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 Posted by ESPN Staff
May 7, 2010

Liverpool report pre-tax losses of £16 million

The extent of Liverpool manager Rafael Benitez's difficulties in terms of rebuilding his squad next season were laid bare by the publication of the club's financial accounts.

Although the figures are only dated to July 31 last year, they showed Liverpool as a club made an operating loss before tax of £16 million, down from a £10.2 million profit the previous year.

Kop Holdings, the company set up by co-owners Tom Hicks and George Gillett to buy Liverpool in 2007, continued to run up more debt as annual interest repayments on loans taken out to finance the purchase rose by £3.6 million to £40.1 million.

That resulted in the group making a loss before tax of £54.9 million, an increase of £14 million from 2008, which in turn contributed to Kop Holdings' debt rising from £299.8 million in 2008 to £351.4 million last year.

Benitez, who cancelled his usual pre-match press conference on Friday in order to avoid a drawn-out grilling on why Liverpool's season had been such a failure, has made it clear four or five new high-quality players, which he valued around £15 million apiece, are needed to inject life into his squad.

Even a conservative estimate puts his requested transfer kitty at £50 million - almost as much as the company lost last year.

The Spaniard's only hope is for a takeover to come sooner rather than later after the American co-owners put the club up for sale last month having admitted they could not - or possibly would not - take Liverpool any further.

But with debts mounting every year the likelihood of a swift resolution to the financial restraints at Anfield seems remote.

In addition to the current £351.4 million debt and Benitez's transfer requirements, funding also has to be provided for the new stadium.

According to the directors' report accompanying the accounts, Anfield only has a "useful economic life'' of five years - and that assessment was made 12 months ago.

With the finances in such dire straits Europe's richest clubs may sense an opportunity to cherry-pick Liverpool's top stars.

Chelsea have already been linked with a £70 million bid for striker Fernando Torres, while speculation has suggested Real Madrid may be prepared to pay £35 million for captain Steven Gerrard.

And while those sales, as unpalatable as they would be to Liverpool fans, would generate over £100 million there is no guarantee the manager would be allowed to re-invest all of the cash in new players.

Having missed out on the Champions League this season Liverpool cannot afford an extended absence from Europe's elite competition as participation alone is worth in the region of £25 million-a-year.

A closer examination of Liverpool's accounts shows just how much money has been wasted.

Former chief executive Rick Parry received a £4.295 million pay-off when he left last summer, a sum apparently negotiated with previous chairman David Moores around the time current owners Tom Hicks and George Gillett entered the bidding to buy Liverpool back in 2007.

It is understood to be one of the biggest pay-offs to a sports administrator, dwarfing the £1.2 million Brian Barwick received when he left his post as Football Association chief executive in December 2008 and Keith Edelman's £1.5 million deal from Arsenal in the same year.

Inspection of this season's transfer dealings also reveals a shortfall in the money Benitez was presumed to have generated.

According to the accounts, the sale of Xabi Alonso to Real Madrid, Andriy Voronin to Dinamo Moscow and Andrea Dossena to Napoli "guaranteed'' fees of £29.7 million.

Considering Alonso was believed to have been sold for £30 million alone, while the other two went for a combined £6 million, there is still some ground to make up, which presumably will come in the form of add-ons.

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