When Fenway Sports Group bought Liverpool in October 2010, they inherited a club which, financially, was on life support; it was technically insolvent as it has greater liabilities than assets, and was paying interest costs on loans of £340,000 a week. It faced a long battle to find itself on level footing Manchester United, both on and off the pitch; not only were they rivals in terms of on-field activities, but they were held up as an example to follow away from the playing aspect of the game.

There was work to do. The previous season Liverpool had finished seventh in the Premier League, their lowest finish for over a decade. New manager Roy Hodgson had failed to impress the Anfield faithful when he took over from Rafael Benitez in July 2010; it would prove to be the last major decision made by asset strippers Tom Hicks and George Gillett, who controlled Liverpool via their Cayman Islands based Kop Football (Cayman) Limited.

Hicks and Gillett were able to buy Liverpool due to what is known as a Leveraged Buy Out (LBO) deal. Here, a prospective owner borrows large sums of money which is then secured on the assets of the company purchased. The aim is to make profits from the acquired company, which are used to pay down the loans, and then sell the company at a profit.

The American duo had seen how Malcolm Glazer had taken a similar approach in acquiring Manchester United in 2005, by borrowing over £700 million.

However, things went spectacularly wrong financially under Hicks and Gillett. In the first seven months of trading, Kop Football had net losses of £33 million, followed by £42million, £53million and £43million in the following three years. The club owed sizeable amounts to the Royal Bank of Scotland (RBS) - which itself was in trouble following the banking crisis - and was unwilling to extend loans.

Meanwhile, at Old Trafford, things were little better off the pitch as the loans taken out carried interest rates of up to 16.25% and totalled £490 million in the first five seasons of what became known as Glazernomics.

Fortunately for United, the club still had Alex Ferguson at the helm, who was delivering trophies on a regular basis; they also possessed a commercial department that, for all its faults in terms of attaching the club crest to anyone and anything, was helping to grow revenues. The gap between the two clubs’ income grew.

When FSG took over Liverpool their first step was to earn the confidence of the club bankers, and this was achieved through taking over the debts run up by Kop Holdings and an injection of over £30million from a new club holding company UKSV Holdings Company Limited.

The new owners allowed the club to start to invest once again in the transfer market. Hicks and Gillett had arrived with a fanfare in signing Fernando Torres in 2007, but the net spend on players had turned negative by the time they left, as events turned sour.

(Image: Kieran Maguire)

FSG’s initial years were hit and miss, perhaps none more illustrated by the signings of Luis Suarez and Andy Carroll on deadline day in January 2011, as Fernando Torres departed for Chelsea.

Since the new owners took ownership of Liverpool, all three drivers of revenue have at least doubled. The expansion of the stadium has helped boost matchday income; commercial income has benefited from on the field success and a savvier approach to negotiating deals; broadcast income has benefited from progress in the Champions League and new contracts signed by the Premier League.

The importance of Champions League income will become even clearer when the 2018/19 accounts are published. UEFA have boosted distributions substantially (see the excellent @SwissRamble on Twitter for a forensic breakdown), meaning the club earned about £100million in prize money plus additional matchday and commercial income from the memorable European adventure.

Winning the Champions League will have also increased Liverpool’s UEFA ranking, which is based on performances over the last ten years, and this will automatically guarantee the club extra money next season.

While Liverpool’s income has grown significantly under FSG, they are in a competitive division and still trail the two Manchester clubs but should start to pull away from Chelsea, who were not in the Champions League in 2018/19.

The increase in revenue has allowed the club to invest more in players in the form of both wages and transfers. Compared to Manchester United, the Reds have had a lower wage bill under FSG’s reign but the increased income has allowed them to keep within a surmountable gap, one which can be bridged with good recruitment and management.

(Image: Kieran Maguire)

One danger of paying higher wages is that they cause concerns over the long-term financial well-being of a club, which is why many analysts check the level of wages as a proportion of income. While Liverpool have substantially increased the wage bill, it has not endangered their future, as the club has spent less than £70 in wages for every £100 of income for the last six years, placing them below UEFA’s ‘red line’ of spending.

Compared to other clubs Liverpool are in a relatively strong position in terms of wage control, and the success in winning the Champions League this year will keep the figure well below the red line.

(Image: Kieran Maguire) (Image: Kieran Maguire)

FSG have backed managers in the transfer market too. Under the new owners, the total net spend sits at a relatively modest £340million, of which nearly half has taken place since the 2018 Champions League final defeat to Real Madrid.

Part of the reason for the relatively low net spend compared to Manchester United is that Liverpool have had far more success in selling players. The likes of Suarez, Raheem Sterling and Philippe Coutinho leaving Anfield has helped generate over £450million from player sales. It is a reversal of fortunes compared to their rivals down the M62, and what is noticeable about transfer activity at Old Trafford is how spending has increased significantly since the retirement of Alex Ferguson. The success of that spending, on the likes of Angel Di Maria, Memphis Depay, Alexis Sanchez and Fred suggests that United have spent money poorly too often. Liverpool have a more coherent recruitment strategy, in which sporting director Michael Edwards can take much credit.

United often suffer from transfer hangover too, as they usually buy players on credit, paying in instalments, and owing clubs £258million. This suggests they will have to perhaps sell - as well as buy - players in this window.

(Image: Kieran Maguire)

FSG have prioritised sporting performance rather than financial, which is highlighted by their level of borrowing costs and dividends compared to their East Lancs Road rivals. Manchester United presently owe $650million (£519million at current exchange rates) in two loans that are not due to be repaid until 2025 and 2027. These loans have been a drain on the club in the form of interest costs, which, while lower than when the Glazers first acquired the club, means United are still hemorrhaging cash each year.

Liverpool too have loans outstanding to FSG, but the sum involved is lower (£221million at the last count), part of which is interest free and is being gradually repaid. The money borrowed has been used to improve the infrastructure at Anfield which, as already seen, is helping generate higher matchday revenues.

In addition, following the listing on the New York Nasdaq Stock Exchange in 2012, the Cayman Island registered Manchester United plc have been under pressure to pay dividends to shareholders once the club started to generate profits.

These dividends, much of which goes to the Glazer family, cost the club about £22million a year, enough to pay Sanchez’s wages; United fans may wish to debate which is the bigger waste of money.

Liverpool have benefited substantially from FSG’s financial involvement. The owners have made smart decisions, both in terms of recruitment in key positions at the club, and this has reaped rewards.

Though some supporters will say that money has eroded the romance of football, today, rightly or wrongly, it plays a critical role in achieving success on the pitch, too.

Liverpool will need to keep making smart decisions as the level of competition at the summit of both English and European football intensifies; the next 12 months will involve potentially big decisions in terms of agreeing the new kit manufacturing deal and whether or not to expand Anfield further.

The club cannot afford to rest on their successes so far, but fans do not have to worry about whether or not they will have a club to support in a few months’ time, as was the case under Hicks and Gillett.

Manchester United appear to have wasted the financial advantage they have historically had over other clubs in the Premier League - Liverpool included. This is due to high levels of interest costs, paying large sums to shareholders and a recruitment policy driven by commercial and social media issues rather than improving performances on the pitch.

Their fall has been self-inflicted. There is no doubt Liverpool's rise has also been self-attained.