Liverpool will be free to compete in Europe next season despite making losses that appear to fall outside UEFA’s Financial Fair Play rules.#INSERT
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caption:Liverpool are on course to qualify for the Champions League for the first time since 2009.
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The club reported a loss of 49.8 million pounds in the 12 months to May 31 2013 when they published their latest accounts on Monday.
That followed a loss of 40.5 million pounds over a 10-month period to the end of May 2012, recorded in their previous accounts.
A combined deficit of 90.3 million pounds over two years is well outside the limits allowed under UEFA rules, which allow clubs to lose 45 million euros -- around 39 million pounds -- over that period.
However, Liverpool are not one of the 76 clubs currently being investigated by UEFA over potential FFP breaches, because they did not qualify for Europe this season.
At a press briefing in Nyon, Switzerland, last Friday, UEFA officials explained that they are only looking into the accounts of clubs who have played in the Champions League or Europa League during the 2013-14 campaign, and who reported a loss for 2011-12.
Liverpool’s accounts, though, will be examined in 12 months’ time if -- as is likely -- they qualify for one of next season’s European competitions. It is expected that they will be assessed over three seasons, from 2011 to 2014.
Brendan Rodgers’ side are second in the Premier League with 10 games to play, and on course to reach the Champions League for the first time since 2009.
Liverpool, as with all clubs, can offset costs from stadium investment, youth development and community projects against their losses.
It is unclear whether the 37.8 million pounds used during 2012-13 to pay off a loan relating to stadium development plans could be offset against the club's losses in this way.
Managing director Ian Ayre indicated earlier this week that he expects Liverpool’s financial results for 2013-14 -- which are likely to be published in spring 2015 -- to be significantly better, thanks to the signing of various commercial deals over the last 18 months.
The 2013-14 season is the first under which clubs are being assessed fully under the new UEFA Financial Fair Play rules, which came into effect in 2011.
UEFA will complete its first assessments of club finances in April or May, with any sanctions taking effect from the start of next season.
The governing body has said that any breach of the regulations will not automatically result in a club being excluded from European competition.
It has a range of sanctions that it can apply before getting to that stage, including a warning, a fine, a points deduction, withholding of UEFA competition revenue and a restriction on the registration of new players for either the Champions League or Europa League.
Owners are allowed to put their own money into a club through a sponsorship deal, but it must be judged ‘fair value’ -- that is, in line with market prices.
The only recent example of an English club being denied a European place for financial reasons was Portsmouth in 2010.
They would have qualified for the Europa League after reaching that year’s FA Cup final, which they lost to Chelsea.
But Portsmouth were unable to apply for a UEFA licence to compete in Europe by the appropriate deadline, having failed to file their accounts in time because they were in administration.
Portsmouth did ask UEFA of they could make a late application for a licence -- the decision was delegated to the Football Association, who rejected the appeal.