Buckingham Group, the contractors responsible for the Anfield Road End work, have filed a notice of intent to appoint administrators.
Quite when Liverpool’s Anfield home will be fully operational at a 61,000 capacity remains unknown.
Last week the Reds were hit with the significant blow that the Buckingham Group, the main contractors for the Anfield Road End revamp, a project that the club has shelled out some £80m to make a reality, had filed a notice to appoint administrators after running into severe cash flow problems that forced them to cease trading with immediate effect.
Work has stopped on the stand, which when complete will add a further 7,000 seats to Anfield and help the Reds generate more than £100m per year in matchday revenues, keeping pace with others to have broken that barrier, which at present only stands at Manchester United and Tottenham Hotspur, although Arsenal will soon join that club.
For Liverpool, Buckingham Group taking that course, if available, would mean that the impact on the club, while having already been felt through a missed deadline for the start of the season opening and one game already having been played at a capacity of 50,000 reduced by 18% from the 61,000 that had been expected, would at least be limited.
Should the firm collapse then the Reds would have to seek alternative arrangements and put the remaining work out to tender at significant cost and with a tight timeframe. Getting firms to pick up unfinished work is no easy task.
When it will be open and at full capacity, nobody knows yet and a clearer picture will arrive in the coming weeks once administrators assess the state of the Buckingham Group and any viable options for moving forward. The longer the situation drags on the greater the cost implication for the club and owners Fenway Sports Group.
Speaking on his Price of Football Podcast on Thursday, football finance expert, author and University of Liverpool lecturer Kieran Maguire said: “On the sums that I did, Liverpool normally make around about £1,600 per fan (annually, 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 it’s 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 to £20m as a loss of matchday revenue (for the whole season).
Maguire’s £1,600 figure is an annual figure that takes into account ticket sales as well as the higher value of hospitality packages. Breaking that £1,600 down over 19 home games works out at £84.2. With capacity 18% down on the usual £4.2m per game, a figure of around £750,000 can be gleaned as the potential loss from each game when compared to what would have been expected for the start of the season.
Using that figure, looking at the potential loss of revenue over a two month period, which would include four Premier League games and potentially two Europa League group games (at least one), and potentially two Carabao Cup games mean that, based on the £750,000 impact, a sum of around £6m could be missed out on. Should it run into the New Year then the club could be missing out on some £14.25m in revenue, although that is dependent upon Liverpool being drawn at home in each round of the Carabao Cup and two FA Cup games.
However, Maguire believes that FSG’s approach will mean that they won’t have bet too much on everything working to the original plan and there will be some flexibility.
“In an ideal world, even if the Buckingham Group go into administration they can come out of administration and complete the work and there could be a full Anfield in a month or two,” he said.
There are financial consequences for the club. My view of FSG being the way that they are, my view is that they won’t have counted their chickens too early in terms of additional income. But they want to be competitive, they know that Manchester United and Spurs both generate far in excess of £100m per year from ticket sales. Arsenal will do that this year because they are back in the Champions League.
“With the new complexity around UEFA’s financial sustainability rules it is essential that Liverpool are competitive with that. It’s not a disaster, it’s business and business setbacks take place and this will be frustrating for the club.”
In filing a notice of intention to appoint administrators and ceasing trading with immediate effect it limits any potential impact on suppliers. For Liverpool, it allows them time to assess some options should Buckingham not be able to find a workable solution to their problems, with the Reds already having put in significant work on the problem, according to a Q&A with club CEO Billy Hogan earlier this week.
Maguire commented: “For a large organisation, what senior management don’t want to be accused of is fraudulent trading. 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.
It could be that there is some form of rescue plan which manages them to alleviate that.”
