This summer has already seen Liverpool commit to at least £170 million in transfer fees, and several decisions have led to them being able to add even further to their spending.
Florian Wirtz is costing Liverpool £100 million at a bare minimum; Jeremie Frimpong commanded a £29.5 million fee; Milos Kerkez‘s arrival will be worth about £40 million.
That takes Liverpool’s minimum summer spend to almost £170 million and there could be further signings to come. Crucially, though, there will be departures.
There are a myriad of factors that have led to Liverpool being able to break their transfer record and spend big this year.
Here, we explain a few of the reasons behind their summer spree.
Money in the bank
It sounds painfully obvious, but Liverpool have been keeping their pennies tight in the piggy bank for nearly two years now.
Last summer, Federico Chiesa was the only new squad addition and cost just £12.5 million including add-ons.
The Reds did also pay £114.5 million across the 2023/24 season in player amortisation costs – that is the amount Liverpool were still paying in transfer fees for players bought in previous windows.
While £114.5 million may sound a lot, it was the fifth-highest in the Premier League during this period. The club’s accounts haven’t been published for 2024/25, but we know that the amortisation figure shouldn’t have increased.
In comparison, Chelsea faced £190 million of amortisation costs for the 2023/24 season and accumulated a smaller turnover than Liverpool by £145.3 million.
The contrast is again stark when comparing the total cost of the clubs’ squads.
Before this summer’s dealings, Liverpool squad cost £749 million, whereas Chelsea had spent nearly double that on theirs.
Meanwhile, Man City‘s total squad cost came to £1.11 billion.
Improved financial position on last season
While Liverpool already stood strong financially last summer, their position will have improved even further over the last year.
The club published an annual pre-tax loss of £57 million in May 2024, nearly £50 million more than they lost in the previous year.
However, the Reds’ overall revenue rose by £20 million to £614 million during the same period, and the club’s commercial revenue increased by £36 million to £308 million.
That came after a year without Champions League football. With the team back in Europe’s top-tier competition, their prize money will have increased significantly.
Liverpool are estimated to have earned £83.7 million from their Champions League run to the last 16.
In addition, the club should be paid about £176 million by the Premier League based on a combination of regular payments, prize money and broadcast appearances.
While the Premier League payments would likely be less than £10 million extra on the previous season, their 2024/25 Champions League campaign and subsequent qualification for next season’s competition represents a vital source of income.
FA Cup and Carabao Cup earnings are almost immaterial in comparison to the Premier League and Champions League‘s offerings.
Player sales are significant
Something that has come to characterise Liverpool’s transfer dealings since Jurgen Klopp took over and Michael Edwards really took up the reins has been their ability to sell well.
This was most apparent when Philippe Coutinho left for £142 million to Barcelona, allowing the Reds to spend £65 million on Alisson and £75 million on Virgil van Dijk.
Since the summer of 2021 Liverpool, have had the ninth-highest transfer net spend in England, according to Transfermarkt.
Net spend is the total amount spent on transfers minus the amount accrued from player sales, and Liverpool’s figure for the last four years stood at -£213 million before Wirtz’s signature.
For comparison, Chelsea have a -£722 million net spend and Man City‘s number is -£312 million, while Arsenal‘s net spend is -£410m.
Remarkably, even West Ham and Nottingham Forest had spent more than Liverpool until Wirtz’s transfer, with the latter racking up a net spend figure £11 million higher than that of the Reds.
While Liverpool have started the summer spending plenty, Darwin Nunez‘s departure is likely being factored into how much the Reds are able to spend.
Wherever he goes, the Reds are likely to receive at least £50 million for the striker. That comes on top of the £18 million for Caoimhin Kelleher, £10 million (including wages saved) for Trent Alexander-Arnold and soon £35 million for Jarell Quansah.
Potential sales of Ben Doak, Diogo Jota, Harvey Elliott and Tyler Morton could also earn Liverpool good money. However, this would leave them with extra work to do to bolster the squad.
It is worth mentioning that Liverpool’s wage bill is the second-highest in the Premier League.
However, the exit of Alexander-Arnold and others – potentially including high earner Andy Robertson – will free up funds for new signings’ salaries.
Building from a position of strength
All of Liverpool’s financial planning has led them to be in a healthy position with regard to profit and sustainability rules (PSR).
Football finance expert Kieran Maguire told BBC Sport: “Liverpool have been outside of the top 10 spenders on player signings since 2019, but their model is a classic case of being smarter rather than bigger.
“Contract extensions for Mohamed Salah and Virgil van Dijk are arguably worth far more to the club than a huge investment in untried new players – they certainly have the capacity to spend £200m but whether that fits with their model is another matter.”
Premier League clubs are allowed to lose £105m over a three-year period, with allowable deductions for investment in infrastructure, the academy, the womens team and community initiatives.
The Liverpool Echo‘s chief business of football writer, Dave Powell, wrote that the club’s profit for the 2024/25 season “could reach £50m according to some estimates.
“Factoring such a profit into the three-year cycle from 2022/23 to 2024/25, assuming similar allowable deductions, would see that net positive PSR position grow even further, up to some £100m before taking into account the £105m figure that is permitted.”
In simple terms, that means Liverpool could spend approximately another £200m this summer and still be playing by the rules, if they were to then lay off the spending for the next two windows.
Ultimately, each player acquisition will have been weighed up by the club. They will have assessed how likely they are to improve the team’s chances of on-field success which, in turn, increases prize money and commercial income.
Wirtz, for example, may have cost a record fee. But if like Van Dijk he is a long-term success who keeps Liverpool at the top of the game, the cost will be looked back upon as simply an investment was repaid.
As supporters, we are interested first and foremost about Liverpool winning. The owners have to balance each deal’s merits and risks.
At the moment, it seems the club are taking their chance to invest in the short term to ensure they stay at the top in the long term – a decision that will hopefully benefit us who care only about the team lifting silverware.
