Liverpool’s Champions League qualification could be worth up to 60 million pounds -- but they still need to consider a naming rights deal for Anfield, a football finance expert based in the city has told ESPN FC.
Professor Tom Cannon, from the University of Liverpool, says that qualification for top-level European club competition will make a bigger impact on the Reds’ finances than winning the Premier League.
Brendan Rodgers’ side are guaranteed a place in the lucrative group stages of next season’s Champions League, and can still secure their first domestic title in 24 years despite Sunday’s 2-0 defeat at home to Chelsea, and Cannon says that it will help Boston-based owners Fenway Sports Group in their bid to restore the club to former glories.
He told ESPN FC: “It’s a major opportunity for Liverpool to get into a healthier long-term financial position. There’s no evidence to date that Fenway are looking to take money out, and unlike the Glazers at Manchester United, they haven’t saddled the club with debt.
“Liverpool do have debts, but not at Manchester United’s levels. In terms of closing that debt, it depends on their ability to get good prices for the players they move on, and on how much -- and how well -- they invest in the squad.”
As the club prepare to return to Europe, they are also about to embark on a 150 million pound expansion of their Anfield home, with plans set to be submitted to the city’s council for approval this summer.
Managing director Ian Ayre said in October 2012 that the club were not looking to sell Anfield’s naming rights to a sponsor, in the way that Arsenal have with the Emirates Stadium and Manchester City with the Etihad Stadium.
However, Cannon said: “The big variation for Liverpool in terms of the balance sheet is the redevelopment of Anfield. There’s no doubt in my mind that their chances of selling naming rights to the stadium will be increased by being in the Champions League.
“If you look at the deal Arsenal did for the Emirates Stadium as a guide, I’d say that Liverpool would be looking for 50 million pounds a year, perhaps over a 10-year deal, if they were to sell the naming rights. Given the history and heritage of the club, I would be surprised if they accepted less than that.
“That’s something, in my view, that they have to look at, because they won’t be covering the 150 million pound cost of the expansion in ticket sales. Bear in mind that they could be paying around 11 million pounds a year just in interest payments on loans for the stadium redevelopment.”
Liverpool’s absence from the Champions League since 2009 has had a negative effect in their finances, and Fenway have faced a battle to overcome the debts piled on to the club by previous owners Tom Hicks and George Gillett.
Ayre, though, said in March that Liverpool were moving towards a healthier financial standing despite posting an annual loss of nearly 50 million pounds in their most recent accounts, and Cannon said: “With Champions League money and increased sponsorship potential, you would be looking at a gross income of 60 million pounds over the coming season, minus the costs of 25 to 30 million pounds on net player spending.
“Any kind of reasonable run in the group stages will earn something in the region of 25 million pounds. Liverpool generally do quite well in Europe, where they have form for getting to the later stages of competitions, so a run to the quarterfinals would be worth another five million pounds.
“So I’d say that Liverpool would earn around 30 million pounds by getting to the quarterfinals of the Champions League.
“On the expenditure side, a lot depends on how much of the 30 million pounds they spend in advance. If you look at the squad as it stands, they do need to spend money on it.
“On the flip side of that, there is an acceptance that there are a fair number of players who haven’t quite made it at the club, such as Fabio Borini, and there are several players who are on the margins, such as Joe Allen, perhaps. Assuming that Liverpool will sell some of their fringe players, in addition to strengthening the squad, you would be looking at a net spend in the transfer market of around 30 million pounds. That’s once player sales are factored in.”
Liverpool’s prolonged Champions League absence was a factor in them dropping out of the Deloitte Football Money League’s top 10 this year for the first time since 1999, as they fell from ninth to 12th place in a table that ranks clubs according to income.
Ayre, though, has suggested that the club will be able to deliver better financial news when their next set of accounts are published, which is likely to be in spring 2015.
He can point to multi-million pound deals signed in January with American company Dunkin Donuts and airline Garuda Indonesia as evidence of the club’s ability to pull in lucrative sponsorship, as well as the 25 million pounds a year kit supply contract with Warrior Sports.
Cannon added: “One of the things Ian Ayre has been very good at is negotiating sponsorship deals, such as those with Warrior Sports, Standard Chartered [the London-based multi-national bank that sponsors the club’s shirts] and Dunkin’ Donuts. He’s negotiated brilliant deals for them.
“I wouldn’t be surprised if he looks to do another deal of that size. I would expect them to bring in one new sponsor worth 25 to 30 million pounds a season, because not many clubs can match Liverpool’s global reach.
“Only Manchester United, of the teams in the Premier League, have a bigger global reach that Liverpool. Unlike Manchester City, Chelsea and Arsenal, Liverpool have a large support base in Asia to tap into. That undoubtedly helped them in securing the shirt sponsorship deal that they have with Standard Chartered, and the kit supply deal with Warrior.”
Cannon suggests that winning the Premier League -- although it would bring great joy on the field -- would not make a huge difference to the club’s finances.
He said: “As far as winning the Premier League goes, the best example of the benefits of that can be shown with Manchester City. What it did for them was to make the Abu Dhabi deal credible -- and it makes sponsorship deals more credible too, because you’re sponsoring the champions.
“But winning the Premier League, financially, is not as big a deal as it used to be. I’d say the difference between finishing first and second is maybe worth five to 10 million pounds.
“It’s about being able to charge more for executive seats, that kind of thing. For Liverpool, it wouldn’t make a huge difference in terms of global reach, because they already have that reach.
“But what winning the Premier League will do will attract more potential sponsors. It can bring in a sponsor who will pay the right price for those stadium naming rights.”