Just in time for the season opener, a haiku to describe the current situation at Anfield.
Awake to red white blue spring
Glory to be had
El Nino rises
Anfield roars out its desire
Crimson sun wavers
Doomed man paces the touchline
Dusk falls on the Red
European nights no more
Eyes on a new era
Last time I estimated a figure of £59.4m in lost revenue should Liverpool fail to qualify for the 2010-2011 Champions League. As mentioned before, some of this lost revenue will be ‘found’ by playing in the Europa League, so let’s adjust for that to get a more accurate picture of the real financial impact. I will assume the best case scenario for Liverpool and have it win the entire competition. This means it will receive the maximum possible prize money and matchday revenue in our hypothetical. Off we go:
(Unfortunately the Europa League is given much less attention and therefore less documentation compared to the CL; numbers are as best I can find them or reasonably estimate. If I estimate a figure I will tell you when and how I did it).
-£59.4m – ‘lost’ revenue from missing CL
+£3.1m – Prize Monies (1)
+£14.7m – 11 matches * 1.3362 (est. matchday revenue / game as determined last time)
+ £4m – Broadcast revenue (2)
–£37.2m net impact with no CL and a Europa League win Continue reading “Liverpool and the Champions League Hangover – Part 2”
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. Continue reading “Liverpool and the Champions League Hangover – Part 1”
Liverpool Told to Cut Debt
Liverpool Football Club is on the hunt for investors to inject fresh capital into the Merseyside outfit. Owners Tom Hicks and George Gillett are open to either a partial sale or complete takeover of the club depending on the terms. But there is a particular urgency to the search as the clubs’ refinancing hinges upon a reduction in the current debt levels,
“Liverpool soccer club will have to cut debt by 100 million pounds ($160 million) before its bankers consider refinancing the Premier League team’s loans, managing director Christian Purslow said.
The 18-time English champion has 237 million pounds in debt,”
Source: Bloomberg News
Weakest of the Top 4
Although the Liverpool’s 237 million pounds debt pales in comparison to Manchester United’s 700 million pound debt (champions even in debt…), it is still substantial relative to Liverpool’s particular economic situation.
Liverpool’s reported revenue for the 2007/2008 period was 159 million pounds, this was composed of 41% Broadcast Revenue, 32% Commercial Sources, and 27% Match Day Revenues. The mix may have changed slightly in the past two years, but not likely by much as Match Day revenues are largely capped by the lack of a new stadium. This means that among the Top 4, Liverpool are the most reliant on Broadcast Revenue for their survival, with a large share of that coming from participation in the Champions League.
Outstanding debt was 237 million pounds as last reported, given this yearly financing costs are likely in the 30 million pound range assuming that Liverpool have the unfavorable rates that football clubs usually pay. Debts at a level almost 150% of club turnover are likely to result in higher fees as a penalty for the declining credit quality of the club.
With a spot in Europe under threat, a substantial portion of the club’s broadcast revenue, it is no wonder that the club’s bankers are requiring a draw down in the debt levels before releasing new financing.