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Liverpool assures financal stability in the midst of debt rise

Wigan Athletic v Liverpool - Premier League

Liverpool said it is in the process of settling its financial issues.

Net debt rose alarmingly by a third from £65.4m in July  2011 to £87.2m in May 2012.

But managing director Ian Ayre said it was all spent in restructuring the squad which should help in the tough times to come.

We are trying to… invest in our team and improve our team. That has a cost, which creates debt.I take comfort in the fact that the work we have done, some of which costs us a lot of money in this period and beyond, looks pretty painful at the time.But as long as you invest in it and manage it in the right way, then hopefully it bears fruit as we go forward… in a world where we are expected to break even,” he said.

Money expended on players

The Premier League club went into a loss  of £1.7m, compared to its profit of £43.3m in player transfers a year ago when its financial situation boomed, hugely due to the £50m transfer of Fernando Torres to Chelsea .

Mr. Ayre added that the Merseyside club sold some of its players at a loss which included Christian Poulsen and Raul Meireles. A total of 11 players were sold in the meantime.

“We’ve made losses as a result of selling them but at the same time we’ve improved our longer-term position in terms of our wage bill by reducing the wages for those particular contracts. We are investing in players like Jose Enrique and Sebastian Coat,” he followed.

Liverpool also had to replace its former manager Kenny Dalglish, who was replaced by Brendan Rodgers .The payment for his severance was also mentioned  in its accounts under the  £9.5m of exceptional payments section.

Growth Commercially 

Liverpool made pre-tax losses of £40.5m between July 2011 and May 2012, a bit  lesser than £49.3m lost a year ago. Looking at the other side of the coin, it’s actually not worthy of a comparison as the latest accounts cover a 10 month period and not 12 as was earlier. The accounts are being changed to report from May to May instead of July to July to match it with the footballing year.

Despite of not playing in any big European competition during the period, its success in domestic competitions gave a way to more matches, which recovered the amount lost in  media and match day revenue, the club said.

Meanwhile, they won the Carling Cup and reached the FA Cup final.

Talking to Liverpool’s official website: Mr Ayre said: “Although we didn’t play in a European competition, we had great success in both domestic competitions, which gave a boost to our revenue.In addition, areas like our commercial partnerships continued to grow, despite a global recession.”

Mentioning these results as quite old, they said things have changed since last summer.

Off the pitch, we forged new partnerships with Warrior, Garuda and Chevrolet – the revenue from these contracts will show in the 2013-14 financial accounts; however, these partnerships continue to demonstrate the strength and reach of the LFC brand,” Mr Ayre concluded.

The club negated any chances of  paying any dividend to its shareholders.

Source- BBC News

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