Liverpool FC confident about finances despite debt rise

Liverpool celebrate Carling Cup win
Image caption Success in domestic competitions such as the Carling Cup made up for lack of European revenue

Liverpool football club has said it is getting its finances in order, despite a large rise in its debts.

Net debt increased by a third from £65.4m in July 2011 to £87.2m in May 2012.

But managing director Ian Ayre said this was due to costs associated with restructuring the squad that should help the club in the long term.

"We are trying to... invest in our team and improve our team. That has a cost, which creates debt," he said.

"I take comfort in the fact that the work we have done, some of which costs us a lot of money in this period and beyond, looks pretty painful at the time," Mr Ayre said.

"But as long as you invest in it and manage it in the right way, then hopefully it bears fruit as we go forward... in a world where we are expected to break even."

Player costs

The Premier League club made a loss on player transfers of £1.7m, compared with a £43.3m profit a year earlier when its financial situation was boosted by the £50m sale of striker Fernando Torres to Chelsea.

Mr Ayre said the Merseyside club had sold 11 players during the period and suggested that some of them were sold at a loss. Players who went during that time included Christian Poulsen and Raul Meireles.

"We've made losses as a result of selling them but at the same time we've improved our longer-term position in terms of our wage bill by reducing the wages for those particular contracts," he said.

He added that the club was investing in players such as Jose Enrique and Sebastian Coates.

The club also had to pay off former manager Kenny Dalglish who was sacked and replaced by Brendan Rodgers. His severance pay is included in £9.5m of exceptional payments mentioned in the accounts.

Commercial growth

Overall, the club made pre-tax losses of £40.5m between July 2011 and May 2012, less than the previous financial year when it lost £49.3m. But comparison with previous periods is difficult because the club's latest accounts cover a 10-month period, rather than the usual 12.

The football club is changing its accounts to report May to May, rather than July to July, in order to align them with the footballing year.

While Liverpool did not play in any big European competitions in the period, its success in domestic competitions resulted in more matches, which made up for the loss of media and matchday revenue, the club said.

During the period, it won the Carling Cup and reached the FA Cup final.

Speaking to the club's official website, Mr Ayre said: "Although we didn't play in a European competition, we had great success in both domestic competitions, which gave a boost to our revenue.

"In addition, areas like our commercial partnerships continued to grow, despite a global recession."

The club pointed out that the results were now quite old, and said matters had improved since last summer.

"Off the pitch, we forged new partnerships with Warrior, Garuda and Chevrolet - the revenue from these contracts will show in the 2013-14 financial accounts; however, these partnerships continue to demonstrate the strength and reach of the LFC brand," Mr Ayre said.

The club also said in its statement that it would not be paying a dividend to shareholders.

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