Liverpool could bolster transfer budget with pure profit FFP loophole to make millions

In a season where Everton and Nottingham Forest have both been handed Premier League points deductions, the English top-flight’s profitability and sustainability regulations have been an increasing talking point.

Liverpool are comfortably within the Premier League's PSR, after recording a £9m pre-tax loss for the previous 12 months when posting their financial results for the 2022/23 season back in March.

But it is a different story for so many of their top-flight rivals, who continue to fly close to the margins for error, and could find themselves at risk of being sanctioned and following in Everton and Forest’s footsteps.

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Such regulations are starting Premier League transfer activity. For example, the likes of Manchester United and Newcastle United found themselves unable to strengthen their squads in January, at risk of crossing over the unwanted threshold.

Meanwhile, others are forced to sell players in an attempt to stay on the right side of the line.

But, using Everton as an example, there is a difference between the £60m sale of Richarlison to Tottenham Hotspur in the summer of 2022 and Anthony Gordon’s £45m exit to Newcastle United in January 2023.

That’s because the England international was a Blues academy graduate, with his exit classed as ‘pure profit’ by PSR as a result. Something of a loophole for accountants, sides are ultimately rewarded for developing players, training them, and introducing them to Premier League success before moving them on for big fees.

High-profile examples in the English top-flight last summer saw Chelsea cash in on Mason Mount and Ruben Loftus-Cheek for a combined £77.18m, while loaning Lewis Hall to Newcastle United in a deal which included an obligation to buy for £28m, plus £7m in add-ons.

With such a tactic nothing new at Stamford Bridge, having cashed in on a plethora of academy talents in recent years, Conor Gallagher looks forced to become the next major outgoing player sold to keep Chelsea on the right side of the regulations despite the fact he has no desire to leave.

Elsewhere in the Premier League, Man City pocketed £61.5m ‘pure profit’ from selling Cole Palmer and James Trafford, Manchester United received £35m from selling Dean Henderson and Anthony Elanga to Crystal Palace and Nottingham Forest respectively, and Forest sold Brennan Johnson to Tottenham Hotspur for £47.5m.

Spurs made £100m selling Harry Kane, and West Ham banked £105m for Declan Rice in two of the summer’s biggest deals, while Aston Villa received £30m when selling Cameron Archer and Aaron Ramsey.

Now not all the aforementioned sides are scrambling around desperately, just trying to stay on the right side of the Premier League’s PSR rules. But as much as supporters want to see academy players come through the academy and break into the first team, their potential exits result in the eyes of Premier League club accountants across the country lighting up in the pursuit of ‘pure profit’.

So, back to Liverpool. As already said, they are already comfortably within the Premier League's PSR and are in no danger of needing to sell off the family silver anytime soon.

But with this transfer trend quickly spreading across the Premier League, they are poised to benefit considerably after a season which has seen Jurgen Klopp regularly turn to the Reds’ academy.

No less than 19 homegrown and academy players have featured for the Liverpool first team this season, with such a list including Trent Alexander-Arnold, Joe Gomez, Curtis Jones, Harvey Elliott, and Caoimhin Kelleher.

The rest are all recent graduates who are now considered first team players, like Jarell Quansah and Conor Bradley, or a litter of academy starlets.

As well as such players have done, the brutal truth is not all will forge long-term futures at Anfield, with Klopp admitting as much on Friday when waxing lyrical about the squad he will leave behind when he departs this summer.

"[The manager will inherit] a fantastic squad. A fantastic squad…,” he said. "You always can [improve] but the basis is absolutely great.

“Look at the age of the midfield, really top. Stefan Bajcetic is back, that’s really cool. A centre-half if you have to buy him, you have to go really deep into the pockets. A right-back, if you need to buy one, you have to go really deep into your pockets.

"Stefan, if you want to have a player like that, it’s really expensive. Up front, Jayden Danns, Lewis Koumas, Bobby Clark, James McConnell, they all did really well. That is the future of the club.

“Some will be here, some will go on loan, some will be sold. That’s all part of the thing. The basis we created is really good and that was the job I thought and how I understood that I had to do.”

Liverpool’s academy prides itself on setting up players to go on to have as successful a senior career as possible, be that at Anfield or elsewhere. Just because Klopp is leaving this summer, that is not going to change.

With Arne Slot yet to officially be confirmed as the German’s successor, it is premature to speculate which of the Reds’ youngsters the Dutchman will keep as part of his squad and which might have to consider moves elsewhere.

Kelleher is perhaps an exception, with it virtually inconceivable that he will sign up for another season as back-up to Alisson Becker. The Irishman has made a career-best 26 appearances for Liverpool this season, but now 25 years old, realistically he needs to move on in search of first team football if it remains out of reach at Anfield.

Transfermarkt currently values the goalkeeper at roughly £15.5m, up from £10m last summer. But considering City sold Trafford in a deal worth up to £19m, anything under £20m for Kelleher at this point feels insulting and unrealistic.

Nat Phillips is another whose sale would result in ‘pure profit’. But without picking any other names out of a hat, Liverpool have successfully ensured that they are well-placed to remain on the right side of the PSR for years to come.

Last summer there were suggestions that the Reds needed a new centre-back and right-back, yet by blooding Quansah and Bradley they saved themselves millions. When the time comes to sell any of these homegrown talents, they will bank ‘pure profit’ to further stay on the right side of the threshold.

It is the perfect example of how to run a fruitful academy in the cut-throat nature of elite level football. They have invested in the long-term future of the club and it’s paying off both on the pitch and in the club's accounts.

Speaking to Reds legend Jamie Carragher for the Telegraph back in February, Liverpool’s academy director, Alex Inglethorpe shared some eye-catching figures when highlighting the value of the club’s academy.

“There are some academies spending £40m a year. We are nearer £13m,” he said. “If you think of £130m over 10 years, what is the return on that investment?

“We have sold about £160m worth of academy talent. We’ve been studying it and we estimate there is about £300m of academy talent in this building.

“That can fluctuate, of course, but if you look at Jarell [Quansah], he is our fourth-choice centre-back this season. He ensured the club did not have to sign another centre-back last summer. What value do you put on that?

“A Premier League squad player is between £15m-£25m, and the average Premier League wage is £60k a week. So if you have three academy boys on the bench it could save somewhere in the region of £70m a year.”

So Liverpool have already both saved and made millions thanks to the recent success of their academy, ensuring their name remains out of the conversation when it comes to debating the next Premier League who could fall the wrong side of the regulations. In contrast to the efforts of a number of other top-flight teams, they really should be the envy of their rivals.

As a result, the Reds could find themselves in a position where they can comfortably bolster Slot’s first ‘transfer kitty’ this summer if they wish to follow such trends. They have benefitted in the past too, of course, when you think of the combined £53m banked for the likes of Rhian Brewster, Neco Williams, and Harry Wilson.

Yet expected exits for the out-of-contract Thiago Alcantara and Joel Matip will already shave a considerable amount off their wage bill.

Liverpool could well become the latest benefactors of this Premier League loophole in the summer. But such is the success of their academy, they don’t actually need to be. Unlike so many of their rivals, the futures of their players will be decided on the pitch rather than by their accountants.