FSG P&L’s Number Crunching

[miller0863]

For those who like to discuss financial side of the game, thought this article might be a conversation starter.

“Liverpool upset £1.4bn odds as new figures show extraordinary Manchester United mismanagement:”

Liverpool have made strides over the past decade while Manchester United have regressed.
For much of the 1990s and 2000s, when under the stewardship of Sir Alex Ferguson, Manchester United were the dominant force in English football.

From pretty much the get-go when the Premier League was formed in 1992, United became the team to beat, and as they racked up the trophies at a time when English football was presenting itself in a new light after the 1980s their following grew both at home and abroad, something that they have been able to leverage for a long time now.

Liverpool's dominance pre-Premier League era was ended and it wasn't until they lifted the title in 2020 that they would end a barren spell of 30 years without an English league title, although two Champions League crowns had arrived in that period, in 2005 and 2019.

But since Ferguson departed Old Trafford in 2013 - the last season they won the Premier League - there hasn't been another title to add to their 13 won since 1992.
Ralf Rangnick is the current incumbent of the United hot seat, albeit temporarily, and he follows failed stints at the helm by Ole Gunnar Solskjaer, Jose Mourinho, Louis van Gaal and David Moyes, the man who was chosen as Ferguson's successor by Ferguson himself.

A club that won six trophies in the 2000s and five in the 1990s has won just two in the past decade, the last being eight years ago. But the money has still rolled in, even if they have been unable to put that money to best use and find a way back to the summit of the English game.

Liverpool have managed to reach the pinnacle despite bringing in less money and spending less money. That second point has been something that hasn't always been seen as a good thing by some, with Reds owners Fenway Sports Group having stuck rigidly to their more analytical and business minded approach to running a football club since arriving at Anfield in 2010.

Some clubs have already made their financial accounts for the Covid-impacted 2020/21 season known, including Manchester United. But assessing the decade between 2010/11 and 2019/20, which included 10 years of FSG ownership at Liverpool and having the data available through published accounts from all clubs, has shown just where the money has come in and where it has been spent.

Figures presented by Swiss Ramble showed that in the last decade, despite the lack of competitive success, it was United who were able to generate the most money, their commercial strategy outperforming their rivals considerably.

Between 2010 and 2020, United brought in £4.67bn of revenue, a figure £1.4bn higher than Liverpool's over the same period, which stood at £3.26bn. Liverpool place fourth on the list when it comes to revenues generated in the past decade, with Chelsea (£3.36bn) and Manchester City (£3.73bn) also ahead of them.

But that major difference between the money coming into the football club has not manifested into success at Old Trafford, with Liverpool having surged past United on a competitive level under the guidance of boss Jurgen Klopp, one of the most progressive managers the Premier League has ever seen.

A large chunk of that revenue has been spent on player wages, which have risen enormously over the past decade.

Of the £4.67bn of revenue United brought in, £2.32bn went on wages, second only to Manchester City's £2.4bn and ahead of Chelsea's £2.2bn. Liverpool spent a fraction under £2bn on wages during the same period. The Reds' spend was 61 per cent of revenue for the period, with United's at 50 per cent and Manchester City at 64 per cent and Chelsea 65 per cent. UEFA recommends that clubs do not exceed the 70 per cent wages to revenue threshold.

Liverpool have made a pre-tax profit of £61m over the past decade, a figure that is almost three times smaller than the £191m that United made over the same period.
The Reds have also operated a rather profitable player trading model, bringing in £359m from player sales during that period, the second most behind Chelsea's staggering £602m. That kind of model is something that United simply haven't placed as much emphasis on when it comes to their own business model, bringing in £117m, the 12th highest.

Manchester United have lead the way in the past decade when it comes to operating profit, with a figure of £461m. Only Tottenham Hotspur and Burnley have achieved operating profit over the same period, with Liverpool having seen an operating loss of £172m, largely due to the financial performance in the early part of the decade as FSG dealt with the mess left from the ownership of Tom Hicks and George Gillett.

The level of owner financing tells the story of Manchester City and Chelsea's backing, with the Abu Dhabi-based City Football Group having provided £837m of owner financing between 2010 and 2020, with Roman Abramovich having provided some £559m at Chelsea.

Owner financing has been greater at Everton, Aston Villa, Brighton & Hove Albion, Fulham and Leicester City than it has at Manchester United (£297m), while QPR, Stoke City, Bournemouth, Bristol City, Cardiff City, Nottingham Forest, Derby County and Blackburn Rovers have all seen higher owner financing than Liverpool (£136m). That heavy spend from some of the others has largely been down to attempting to make loss-making clubs competitive and not having the revenue streams to be able to deliver that at the levels they want. Relegation from the Premier League also plays a part, especially for those clubs who could not bounce back swiftly. Spurs had zero owner financing over the decade, according to the figures.
Manchester United's approach in the transfer market and lack of strategy has been one of the major reasons for them falling behind Liverpool over the past decade. Their transfer debt stands at £135m, behind only Arsenal at £136m, while Liverpool's was a long way back in 14th with £47m. Spending wisely in the market and buying players yet to reach their ceiling at a relatively low market value has been a formula that has paid dividends at Liverpool, while the opposite approach has not worked for United in their quest for success.

The figures demonstrate that the transfer spending at Manchester United has been flawed and highlights their lack of strategy when compared to Liverpool, who are now several years into a structure that will likely remain regardless of who the manager is, although quite whether the same level of success would be delivered post Klopp is an unknown.

Despite both being US owned clubs, and both having owners who seek the business to be a profitable one, there is a very different approach, one that involves having the right pieces of the puzzle in the right places in the football club to drive forward a plan.

That model has allowed Liverpool to push on and succeed on the pitch despite earning and spending far less than their rivals, which leans into the view of one of FSG's most prominent partners, RedBird Capital's Gerry Cardinale, that you don't have to sacrifice cash flow to succeed on the pitch.

United's move to hire Rangnick, a man who is more closely aligned with the kind of strategy that Liverpool have already in place, points to them attempting to steer the club in a different direction in this decade given how much time, energy and money was wasted over the previous decade, in the post-Ferguson years.

They will have some ground to make up on Liverpool, though.

[CCTV]

Good read. A few thoughts..

United finances still remain as they are due to the legacy of fergie.
They still have lots of fans and whilst inheriting a football fan from a relative is likely, me and dad say, the appeal for younger kids has jumped into the more successful trio currently atop the Premier league.
Like arsenal and manu, lfc has a larger existing fambo base. So given success, inheriting a club etc we stand to develop rapidly and gave done.
The tables haven't turned yet as deloitte proclaims the football finances. But perhaps the inevitable turning expected is already underfooy.
The football staff are quite marketable in terms of their commercial appeal. Whilst the fans in terms of marketability are immense. Best chants, best anthem, the magic of anfield, the crazy comebacks.
The contract with Nike sees lfc as potentially their biggest football club sponsorship. Barca technically are, but the will need some turnaround to maintain their position.
Lebro James is a big icon in emerging markets and his potential reach as a minor shareholder in fsg along with some other influencers like Rihanna should benefit the club.
If you don't like the commercial side of football, fair enough. But this aspect of the club has and should continue to see growth.

Fsg have a robust model which can account for failure. Its a sensible model, iirc when chelsea missed out on European football after finishing tenth they needed to shift a lot of players, in doing so they raised some big cash but sold on a much greater amount of players in terms of market value than what was raised in cash. Like selling a few mercs for vw prices a fire sale.

Klopp has obviously been an integral part of the success. He's signed many players or developed young players at the club. In doing so he has seen massive gains in the market value of players bought in or developed youth.
Prior to the pandemic you could have sold anyone of our front 3 and covered the outlay for all 3 essentially.

Over klopps time our net spend has been bigger than real Madrid, which rarely gets cited. They might be able to improve their lot soon. Bale off the books this summer I believe and reportedly 70 odd mill could land both mbop/haaland and they've had ronny/bale wages moved on. Moving on varane and ramos too in terms of wages. Leeds United have a net spend greater than Real Madrid over the last 7 years. Mostly down to pl money.

In the post klopp era we should expect a likely dip.
However the legacy of Klopp should be a message to other clubs too.
1 identify value
2 progress youth
3 profile player characters
4 work with what's available
5 have a plan

He left Germany where the financial beast was bayern, came to LFC and displayed a magnificent resilience to win within the constraints.

He's shown great leadership even having the balls of a bengali tiger to call out the match day goers when he was feeling alone

He's given massive kudos to the fans too and absolutely loves jeering up the fans. Theres a YouTube video detailing the #levels of the fist pump maestro.
When he's on it the players join in.

A personal fav of mine is his dealings with the media where but for his charming and civil manner, he essentially says dumb question or that's your job to write.

I hope and suspect he will stay on after the end of his current deal. Seems happy with his working conditions and relationship with the other departments and owners. Has seen the new stand and training complex developed and should enjoy a few more years of an expanded Anfield.

[CCTV]

I'm not sure if the football clubs finances could sustain a year without cl, or both cl and el.
But the wiggle room we have with respect to ffp would mean we shouldn't be needing to sell players because of ffp.