How much could Anfield Road End difficulties cost Liverpool and FSG?

How much could Anfield Road End difficulties cost Liverpool and FSG?

When Liverpool’s Anfield stadium will be fully operational with a capacity of 61,000 is unknown.

The Reds were dealt a significant blow last week when the main contractors for the £80 million Anfield Road End renovation, the Buckingham Group, filed a notice to appoint administrators due to severe cash flow problems forcing them to cease trading immediately.

Work has ceased on the stand, which, when complete, will add an additional 7,000 seats to Anfield and help the Reds generate more than £100 million per year in matchday revenues, keeping pace with those who have already broken that barrier, which is currently only held by Manchester United and Tottenham Hotspur, although Arsenal will soon join that club.

Buckingham Group, who were also working on Birmingham City and Northampton Town’s stadiums at the time they notified their intention to appoint administrators, are buying themselves time to see if parts of the business and jobs can be saved through restructuring, with one potential outcome being that investment or a takeover arrives and a rescue package can be agreed to take the business out of administration and allow them to continue with their projects, thereby avoiding truncation.

Buckingham Group pursuing this option, if available, would limit the club’s impact, which has already been felt through a missed deadline for the start of the season and one game played with a capacity of 50,000, 18% less than the 61,000 that had been anticipated.

Should the company fail, the Reds would be required to pursue alternative arrangements and put the remaining work out to bid at a high cost and within a short timeframe. It is difficult to persuade businesses to take up unfinished work.

Nobody knows when it will be open and operating at full capacity, but a clearer picture will emerge in the coming weeks after administrators evaluate the state of the Buckingham Group and any viable options for the future. The club and its proprietor, Fenway Sports Group, will incur increasing costs as the situation persists.

Harry Maguire, a football finance expert, author, and lecturer at the University of Liverpool, stated on Thursday’s episode of his podcast The Price of Football: “According to my calculations, Liverpool earns approximately £1,600 per supporter per year (including hospitality packages).

“If they are unable to increase the capacity from the 50,000 who attended the match at the weekend, and it’s not just the extension because there are link-ups between the extended stand and where people were able to sit last season, we are probably looking at a loss of between £18m and £20m in matchday revenue (for the entire season).”

Maguire’s annual figure of £1,600 is based on ticket sales and the increased value of hospitality packages. Over the course of 19 home games, £1,600 is equivalent to £84.2. With capacity 18% lower than the usual £4.2m per game, a prospective loss of approximately £750,000 per game can be calculated when compared to what was anticipated at the beginning of the season.

Taking into account the potential loss of revenue over a two-month period, which would include four Premier League games, potentially two Europa League group games (at least one), and potentially two Carabao Cup games, a sum of approximately £6 million could be lost based on the £750,000 impact. Depending on whether Liverpool is drawn at home in each round of the Carabao Cup and two FA Cup games, the club could lose approximately £14.25 million in revenue if the strike continues into the New Year.

Maguire believes, however, that FSG’s strategy will allow for flexibility and less reliance on the original plan.

“In a perfect world, even if the Buckingham Group enters administration, they can exit administration and complete the work, and Anfield could be full within a couple of months,” he said.

“There are monetary ramifications for the club. In terms of additional income, I do not believe FSG will have tallied their chickens too soon, given their current state. However, they wish to be competitive, as they are aware that Manchester United and Tottenham Hotspur generate far more than £100 million per year from ticket sales. Since they are back in the Champions League, Arsenal will execute this strategy this season.

“In light of the new complexities surrounding UEFA’s financial sustainability regulations, Liverpool must be competitive in order to succeed. It’s not a catastrophe, it’s business, and setbacks occur in business, but it will be distressing for the club.”

In submitting a notice of intent to appoint administrators and immediately ceasing operations, the potential impact on suppliers is mitigated. According to a question-and-answer session with club CEO Billy Hogan earlier this week, the Reds have already put in a significant amount of effort to find a viable solution to their problems, allowing them time to evaluate alternative options should Buckingham fail to do so.

Maguire stated, “Senior management of a large organization do not want to be accused of fraudulent transactions. If you know that there is a genuine struggle with the ability to fulfil contracts in an industry as precarious as construction, what you are effectively saying to suppliers is ‘we’re not going to be ordering anything from you in the next few days as we expect to go into administration’.

How much could Anfield Road End difficulties cost Liverpool and FSG?