Liverpool: where money costs too much
If Liverpool’s financial losses, announced this week, proved one thing, it is that the club is way behind Manchester United and Arsenal in terms of commercial success. Liverpool lost nearly £50million in the ending July 31, 2012, which is not a lot in Premier League terms, but still a reflection of mismanagement and wasted opportunities.
Clubs do not exist to make money, of course – they are there to win trophies and keep fans happy – but financial records do say something about a club’s ability to survive in shark-infested waters.
Ian Ayre, the Liverpool managing director, claimed that the losses are exaggerated. The club, he said, wrote off £35million incurred by Tom Hicks and George Gillett, the previous club owners, in their plans for a redesigned new stadium. Liverpool will instead redevelop Anfield. Nevertheless, £35million seems a lot to pay for nothing. You could get Andy Carroll for that or even 70 per cent of Fernando Torres.
Liverpool even wasted nearly £9million on dispensing with staff, like Roy Hodgson, the former manager, who has since turned up as the head coach of the England national team.
Wasting money on compensation is not unique to Liverpool, and, in that regard, they are not in Chelsea’s league. However, Liverpool FC has shown a frightening predilection for paying too much money for players. It seems that the club has not learnt one immutable fact: high wages bringer greater rewards than high transfer fees. The final Premier League table in any given year will mirror, usually, the amount of wages that clubs spend.
In some respects, Liverpool operated at a de facto break-even position, which was impressive given the lack of Uefa Champions League football and the crazy money wasted on certain players. But the club still has a reputation for profligacy.
To think there was a time when the football world regarded Liverpool FC as prudent. In the Seventies, when Liverpool had the best team in Europe, and possibly the world, it was rare to find the most expensive players at Anfield. Even when Liverpool sold Kevin Keegan to Hamburger SV in 1977 for £500,000, the club bought Kenny Dalglish for £60,000 less. That is how to conduct business.
For Liverpool in the Seventies, everything was about what happened on the pitch. That is why, at the time when the players were sweeping all before them in Europe, the official Liverpool FC club shop at Anfield was a glorified hut. Photographs, red bobble hats, and facsimile autographs . . . such was the club’s range of souvenirs.
In terms of organisation, Liverpool were brilliant in the Seventies. In terms of management, the Boot Room concept was unsurpassable. Commercially, Liverpool was behind the times. Two generations on, the club has not yet caught up.
The Liverpool of the Brendan Rodgers era needs to reclaim its lost horizon in Europe, but it is just important for the club to close some of the drains down which employees of the past have thrown money. Just because poor business practice disfigures football, it does not mean you have to perpetuate the culture of waste.