28 May 2018 09:41:46
Hi Ed.

Long time reader, first time poster.
I did the research about money.

2016/ 2017 - We got a profitable transfer 20m and got total profit before tax around 40m.
2017/ 2018 - We got a profitable transfer around 20m and hopefully for the UCL we can raise our profit to around 100-120m

As I knew about FSG, they would like to keep the balance sheet slighty profit every year.

So I think this summer transfer window we will have the budget around 100m plus selling (maybe around 20-30m)

Keita would take 50-60m
and maybe Fekir? 60m

So my question is
Do you think the club would break the limit of transfer record in this market (net spend more than 150m)

Or they will just spend the same level and get the bargain optional man for position like winger or no.6

Cheers.

{Ed002's Note - Thank you for your efforts but I am afraid dorottee that this is only considering a tiny part of the picture. You cannot consider the basic transfer fees in and out as a simple profit or loss - there are significant additional costs to transfers that must be taken account of (for example Liverpool spent a tiny bit under £27M on agent fees in the season just gone - excluding the additional payment fees for Keita). That is not insignificant and one of the major issues people always exclude when trying to understand the finances. You also cannot consider annual profit and loss on transfers and forget about the money the club spends on wages, the costs of running the facilities, the income from elsewhere, the debt that the club is taking on in loans from the owners (currently maxed out) and from banks (increasing).

As such, you need to consider the full picture including the costs associated with updating the stadium. You also need, for purposes of transfer income and outgoings, the breakdown of when the money arrives and goes - people often quote the fictional "Coutinho money" figures and what the club gets and when. Do date they have had 15% of what in the end may be due). Equally, people forget the income from Manchester City that Liverpool got from them winning the league with Raheem Sterling (and they also the money that Liverpool need to pay QPR from that income). What about the ludicrous image rights payments (although they have now finished) that Liverpool agreed in the contract for one player - again people forget it. And the 5% of the transfer fee that is paid for the registration of the player. Insurance costs are another significant expense often forgotten.

So it is not a simple breakdown of any costs listed against players for transfers in and out that counts - even if an accurate source was used.

Regardless of all of this, the club plans to continue spending to try and buy success. The additional Champions League money and the Premier League money helps a great deal - but don't forget there is a large business to run and increasing debts that need to be serviced. The owners are gambling that the increase in value of the club offsets the debt they are taking on - and they will be right, and tehy will continue to put money in to the club - but that is not just for transfers.}

1.) 28 May 2018
28 May 2018 10:33:46
And that Ladies and gents, is why we love Ed2.

2.) 28 May 2018
28 May 2018 10:34:39
Thanks ed002. You seem to need to do this every year, but I learn/ remember something new each time you post on finances.

{Ed002's Note - You are welcome Mark.}

3.) 28 May 2018
28 May 2018 10:51:17
We love Ed002 and should give FSG their due. If Klopp tells them he needs £50m for a new number 1 goalie they will give it to him, and now they won't need to ask why. Personally, I hope he dos and that we manage to land Fekir and a few others as well. This summer is a crucial one in terms of the Klopp project, we simply must build on the progress so far.

4.) 28 May 2018
28 May 2018 10:54:34
Fair play. Some serious knowledge on show. Nice one Ed002.

5.) 28 May 2018
28 May 2018 10:58:53
As ever Ed002 gives more than he takes. Great explanation.

6.) 28 May 2018
28 May 2018 11:48:15
Ed002, would you consider the club's level is debt at a dangerously high one should we, for example, miss out on CL football for a season or two? How do we compare with other top 6 OK teams in terms of managing debt levels?
I take on board your point around the owners gambling on success but should our financial position give reason for us, as supporters, to temper our expectations with regard to high value signings thus summer? Thank you for your time and appreciate your insight.

{Ed002's Note - The owners made a clear statement that they can sustain servicing the debt but they cannot endlessly throw money at the club and must comply with FFP or take the consequences. Right now they are fine and only two English PL sides had an issue last season and both were related to wages and not expenditure or debt. The situation has been eased by the additional PL income and the club will continue to spend in search of success, but they need to stop taking on new debt.}

7.) 28 May 2018
28 May 2018 12:26:29
ED02 Great explanation to Dorotre post.
It is facinating to know how much more of business than a sport it has become.
You shod really peice these types of answers together and have them as a seperat tab where we could all go on to to read and learn.

Thanks again for your knowledge.