What Mohamed Salah contract situation means for Liverpool and PSR

Liverpool owners Fenway Sports Group face a major contract dilemma between now and the end of the season. Mohamed Salah’s comments on Sunday evening that he was “disappointed” not to have yet been offered a deal have done little to ease the pressure.

Salah, along with other vital cogs of the team in Virgil van Dijk and Trent Alexander-Arnold, is out of contract at the end of this season and FSG risk facing the ire of Reds fans if they don’t find a satisfactory outcome to the situation, and for supporters that means all three players representing the club beyond the end of this season.

While Salah’s claim of a lack of an offer might appear worrisome, it’s highly unlikely that the future of one of the club’s most legendary players, its current highest earner, and someone who was deemed valuable enough to reject overtures from Saudi Arabia for vast sums of money in the summer last year, won’t be discussed in enormous detail behind the scenes.

READ MORE: I am worried by Mohamed Salah Liverpool contract comments - FSG must come out and give us answers

READ MORE: I have waited years for Mohamed Salah to speak - FSG message couldn't be clearer for Liverpool

While for some clubs the decision around new contracts, which almost always involve shelling out even more in funds to players, may revolve around aspects of remaining within the confines of financial controls, whether that be the Premier League’s profit and sustainability regulations or UEFA’s squad cost ratio rule, that won’t be a chief concern for the Reds.

As of the most recently published 2022/23 financial accounts, a season that included the first year of Salah’s extension, Liverpool’s wage bill stood at £372.9m, up £6.8m from the 2021/22 financial year.

Liverpool’s wages have increased by £165m (79%) in the five years up to 2023, which represents the highest growth of the so-called ‘big six’. Three other clubs are also up by more than £100m: Manchester City £159m, Chelsea £140m and Tottenham £126m. Liverpool, for 2023, had the second highest wage bill in the Premier League.

In terms of wages to revenue ratio, the Reds sat at 63%, well under the 70% ceiling recommended by UEFA. But managing that alongside fluctuating revenues, especially when such things as missing out on Champions League football is taken into account, can be a challenge.

For the 2023/24 period, according to figures presented by football finance expert Swiss Ramble, Liverpool had the third largest PSR capacity at £173m, behind only Manchester City and Brighton & Hove Albion, a club whose finances were given a major boost through the massive mark-up on the sales of the likes of £115m Moises Caicedo.

PSR, or any UEFA variation, isn’t really a major concern for the Reds, and they have the financial ability to offer contract extensions. The main issue will be one around the return on investment over the length of the next deal, and whether several £400,000 to £500,000-per-week deals are good on the balance sheet and work in favour of the club’s competitive and financial goals.

Salah continues to operate at an elite level, as does Van Dijk, despite their advancing years when they would usually be looking at only being able to command lesser terms. Alexander-Arnold is a player in his prime, and that means a premium is to be paid for retaining that.

Salah will know his worth, and his footballing CV and achievements for Liverpool speak for themselves. He is a club legend in every sense of the word. But he will want to be paid in line with what a player of his calibre is getting on the market, and with the option of getting much more money in Saudi a genuine one, he has leverage. He knows the potential backlash that could occur if FSG allow him to walk away.

FSG have long sought to incentivise contracts as the increase in payroll aligns itself with a rise in revenue associated with competitive success. That is likely to remain the case, and finding a way to match output with wages is likely a point of focus. But for Salah and his representatives that puts the risk on him, not on the club, and that might not be acceptable given what he has, is and could achieve for the club still, especially with him being so key under the Arne Slot resurgence so early on.

Financial constraints from a regulatory perspective are not what risks putting the handbrake on these deals getting over the line, it will all be down to business decisions about risk and reward. The only likely way it is solved is if the risk is weighted to a heavier degree on the side of the club than the players.