Liverpool can help give themselves late PSR boost with £50m deal

Liverpool can help give themselves late PSR boost with £50m deal

Latest Liverpool transfer news and gossip as the summer window continues to present rumours and gossip concerning potential business at Anfield

Arne Slot head coach of Liverpool (Image: Catherine Ivill - AMA/Getty Images)

There are just under five weeks remaining of the summer transfer window, and Liverpool are likely to be busy right up until the deadline on September 1. The Reds have made seven new signings already this summer and there is the potential for more to come in the weeks ahead.

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Liverpool have now completed their pre-season tour of Asia, which ended with a 3-1 win over Yakohama FM on Wednesday. The Reds will now return to Merseyside and prepare for a double-header at Anfield against Athletic Bilbao next week.

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With the transfer window still open, there are continuing to be rumours about potential new signings. One player who is dominating the rumour mill is Alexander Isak, with the Newcastle United striker a known target for the Reds.

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In terms of outgoings, Liverpool confirmed on Wednesday that Luis Diaz had completed a permanent move to Bayern Munich. A £65.5million deal was agreed with the Bundesliga champions which has seen the Colombia international's time at Anfield come to an end.

There is also the potential for further outgoings this summer, with Darwin Nunez's name being mentioned as a player who could leave the club. Napoli, Atletico Madrid and clubs in the Saudi Pro League have been linked with signing Nunez this summer for around £50 million, and a sale would certainly benefit the Reds from a financial point of view.

Reach PLC's Business of Football writer Dave Powell has explained why Nunez leaving the club would help Liverpool boost their standing with the Premier League's Profit & Sustainability Rules.

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“While the sums may appear eye-watering in terms of incomings, Liverpool have no concerns when it comes to PSR,” he says.

“The signings of Jeremie Frimpong, Milos Kerkez, Florian Wirtz and Hugo Ekitike come in at around £269m, including add-ons, although it is only the guaranteed fees that are accounted for through amortisation, with add-ons payable via exceptional items as and when they are triggered.

“But a little over £108m has come back into the club in terms of player sales following the exit of Luis Diaz to Bayern Munich on Wednesday. That means that the net spend is actually around £161m. The key point to remember is that the transfer outlay is spread over five years, with the guaranteed fee divided by the length of a player’s contract. The Premier League and UEFA last year capped amortisation at five years, regardless of contract length, in response to Chelsea’s tactic of seven, eight and nine-year deals.

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“But profit on player sales can be booked in its entirety when a deal is done, even if the cash is to be received via instalments, which for big deals is almost always the case. That means the amortisation costs added to the balance sheet for Liverpool are actually dwarfed by the profit made on players.

“The remaining book value of players is also removed from the balance sheet. Diaz had around £12.9m remaining book value before his sale, and he was sold at a £65.5m guaranteed sum, representing a £52.6m profit. That reduction in book value lessens the impact of additional transfer spend for the club this summer when it comes to monitoring amortisation costs, which for Liverpool stood at £114.5m in 2023/24, some £90m less than Chelsea’s.

“Liverpool have saleable assets remaining. Darwin Nunez has around £32m in remaining book value, and a sale at £50m, the reported figure the Reds seek, would not only hand them an £18m profit, but also clear the £32m from the balance sheet. Add that to the removal of Diaz’s remaining book value, and the total additional amortisation costs for the four new signings so far are accounted for in 2025/26. It’s effectively cost-neutral, although cash flowing the deals can be a headache, requiring capital inflow through sales to ease the burden. Liverpool do have a £300m credit facility they can rely on, though.

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“They could move on someone like Harvey Elliott, Ben Doak or Tyler Morton, but the impact there would be purely from a profit standpoint as none of those players hold book value at the club due to being products of the youth system or being acquired for very small fees that have since been fully amortised.

“The wage bill will be the key thing that Liverpool really need to control. With Premier League title success came bonuses for players, and add to that contract extensions for big players like Mohamed Salah and Virgil van Dijk, and the wage bill will push past £400m for the first time for the 2024/25 accounting period, which came to an end on May 31.

“Managing those costs will likely be key to whether or not they go big on Alexander Isak and another central defender, and whether they need to move on one or two more players. In terms of wages, Nunez would command the most from the remaining saleable assets, while Trent Alexander-Arnold’s exit to Real Madrid provided some flexibility. It seems likely that a Nunez exit would be a preference over others because of the impact it would have on removing amortisation costs and wage costs.

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“But there is no requirement for the club to sell to meet PSR obligations. If anything, even with their heavy outlay, they could well post a profit for the 2025/26 financial year if they have a successful run in the Champions League to the knockout stages.”

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