Are Liverpool really closing in on Man United’s financial supremacy?
14 March 2019
Liverpool’s 2018 annual report reveals a world-record pre-tax profit of £125 million, as they edge closer to football’s biggest money-machine — Manchester United.
Liverpool’s revenue development over the last five years has seen the Reds dramatically improve their financial performance.
But Manchester United have increased their commercial dominance, having the revenue stream with the biggest growth potential.
Liverpool have once again qualified for the quarter-finals in the Champions League by beating Bayern Munich 3-1 last night. Last year they went all the way to the final, while arch rivals Manchester United were knocked out earlier in the competition by Sevilla. Since losing the 2011 final, United have only reached the quarter-finals twice - losing to Bayern Munich in 2014.
Liverpool are second in the Premier League table battling Manchester City in the fight for the Premier League title. Manchester United, although performing very well under caretaker manager Ole Gunnar Solskjaer, are 15 points behind Liverpool.
In that context Liverpool are having the upper-hand at the moment on the pitch.
Looking at the financial part of the game, Liverpool fans might have been cheerful when Liverpool executives Peter Moore and Billy Hogan back in February presented a pre-tax profit of £125 million for the 2017/18 period. But despite the record-breaking figures, Manchester United’s commercial dominance continues.
Could they close the gap
The top executives from Liverpool are on a journey to build a lasting financial platform, to give the club the opportunity to invest in a squad capable of fighting for the title on an ongoing basis.
But Liverpool’s exceptionally strong result begs the question: Is the club closing the gap with financial frontrunner Manchester United?
Looking at the accounts of both clubs over the last five years, the financial advantage Manchester United have enjoyed over their fierce rivals is obvious.
Five years ago, the difference between the two clubs in terms of yearly income was £156.9 million. By 2018, Liverpool had cut that gap to £135 million.
Manchester United’s latest accounts show a turnover £590 million, while Liverpool’s most recent figures reveal £455 million in turnover — still almost 30 per cent behind United.
Largest capacity in the Premier League
That said, Liverpool have enjoyed remarkable growth of 121 per cent in this period, compared to Manchester United’s 63 per cent growth over the same phase.
Match day revenues increased at both clubs substantially, with Liverpool’s income standing at £81 million - up from £45 million in 2013, and a rise of 80 per cent.
Liverpool increased the capacity of Anfield to 54,000 in 2017, by expanding the main stand. This has added close to £20 million a year in additional revenues, while the club continues to undertake feasibility studies on how best to expand the Anfield Road stand, which could take capacity to 60,000.
Further increases of this nature depend on more investment to boost capacity again, and on introducing additional non-match day events and revenue streams.
The final big income area in modern football is the commercial field - an area that highlights the big difference between these two clubs
Old Trafford has the largest capacity in the Premier League, holding 74,994.
The stadium has enabled United’s match-day revenues to remain high, rising to £109.8 million in 2018 from £109.1 million in 2013 - but while revenues are consistently high, there is little scope for further increases in the current climate. Large ticket price rises and stadium expansion are not on the horizon.
Broadcasting important - but not the crucial battlefield
The major revenue driver over the last 20 years has been Premier League and Champions League TV deals.
Looking at the two clubs, United earned £149.7 million from the Premier League in 2018, with Liverpool commanding £145.9 million.
These payments compare to £60.8 million for United and £54.8 million for Liverpool at the end of the 2012/13 season. It remains to be seen whether the Premier League will negotiate a dramatically-improved deal next time around.
Over the last five years, both clubs have been hampered by an absence from the Champions League.
To highlight the importance of Champions League qualification on revenues, Liverpool’s run to the final last season was worth £70 million from UEFA. Going forward, both teams would expect to be regular qualifiers for the Champions League. As such it is difficult to see one club gaining much financial advantage over the other.
The final big income area in modern football is the commercial field - an area that highlights the big difference between these two clubs.
70 commercial partners
Since 2013, Manchester United’s revenues have increased by £227 million to £590 million from £363 million in 2013. That is a rise of 63 per cent from a higher commercial starting point than Liverpool.
United’s commercial revenues, meanwhile, rose to £276 million in 2018, up 80 per cent from £153 million in 2013. This period has seen the number of commercial partnerships at United double. According to the club’s official website, United have 70 commercial partners, compared to 35 in 2013.
These sponsors include 24 global partners such as Adidas and Chevrolet, 10 regional partners including Thomas Cook Sport and 13 financial partners including Santander and 23 media partners.
The biggest deals include their shirt sponsorship deal with Chrysler worth £47 million a year and a kit deal with Adidas worth up to £75 million a year. Only last month, United signed their latest sponsorship deal, as Maui Jim became the club’s official electrical styling partner.
For their part, Liverpool have 29 commercial partners, with the club signing eight new partnerships in the 2017/18 season alone, including a shirt sleeve sponsorship with Western Union and global partnerships with Falken Tyres and Joie.
Commercial income at Anfield has risen to £154 million from £98 million in 2013, a rise of 57 per cent.
Liverpool has a huge global fan base, so the potential is there, but they are playing catch up
Major deals include a renegotiated shirt sponsorship with Standard Chartered worth £40 million a year. Meanwhile, the club are now in the last year of a kit deal with New Balance worth £45 million a year and are looking a for a new deal worth £75 million a year, which would put them on a par with United.
Significant growth required
Manchester United earns £122 million pounds more than Liverpool in commercial revenues. For Liverpool to reach the same level, they will have to grow their income by 80 per cent.
Liverpool’s financials are already strong enough to make eye-catching transfers such as Virgil Van Dijk and Alisson Becker last year, but United are able to pay even bigger transfer fees should they choose.
That said, United’s owners, the Glazers, continue to pay themselves £20 million a year in dividends and they must continue to pay back £24 million a year in loan repayments on their £487 million debt. Liverpool’s owners, on the other hand, do not appear to be taking money out of the club. It will be interesting to see how far Liverpool grow their commercial income in the next two or three years and whether they can close that huge commercial revenue gap with Manchester United.
Liverpool has a huge global fan base, so the potential is there, but they are playing catch up.
The commercial prowess of Old Trafford has been evident for a long period and can be traced back to the early 1990s - even before the Glazers acquired the club. United were the first club in England to take advantage of the new commercial era heralded by the introduction of the Premier League.
But with the middle classes growing rapidly across Asia and increased interest in the Premier League in the US, these remain key markets for both clubs to further increase revenues.