Liverpool FC: In performance far more than its monies worth

Liverpool is the most storied English football club there is with 18 League titles and 5 European Championships. Of late, Chelsea has been getting its share of thunder in the English League but it is a Johnny come lately by international standards. This explains Jose Mourinho’s neurosis trying to succeed in the international arena and his frantic deal making with so many football players. They still rank below Liverpool, Arsenal, and Man U in the international rankings (Chelsea is 7th).
Liverpool declined in the 90’s with its financial debacles, giving Man Utd, the push that it needed to overtake Liverpool and since then Sir Alex Ferguson assured Man U of its dominance in the 90’s and early 2000s.
The 2000s saw Liverpool return to form and and in the last couple of years, Liverpool has manged to turn things around for seemingly good with Rafael Benitez at the helm, and has won the European Championships in 2005 and the FA Cup in 2006. They finished third in the Premier League in the 2005-2006 season.
Liverpool signed on some exciting new players for about £55 million. Players like Djibril Cisse, Xabi Alonso, Luis Garcia, Peter Crouch, Fernando Morientes, Daniel Agga paid off immediately except for Fernando Morientes (since transfered to Valencia). The 2004- 2005 season saw Liverpool win the UEFA Champions Cup, and finish 5th in the Premier League. The next year was very succesful and saw Liverpool win the UEFA Super Cup, the FA Cup, and come 3rd in the Premier League with an impressive 82 points.
In the same period of time, Chelsea paid up £ 145 million in new signings with Didier Drogba, Michael Essien, Shaun Wright Philips, Ricardo Carvalho, Paolo Ferriera, Petr Cech, and Arjen Robben. In the 2004-2005 season, Chelsea won the Premiership and the Carling Cup. In 2005-2006, they again won the Premiership and the FA Community Shield. But both years they failed to make an impression on an international level in the UEFA Cup. Man Utd, ended up 3rd in 2005 and 2nd in 2006 in the Premiership, and won the Carling Cup with £ 47 million spent on transfers. Arsenal won the FA cup and the FA Community Shield in 2005 and became this year’s runner up in the UEFA Champions Cup. In the Premiership , they came 2nd in 2005 and 4th in 2006. Arsene Wenger was typically tight fisted and paid only about £ 18 million in new players, Alexander Hleb, Adebayor, and Theo Walcott.
What makes Liverpool’s surge in performace all the more impressive is that it has come at a time when Liverpool is actually on financially shaky ground. Amongst the big four, Liverpool is the only club that saw its financial worth decrease, from £ 441 million to £ 370 million ( a drop of 16%), from the 2005 to the 2006 season. Its operating income shrank from £ 57 million into the red to – £2.9 million, the largest drop compared to the other clubs. Arsenal showed the biggest gain of 37% and its current valuation is £841 million. Man Utd and Chelsea also showed smaller gains and are presently valued at £1373 million and £528 million, respectively.
Revenues are increasing slowly and Rafael Benitez has not made any outlandishly expensive purchases with the two most expensive signings being Craig Bellamy and Jermaine Pennant for a total spent of £17 million in new signings. He has let go on loan, transfer, or released 12 players from the roster. He has trimmed the player wage bill significantly.
However, Liverpool unlike Arsenal does not have a new stadium with a larger capacity and hence, increased revenue through future ticket sales. Chelsea can coast on Roman Abramovich’s bottomless finances and can afford £30 million signings of players like Andriy Shevchenko. Man Utd has the largest attendence averaging about 60,000 or more and they have a new AIG sponsorship. The Glazers are trying to restructure their debt so that in the future it becomes easier to float bonds, to raise more capital.
Liverpool’s success will continue because it has a great team led by Steven Gerrard and quality players and a canny coach in Rafa Benitez but the financial equation is also going to factor in sometime or the other. Liverpool right now is consistently outperforming other teams given its financial constraints.
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