THE NUMBERS GAME

Not only do I spend 40 hours a week crunching numbers for a living, I've had a quick peek at the annual Deloitte Review of Football Finance 2009 report into football's finances which revealed some startling truths about their long-term sustainability. Overall from a Liverpool FC perspective, the financial situation is relatively not as dire as the scaremongering media analysis in recent weeks would have you believe. Here's the key figures and what they mean:

Club	Debt (£m)	Turnover (£m)	Wages (£m)	Wages/turnover
Arsenal	416	223	101.3	45%
Aston Villa	73	75.6	50.4	66.6%
Blackburn Rovers	17	56.4	39.7	70%
Bolton Wanderers	52	59.1	39	67%
Chelsea	701	213.6	149	68%
Everton	39	76	44.5	59%
Fulham	197	53.7	39.3	73%
Hull City (2007 figures)	1	9	6.9	77%
Liverpool	280 (est)	159	80 (est)	50%
Manchester City	147	82.3	54.2	66%
Manchester United	699	256.2	121.1	47%
Middlesbrough	93	48	34.8	73%
Newcastle United	106.2	100.8	74.6	74%
Portsmouth	57.7	70.6	54.7	78%
Stoke City	2.3	11.2	11.9	106%
Sunderland	69.2	63.6	37.1	58%
Tottenham Hotspur	65	114.8	52.9	46%
West Bromwich Albion	8.9	27.2	21.8	80%
West Ham United	36	57	44.2	76%
Wigan Athletic	66.4	43	38.4	89%
Total	3126.7	1800	1095	55%

Table courtesy of the excellent David Conn of the Guardian.

Conclusions
Debt

Liverpool currently have the smallest debt at £280m - made up of Hicks and Gillett's loans used to buy the club and fund operations (player transfers and wages, consultancy costs for new stadium and interest repayments). Arsenal's £416m deficit is next "best" as they are still paying for the Emirates Stadium following the failure to sell the Highbury properties, poor sporting performance and boardroom uncertainty. Chelsea and Manchester United have by far the biggest debts, owing in the region of £700m. The major difference is the interest accrued: the Glazer family levied large debt on club during their takeover whereas Chelsea's deficit largely consists of interest-free loans from their Russian sugar daddy.

Turnover

Turnover is a rather deceptive measure of financial performance as it only indicates the level of income a business generates and takes no consideration for operating costs (see below for analysis of profits). Having said that, theoretically, the greater the turnover, the greater financial muscle a club has regarding transfer policy and wage structure in order to be competitive. The top four's domination is underlined by these figures : since Newcastle's demise, Spurs are the only other club to turnover more than £100m a year.

Wages

In order to compensate for their reduced income as they struggle to keep abreast with the dominant big four clubs, Premiership teams are increasingly blowing bigger sums of plto recruit stars to bridge this gap. Stoke City spent more than their entire turnover on wages and will look now to consolidate and increase their turnover. Football's governing bodies have criticised this sort of financial (mis-)management after many high-profile clubs (e.g. Leeds Utd and Leicester City) fell into administration following spiralling costs in the desperation to compete at the top table. Despite calls for a salary cap, Football League clubs cannot have a wage above 60% of their turnover: sensible indeed. Interestingly, only six Premier League clubs would meet this criteria: Man U, Liverpool, Arsenal, Everton, Tottenham and Sunderland.

Now let's look at how the books balance for the top four. In simple terms, who makes a profit when the costs are taken out of the turnover.

Club: Matchday revenue / Operating profits / Overall debt
Man U: £101.5m / -£44.8m / £69m
Liverpool: £39.2m / +£30.2m / £21m
Chelsea: £75.5m / -£84.5m / (n/a)
Arsenal: £94.6m / +£36.7m / £26m

Matchday revenue

Unsurprisingly, Man United dominate this area as their monstrous commercial operation, that is probably only matched globally by Real Madrid. Sponsorship, marketing, merchandise, hospitality and the largest club stadium in Britain all contribute to swell the coffers. Arsenal are next best following the move to a larger stadium and the ability to charge London prices. Chelsea come third following the arrival of Kenyon's marketeering and the moneyed Johnny-come-Lately plastic West Londoners (exemplified by the club having to hand out free flags on European nights to create atmosphere! Liverpool fans bring their own.) This is an area which Liverpool's ownership are keen to improve with the construction of a new, larger stadium and capitalising and expanding the commercial operation under Ian Ayre. Anfield has been given 5 more years before needing substantial refurbishment and the situation is underlined by the fact that even Spurs generate more sponsorship and matchday revenue despite finishing mid-table and having an even smaller ground!

Operating profits

Despite the poor matchday income, Liverpool still made a modest operating profit and alongside Arsenal show that business is healthy. Off the field, Ian Ayre's team have expanded the merchandising operation (Liverpool's new Liverpool One superstore), matchday travel packages, LFCTV, improved website and setting up overseas commercial and sporting links. The key factor in Liverpool's relatively poor operating turnover is the limited matchday profit from Anfield. However, it is important that the club strike the right balance between maintaining the integrity of its traditions while taking advantage of commercial deals, sponsorship and attracting new fans in order to increase revenue for transfers, wages and investment in the youth structure and training facilities.

PERFORMANCE-RELATED INCOME

Unsurprisingly, Man United's on-field success was reflected by their prize money. Despite finishing as Premier League runners-up, Liverpool won £10m less in prize money than 3rd placed Chelsea - largely thanks to Liverpool's epic Champions League exit at Stamford Bridge. This underlines the financial importance of the tournament and in pursuit of that elusive 19th title, we cannot afford to neglect our European commitments.

Club: PL /Euro /Cups / Total

Man Utd: 52.3 / 33.7 / 4.0 / £90.0m

Liverpool: 51.1 / 20.4 / 0.8 / £72.3m

Chelsea: 48.4 / 27.7 / 5.1 / £81.2m

Arsenal: 47.2 / 23.4 / 2.8 / £73.4m

Premier League earnings: prize money (max £15.2m, min £761,000); TV cash (£13.9m per club plus £480,000 per televised match - minimum payment 10 matches); overseas TV, sponsorship and licensing money (£12m per club). In 2008-09, Liverpool earned 51.1m compared to 52.3 for Man United (even Newcastle managed£37m!!).

European: Champions League earnings (TV money and performance bonuses).

FA Cup: prize money (£75,000 for 3rd round win rising to £2m for final win); TV money (£160,000 to £275,000 per live match). Carling Cup: £100,000 per live televised match.