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The truth about Liverpool only having £45m to spend this summer as FSG set budget for Arne Slot
Liverpool supporters were crying out for some retail therapy last summer and were furious when FSG sanctioned only modest signings and ended the transfer window with a positive balance.
Eight months down the line and it’s fair to say the owners have been vindicated. A second Premier League title of the FSG era will be confirmed if Arsenal lose to Crystal Palace tonight.
If not then Arne Slot’s side have the chance to secure the crown against Tottenham at Anfield on Sunday.
With club legends Virgil van Dijk and Mohamed Salah tied down to new deals, a historic season is reaching a rousing crescendo at Liverpool.
However, Fenway Sports Group are well aware of the need to strengthen in the transfer market this summer. They have an aging squad and a succession plan must be put in place.
What’s more, several rivals underperformed this season relative to how much they spent. FSG will be wary of resting on their laurels in an uber-competitive Premier League.
FSG are known for their relatively conservative approach to recruitment but the owners, whose sports empire is worth over £12bn, do have the capacity to dig deep.
They have shown that in windows gone by, and the hope at Anfield is that they can sign oven-ready superstars for a fresh assault at the title and another European campaign next season.
But in modern football finance, an owner’s bank balance isn’t the only thing that dictates how much they can spend on Hollywood signings.
There’s also the small matter of Profit and Sustainability Rules (PSR), which are acting as an anchor for the most ambitious clubs.
Liverpool have ample headroom under PSR
There have been some claims in recent weeks that, because Liverpool lost £62m in their last set of financial accounts, they only have modest funds available to spend this summer under PSR.
Some reports suggest Profit and Sustainability Rules will only allow Liverpool to spend £45m meanwhile, while there have been dubious social media claims about sources saying the Reds are at the limit.
These are well wide of the mark.
It’s true that Liverpool have lost £77m in the last two financial years, but with PSR-exempt add-backs – such as infrastructure, academy or women’s team spending – they are comfortably within the quota.
Under the Premier League system, Liverpool are allowed to lose up to £105m over a rolling three-year period as long as the bulk of that figure is covered by the owners.
The new PSR period starts in July, after which Liverpool will be assessed based on the 2023-24, 2024-25 and 2025-26 seasons, with compliance determined by the Premier League with a six-month delay.
So for next season’s PSR assessment, we only have the negative £62m figure available.
In 2024-25, they will post a significant profit, thanks to their return to the Champions League, as well as rising commercial and matchday income.
That will likely bring them to a break-even point as far as PSR is concerned, which means they have the full £105m allowance.
Given that new signings are amortised over five years, that means Liverpool could in theory make £525m worth of signings without falling foul of PSR.
Of course, that’s a very crude calculation that doesn’t take account of wages and other factors, but it does illustrate how comfortable Liverpool are with PSR.
How are Liverpool faring under UEFA PSR?
UEFA’s PSR system is slightly more complex.
It has lower loss limits than the Premier League mode but with greater flexibility for clubs who are deemed to be in good financial health.
The central point of the system is a squad cost control rule that the Premier League hopes to mirror from 2026-27.
Under this system, Liverpool are allowed to spend no more than 70 per cent of annual turnover on wages, transfers and agents fees.
Liverpool’s turnover was £614m last season and could break £700m in 2024-25.
UEFA assess PSR on a calendar year basis, not based on seasons. So, taking the average of those two figures, Liverpool would be allowed to spend £459m on wages, transfers and agent fees.