Liverpool rewarded Diogo Jota for his impact since arriving at Anfield two years ago with improved and extended terms on Tuesday.
Jota, 25, has bagged 34 goals in 85 games in all competitions since he arrived from Wolverhampton Wanderers back in September of 2020, his dynamism meshing perfectly and complementing the attacking options at the disposal of Reds manager Jurgen Klopp.
The Portuguese has agreed improved term s on a deal that is understood to run to 2027, an extra two years on the initial five-year deal that he penned to join Klopp's Reds from Wolves.
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While improved terms will add to the wage liabilities of the Reds that have been bumped by the arrival of Darwin Nunez and a new deal for Mohamed Salah, with the departure of Sadio Mane to Bayern Munich mitigating some of the impact, the Reds will save in one area when it comes to their annual accounts by extending the stay of Jota at Anfield.
Jota arrived at Liverpool in a deal worth around £41m guaranteed, with another £4m potentially to head to Wolves if the Portuguese international reached certain milestones.
Transfer spend is amortised in financial accounts by clubs, with the guaranteed sum spread over the life of the contract of the player. So £41m guaranteed for Jota over his initial five years means that the amortised cost in the club accounts would be £8.2m per year.
By extending Jota's deal not only do Liverpool reward him for his performance and protect his asset value, they reduce the amortised cost related to his transfer in 2020 in their annual accounts.
In the next set of accounts for Liverpool due in early 2023, £16.4m will have been accounted for. By extending Jota's deal to 2027, the transfer cost stands at £24.6m, something that would be amortised over the length of the new deal, meaning that the annual cost of the Jota deal becomes £4.92m per year, reducing the liability in the accounts by £3.28m per year. That would mark a reduction in overall cost liabilities for the year even taking into account any wage rise for the Portuguese.
What isn't factored in to the amortised costs is the extra £4m. Payments to Wolves would occur as and when Jota reaches the milestones set out to trigger the add-ons. Amortising transfer cost in accounts uses on the guaranteed sum that the club agreed to pay for the services of a player.
Extending contracts in this way is something Liverpool have historically done, from Luis Suarez to Mohamed Salah. It is a well-worn tactic that allows the club to make cost savings in their financial year by spreading their liabilities over a longer period, positively impacting their profit and loss account.
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