What is set to be a busy summer of transfer activity for Liverpool kicked off in earnest on Thursday with the announcement of a deal to sign Alexis Mac Allister from Brighton & Hove Albion.
The 24-year-old Argentinian international, a World Cup winner back in December, arrives at Anfield on the back of a superb stint in East Sussex where he proved himself as an elite Premier League midfielder whose services had been courted by some of the Reds’ major rivals.
There was no transfer battle in the end, no need to keep upping offers in an attempt to gazump an opponent, as had been feared in the club’s pursuit of Jude Bellingham that they ended up stepping back from. Liverpool managed to bag the first signing of the summer for a bargain of £35m, a sum that is a fraction of what some of their rivals have spent in more recent times on players of a lesser pedigree. To put the sum into some context, it is less than relegated Leeds United paid to land striker Georginio Rutter from Hoffenheim in January.
Liverpool, under the ownership of Fenway Sports Group, watches the sums more closely than most when it comes to transfer activity, something that they have been both lauded and lambasted for over time.
DONE DEAL: Inside story of Mac Allister deal as 'aggressive' Liverpool window gets started
LIVE: Alexis Mac Allister signing reaction as Liverpool transfer plan turns to new targets
The Reds have the ability to spend sustainably given that they have created such a strong business thanks in small part to the success on the pitch that they have been able to leverage in recent years. But with the need for a significant rebuild due to an ageing squad and departing players, spending this summer was unavoidable, although finding ways to address what they need to do with recruitment and how to make fit within the confines of their business model will be a challenge.
Amortisation is how transfer fees are accounted for. While clubs may stagger payments for players or pay in one go, which impacts cash flow, the actual way in which they appear on the balance sheet is as annual amortised cost. That is the value of the guaranteed sum divided by the length of the contract.
In Mac Allister’s case, a £35m fee spread over five years would be £7m per year amortised. In the most recently published 2021/22 financial accounts for Liverpool the club’s amortisation, depreciation and impairment costs for the year were £114.3m. That is a figure that could rise through next year’s accounts due to the addition of Darwin Nunez and Cody Gakpo, although any rise could be partially offset by the departing of players and extension of contracts that lessen the annual amortisation cost, as in the case of the likes of Alisson Becker and Virgil van Dijk. Mac Allister won’t be included in the next set of accounts as Liverpool’s financial year runs to the end of May.
Naby Keita saw his Liverpool journey come to an end this summer as the Guinean midfielder left Anfield upon the expiry of his five-year contract that he signed back in 2018 when he arrived from RB Leipzig for a fee of £52.75m. Keita’s amortised cost to the club was around £10.5m per year which was included even up to the most recent financial year. In securing Mac Allister for £35m on a deal of the same length the Reds have already made a saving of £3.5m in that regard.
Then comes the wage bill. Liverpool’s payroll stands as the second highest in the Premier League according to the 2021/22 accounts, the sum being £366m. That was, however, distorted due to the bonus payments made to the squad for domestic and European successes during that season where they won two domestic trophies, reached a Champions League final and finished second in the Premier League. There were also a significant number of contract renewals that were factored into that financial year and the 2022/23 accounts are expected to show a considerable decrease from that figure.
While no specifics have been placed on just how much Mac Allister will earn at Liverpool, some reports have placed it around £150,000. To put that into some context it would be a little higher than what recently released Alex Oxlade-Chamberlain and Keita had been earning with the Reds.
Mac Allister doesn’t solve all Liverpool’s competitive issues and they have a considerable amount of work to do this summer to build a side that can overcome the disappointment of last year and make a return to the top four and challenge Manchester City for domestic dominance. It is, however, a shrewd first play, one that will barely make a financial ripple given the other sums that have been saved elsewhere from amortisation costs dropping off and wages leaving the payroll. It means that there should still be significant room for manoeuvre for the Reds when it comes to addressing further the need to put together a capable squad.
READ NEXT:
