Finance expert explains exactly how much Liverpool can spend this January as £145m FFP factor cited

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Fenway Sports Group (FSG) have been questioned at times throughout their time at Liverpool, but it is hard to argue that they haven’t got the biggest questions of them all right.

The appointment of Arne Slot looks to be up there as one of the highlights, with the Dutchman bucking the trend by following a club legend and more than living up to their standards.

Liverpool’s 6-3 thumping of Tottenham on Sunday ensured they would be top of the Premier League table at Christmas with a four-point advantage and a game in hand on 2nd-place Chelsea.

After a summer when Liverpool spent only modestly, with Federico Chiesa’s arrival their only major signing of note, even the most optimistic of fans would not have predicted that state of affairs.

It seems as though FSG’s decision not to reshuffle the deck left behind by Jurgen Klopp was the correct call, but there are still hopes that they could strengthen in January to capitalise on their momentum.

Of course, the biggest issues they are facing ahead of the mid-season transfer gravitate around the futures of Mohamed Salah, Trent Alexander-Arnold, and Virgil van Dijk.

If FSG were to lose even one of those superstars, serious questions would be asked of the Boston-based sports investment moguls.

FSG have always prioritised value for money above almost all else, spending big only when they are supremely confident of a return on investment.

If a legend is to leave Anfield at the end of the season, it would severely threaten the credibility of and faith in that system from the terraces.

Last week, one surprising report suggested that the Premier League’s spending limits, Profit and Sustainability Rules (PSR), might explain their conservative approach to recruitment and retention.

To gauge the accuracy of that statement, TBR Football spoke exclusively to Liverpool University football finance lecturer Kieran Maguire

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Liverpool have tonnes of PSR headroom, says finance expert

Under PSR, Premier League clubs are limited to losing a maximum of £105m over a rolling three-year period, with certain expenses deductible for the sake of the calculation.

PSR used to be called Financial Fair Play, or FFP.

Liverpool are one of only a handful of clubs who, if one zooms out on the graph over the last decade or so, have been broadly profitable.

That, Maguire explains, means they have oceans of breathing space and that PSR will not prevent FSG from spending in January if they are inclined to do so.

“Liverpool are run extremely well both on and off the pitch. They have a great deal of latitude in terms of their total payroll cost,” he said.

“It could be that there are other offers being made to other players that could have significant increase in the numbers of the overall wage bill, so a deal with Diaz is on the backburner.

“But in my view, they are not in a delicate PSR situation. They are far too well run for that to be the case.

“One of the central tenants of FSG is that they don’t get themselves in the awkward position where they have to do something, because they want to take advantage of opportunities when they arise.

“So I think this is very speculative and also slightly insulting to how Liverpool are run.

“There is an awful lot of expectation management taking place and sometimes clubs are reliant on them knowing an awful lot more about PSR than fans.

“They have got a net loss of £18m over the last three seasons and one of those was Covid. If you look at infrastructure costs, they were £38m.

“Then you add back their academy costs which for a club like Liverpool are probably £15-20m per year, plus the costs of the women’s team.

“They are in a PSR profit and they have the capacity to minus £105m, so they have a lot of headroom. About £145m based on those figures.”

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How much can FSG and Liverpool spend in January?

Liverpool are, on current projections, expected to post an operating profit for the current season.

That essentially means they are running at a surplus before transfer expenditure or incomings are taken into account.

With a positive net spend in the summer, that means their accounts are on course to be in the green again this season.

They haven’t released their accounts for 2023-24 yet, but they are expected to reveal a loss of around £25m, reflecting their absence from the Champions League.

In PSR terms alone, that likely means that they have roughly broken over the last three financial years, which would mean they can afford to lose over £105m this season and remain compliant.

However, the capacity to spend and the willingness to spend are two different things.

Ultimately, it is at the behest of FSG as to whether Slot and Richard Hughes will be backed in the January window.