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SBD Global/March 5, 2013/Finance

Liverpool Reports Debt Increase Of $32M To $131M In 10-Month Period Ending Last May

Liverpool is not expected to be under financial pressure to sell players this summer.
Liverpool, on Monday, announced its debt has increased by £21.8M ($32.7M) as "prolonged absence from the money-spinning Champions League takes its toll," according to Toby Davis of REUTERS. Liverpool's latest accounts show the club recorded a loss of £40.5M from Aug. 1, 2011 to May 31, 2012, and debts increased to £87.2M ($131M). The club said that the cost of rebuilding its squad during a period without European football "played a large part in the debt increase" and added that revenue "actually increased" by £5M ($7.5M) (REUTERS, 3/4). In London, Tony Barrett reported contributing factors to the increase in debt were "player installment payments plus exceptional payments" of just over £9.5M ($14M). Such payments include a stadium project, general restructuring and payoffs to "senior employees who left the club" (LONDON TIMES, 3/4). Liverpool Managing Dir Ian Ayre said, "The key message for me is that we are continuing to transition to the point we have been working on for several years under this ownership -- which is to continue to improve revenues and manage our cost base effectively. The biggest cost base without doubt is player trading and player wages -- but these accounts demonstrate that we are still working hard to improve that." He added, "Nobody in a position of authority would say it is a good set of accounts where you lose money in any business (LIVERPOOL ECHO, 3/4).

LOOKING FOR HOPE: In London, David Conn reported the £40.5M loss followed a £49M loss the previous year, ending July 31, 2011. This period covered Fenway Sports Group's "first months since its takeover" from former owners -- U.S.-based Tom Hicks and George Gillett. If Liverpool repeats these figures next year, it would "fail the new regulations introduced by the Premier League," which limit annual losses to £35M ($52.8M) (GUARDIAN, 3/4). Also in London, Chris Bascombe reported FSG "has injected" £46.8M ($70.1M) of its own cash into the club "via a non-interest loan." Despite the debt increase, Liverpool's annual pre-tax loss "actually fell during this period" by £8.8M ($13.2M). There "is no doubt" FSG feels it remains in a period of damage limitation. However, the figures are "reflective of problems they inherited and the discomfort they expect the club to endure before they can reclaim top four territory." How these "enduring issues will be resolved without swift improvement on the pitch and a solution to the stadium issue is unclear." The greatest potential source of future revenue, however, is "extra seating capacity." However, there is "no suggestion the club is any closer to raising funds" to act upon its statement of intent to stay at Anfield (TELEGRAPH, 3/4).

NO PLAYER SELLING: In a separate piece, Barrett also reported Liverpool Manager Brendan Rodgers "will not come under financial pressure to sell players in the summer." Ayre said, "We won’t be selling anyone because of the financial position. If we’re selling anyone, it’ll be because they are deemed by the manager to be surplus to his requirements and, obviously, if that happens, we will be replacing them and bringing new players in, as we always do." Liverpool expects its next accounts to "reveal a much healthier picture," particularly because they will include the proceeds of a £20M- ($30M)-per-year kit sponsorship deal with Warrior (LONDON TIMES, 3/4).
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