Liverpool and the Champions League Hangover – Part 1

What happens when a mega-club that has traditionally qualified for the Champions League (CL) no longer makes the cut?  We may find out this year.  As of March 11, Liverpool sits in sixth place in the Premier League with 48 points, 2 points off fourth.  But with all the clubs surrounding the Reds having at least a game in hand to play (Villa with three games yet to play!) the race is far closer than anyone at Anfield would feel comfortable about.  While there are still plenty of matches left to play it is highly possible that Liverpool may find itself absent from the CL next year.

Supporters are well aware of the financial boon that participation in the premiere European club tournament brings a club.  What they may not know is just how dependent their club may be on that revenue. It is not immediately clear how much money the CL brings a club, so let’s start there.

The revenue derived from CL participation can be broken down into three categories: Prize Money, Gate/Matchday Receipts, and Broadcast Revenue.

Prize Money

For Prize Money calculation I assume that Liverpool repeats an average performance in the CL relative to its historical standards, which means survival through the group stages and into the quarter final round.  This way lost revenue won’t be over or understated.

All teams participating in the CL group stages are awarded €3.8m each, additional bonuses are awarded for each match played (€550,000), and each win (€800,000) or draw (€400,000).  12 points are assumed to be the average minimum to make it out of the group stages, and again assumed to be comprised of 3 wins and 2 draws.

The first and second knockout rounds pay a flat €3.0m and €3.3m respectively.

Summing up:

€3.8m – Group Stage Participation Award

€3.3m – 6 Group Matches played

€2.8m – 3 Wins and 2 Draws in Group Stage

€3.0m – First Knockout Round Award

3.3m – Second Knockout Round Award

16.2m Total Prize Money

Gate/Matchday Receipts

Based on the figures from the wonderful site Football Finances I estimate that Liverpool grossed approximately £1.31m per home match from gate receipts and matchday revenues in 2008.  This is based on £39.2 in revenue earned from 30 home matches played across the Premier League, Carling Cup, FA Cup, and Champions League.  There is gate revenue sharing to take into account, but I assume that most of the difference is accounted for when Liverpool receives its share of away day compensation.

I will bump the per match revenue figure by a conservative 2% to account for the inevitable price increases that must have happened.  This brings the per match revenue to £1.3362m.  Applying this to Champions League fixtures we get:

£4.0m – 3 Group Stage Matches at Home

£2.7m – 2 Knock Round Matches at Home

£6.7m – Total Gate/Matchday Revenue

Broadcast Revenue

Broadcast monies as distributed by UEFA is estimated to be £38m based on figures provided by Arsenal in their annual financial reports (freely available and stored on the club website, all other clubs take note!).

£38m – Total Broadcast revenue

How Much Then?

£14.7m –  (€16.2m / 1.1017 euro/pound exchange) Total Prize Money

£6.7m – Total Gate/Matchday Revenue

£38m – Total Broadcast revenue

£59.4m – Total

£59.4m is a large chunk of money for any club to have to budget without.  To be fair this is not the true figure that Liverpool will lose, a portion of the loss will be mitigated by participation in the UEFA Europa League, but given the Grand Canyon sized gulf between the two leagues it is unreasonable to expect that it will put a major dent in Liverpool’s lost earnings.

We have a figure now, ostensibly the price of Liverpool’s failure to qualify for the 2010-2010 UEFA Champions League, but what does this potential missing £60m mean for Liverpool as a business?  Find out in Liverpool and the Champions League Hangover – Part 2.

Liverpool and the Champions League Hangover – Part 1

4 thoughts on “Liverpool and the Champions League Hangover – Part 1

  1. […] Tagged Liverpool, Manchester United, parachute payments, relegation When a club is relegated from the Barclay’s Premier League it loses out on the lucrative TV revenue the league portions out to member clubs each year.  That missing TV money represents a large percentage of even the largest club’s revenue, as we saw in the case of Manchester United and Liverpool. […]

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