement their policies at the club.
Liverpool were in dire straits under the ownership of http://www.senore.com/Football-soccer/Tom-c35214 Hicks and George Gillett, who after being forced to sell the club to the new owners, failed in an attempt to sue the club and its new owners.
It was a bitter and tense period in the club’s history as there was talk of the club potentially going into administration. The club was in debt with figures indicating that http://www.senore.com/Football-soccer/Liverpool-c39809 owed over 300-million as the owners were looking to finance a new stadium.
It also turned out that the club’s previous American owners were dumping their debts on Liverpool and using the club to write off their liabilities.
From that one can gauge how the club was flirting with bankruptcy and administration, yet one has to commend the new owners and that not only goes for Liverpool supporters but businessmen everywhere.
The first thing the owners did was write off all of the debt, including the £300-million that the club owed. The second thing they did was bring in a new transfer policy and invest heavily in the squad, bringing in seven new players since their arrival.
While a majority of the transfers may have been overpriced and have not lived up to their billing, the side has won their first trophy in over six years, a statistic that other clubs such as Tottenham Hotspur and http://www.senore.com/Football-soccer/Arsenal-c38429 cannot boast.
Moving on to the current issue, the £50-million loss which the club have reported for the year. Without the prospect of Champions League football, and the significant revenue playing in the tournament generates with it, next season the situation seems concerning once again.
However, if one segregates the loss, one can see that more than half of the loss consists of the final payment of the debt that was owed by the previous owners in regards to the HKS project.
Basically, the previous owners borrowed and spent a lot of money of Stadium plans that never worked out and only put the club in increasing amounts of debt.
With that written off the club are now free to focus on building for the future.
Another significant chunk of the loss comes in the form of termination payments. Roy Hodgson and his backroom staff and Christian Purslow, were paid a total of £8.4-million as part of their severance package.
Altogether that takes the total figure of money spent on getting rid of the previous owners mess to £43.4-million, which, in essence signifies that 86.8% of the loss can be attributed to writing off debts.
That leave us with a figure of £6.6-million in loss, which is a result of a host of factors including operations, meaning that for the previous year the actual loss from doing business is a total just under £7-milllion.
Also, the figure does not factor in the new kit deal with Warrior sports, which is worth around £25-million in itself and is a record in the Barclays Premier League.
So in essence, Liverpool may have taken a financial beating this year but most of it was down to paying off the leftover debts and on the business side one can expect the financials to improve next year. However, if the club want to be financially sound in the long run, qualifying for the Champions League is a necessity.
All in all, Liverpool fans can rest easy as it seems that the club is in the right hands for the time being.
Disclaimer: the views and opinoins expressed in the article are the writer's own and do not reflect the editorial policies of Bettor.com

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