Latest Liverpool transfer news as Newcastle United striker Alexander Isak is linked with a move to Anfield this summer
Alexander Isak celebrates after scoring a goal for Newcastle United
Liverpool are fans of Newcastle striker Alexander Isak(Image: Owen Humphreys/PA Wire)
Having broken the British transfer record once this summer, Liverpool may yet do it again. The Reds have reportedly approached Newcastle United over a deal for Alexander Isak.
In a report by The Athletic, it is claimed Liverpool have made contact with the Magpies but no formal bid has been made and the Reds are well aware of the Newcastle stance on Isak in that he isn’t for sale.
The ECHO reported today that no official offer has been made with no contact between the clubs either, however Isak has emerged as a leading target for Liverpool this summer.
With a £120 million fee mooted and no new and improved deal signed by the 25-year-old Swedish striker that was teased earlier in the summer to ward off potential suitors, Liverpool are said to be testing the water the day after Newcastle submitted a bid for another Reds target, Eintracht Frankfurt striker Hugo Ekitike.
A bit of gamesmanship going on? Maybe. Newcastle would like both, but Liverpool could scupper that particular dream for Eddie Howe.
Having parted with £116m to sign Florian Wirtz already this summer, as well as £28.6m on Jeremie Frimpong and £40m on Milos Kerkez, the Reds have been willing to spend.
Such major outlays under the ownership of Fenway Sports Group have been rare, something which has been a bone of contention among some factions of the fan base, but this is Liverpool, as Premier League champions and with a profit expected for 2024/25, the financial year which ended on May 31, looking to build from a position of strength.
But what might a deal for Isak mean for the club and their position when it comes to the Premier League’s profit and sustainability rules (PSR)?
The reason is very simple. Liverpool can do more because they earn more, and they have managed their finances better than most in recent years in terms of giving themselves the financial wherewithal to be impactful with their business.
Liverpool’s financial year came to an end on May 31 for the 2024/25 period. It was a season when they only added Federico Chiesa from Juventus for a £10m guaranteed fee, his contract being over four years, meaning £2.5m per annum in amortisation costs. Liverpool’s amortisation stood at £114.5m, but even with the added Chiesa impact, the sales of players who held book value, and the annual decline in book value on some squad members, means that the actual cost will likely have fallen for the last financial year.
It was a financial year when the Reds were back in the Champions League, banking more than £85m for their trip to the last 16 thanks to a superb league phase, greater broadcast sums and attributed matchday revenue, with five home games. Add into that the fact they won the Premier League, delivering merit payments, equal share payments and facilities fees from both domestic and international markets that will be around the £185m mark and you can see the financial confidence.
The wage bill will be going up due to new deals and bonus payments for Premier League success, and that could soon breach the £400m mark. But Liverpool have managed their affairs. They haven’t been active participants in each and every window and that has allowed them to do what some of their rivals have not been able to do.
Only Manchester City and Arsenal could have made a Wirtz deal work this summer when it comes to the Premier League, taking into account PSR positions and transfer debt that already needs to be serviced.
Premier League clubs can lose £105m over a three-year period, with allowable deductions for investment in infrastructure, the academy, the women's team and community initiatives.
The period from 2021/22 to 2023/24 saw the Reds post a profit of £7m, a loss of £9m and a loss of £57m for the last three years. In terms of allowable deductions over that period the club had £33m, £35m and £39m, according to figures presented by football finance expert Swiss Ramble. That means that the club had a positive PSR position of £48m, which when added to the allowed £105m means they had headroom of £153m. They had absolutely no worries.
The 2024/25 period is likely to see Liverpool swing back to profit with revenues almost certain to be above £700m. The club’s profit could reach £50m according to some estimates.
Using a £120m guaranteed sum, that would be amortised at £24m per year. The total amortised costs added to the balance sheet for 2025/26, including the signing of goalkeeper Giorgi Mamardashvili last summer, which counts for this year, of £25m, would be around £62m.
That’s still below Chelsea, Arsenal and Manchester United, and likely below Manchester City and Tottenham Hotspur given they have added significantly this summer. It would likely, with Wirtz, Isak, Frimpong, Kerkez and Marmardashvili, see Liverpool have only the sixth-highest amortisation costs in England’s top flight.
Having been net-PSR positive by some £62m for the three-year cycle up to 2023/24, and with a profit expected for 2024/25, the club, now into 2025/26, are working on the three-year cycle from 2023/24, 2024/25 and 2025/26.
The £57m loss in 2023/24, minus allowable deductions of £48m for depreciation, investment into infrastructure, the youth team, the women’s team and the community initiatives, means a net PSR position of £9m. Any profit for 2024/25 would be that plus allowable deductions to give them a strong net PSR position to go into 2025/26. For example, a £20m profit in 2024/25, using the current cycle, would mean Liverpool could lose £212m in 205/26 and remain compliant. That won’t happen at all.
But the club are making the moves to solidify their position coming off their title win, looking to ensure that they follow up success and don’t miss out on Champions League football for the years to come, something which was chiefly responsible for the losses seen in 2023/24 when the club spent a campaign in the Europa League.
But building up headroom and keeping your powder dry to put to work at key times is the hallmark of a well run business.
Liverpool’s amortisation costs for 2023/24 stood at more than £90m lower than Chelsea’s. As suggested last month by the ECHO, Liverpool could spend another £200m in the market this summer and still be PSR compliant.
Then there are the sales to be factored in. The £18m for Caoimhin Kelleher and the £30m for Jarell Quansah that is pure profit for the books means there is £48m to be accounted for, which wipes out a significant cost of one year’s amortisation for the new additions. Then factor in Darwin Nunez and a potential exit, which would likely net the club a small profit but remove the £10.6m per year he counts as on the books which has two years to run. Liverpool need to clear £31.8m in terms of a fee for Nunez before booking profits as he signed a six-year deal before the Premier League and UEFA capped amortisation at five years. They will do that, and that will mean that they are already clawing back money they’ve spent.
The Reds have the ability to meet the actual payments of these deals too. They have a revolving credit facility which was renegotiated last year of up to £300m, but the bulk of cash going out will be paid for by the cash coming in.
Liverpool are in a position of tremendous financial strength still. They will be after this window closes.
Wage bill rises would be something to consider, of course, but with the potential for a Nunez exit and Trent Alexander-Arnold having dropped from payroll after his move to Real Madrid, the hike might not be too drastic, although the new deals for Mohamed Salah and Virgil van Dijk would need to be taken into account. A £400m-plus annual wage bill seems inevitable, though.