The issue of wage bills being linked to league finishes is well known in the world of football financial analysis. The author Simon Kuper and economist Stefan Szymanski worked together on Soccereconomics, an important work that illustrated the strong correlation between a football club's wage bill and its league position. While that's of interest, Liverpool's wage bill did not offer the value on the balance sheet between the post Rafael Benítez era and the second season of the Brendan Rodgers era. Liverpool currently sit at the top of the Premier League and will outperform its wage bill by the end of the season no matter what happens against Crystal Palace and Newcastle United.
The UK Guardian's yearly review of Premier League accounts have revealed that nearly a record £2 billion in wages was paid by clubs in the 2012-2013 season. QPR's wage bill was higher than Atlético Madrid's and that's laughable considering Diego Simeone's achievements last season. David Conn's "full club-by-club breakdown and verdict" is pleasant and relatively brisk reading for discerning eyes but Liverpool's revenues and expenses from last season have already been detailed (without numbers rounded up or down) by Eliz in March. While this is all interesting, Liverpool's wage reallocation process that FSG seems to have undertaken in the Rodgers era and the tangible benefits offered by wages paid by the club have drawn my attention ever since Rodgers took charge on 1 June 2012.
Liverpool are close to winning the league title and the wage bill would be the lowest of any Premier League title winner for many years. Apart from the couple of instances of the third-highest wage bill triumphing over all, a club needed to possess the either the first or second highest wage bill since the turn of the century. Brendan Rodgers' side could be adding another mind-boggling stat if the league title comes to Anfield after such a long absence.
The wage reallocation in the squad has resulted in a wage bill with more value for the owners and fans along with room for improvements in wages for players who merit such good things in life. In the first few months of competitive action of Brendan Rodgers' first season, Daniel Agger and Martin Skrtel (now justifying a contract that was awarded to see off interest from Manchester City) signed new contracts estimated to be between £70,000 and £80,000 per week. Mamadou Sakho is believed to be rewarded similarly. While Liverpool's defence is a concern, the three main centre backs are all paid well, possess significant first-team experience, and are close in ability. Add the experienced Kolo Touré at similar wages as the fourth choice option for Liverpool's manager, it is easy to see that the depth at that position is unsurprisingly the best compared to other positions in quite a thin squad.
Last season's wage bill was estimated to be circa £132 million including the salaries of highly paid players such as Stewart Downing (continuing his trajectory back to Middlesbrough via West Ham), Andy Carroll (on-loan last season before permanently transferring to West Ham), Jamie Carragher (now retired and part of an unlikely duo of enlightenment at Sky Sports), and Joe Cole (a January 2013 departure who is proving to be excellent value at West Ham for Big Sam). While Carragher adapted well to a more demanding technical style of play, the other players' wages were of questionable value for the ability offered on the pitch. Liverpool's defensive stalwart retired with many wishing he was part of an unlikely title challenge this season and the others were sold or released with some loyalty or termination payments headed their way.
That figure of £132 million will have naturally altered with additions, departures, pay-offs, new contracts, bonuses, and signing-on fees. Luis Suárez's new contract was considerable (being the highest in the club's history) and displayed a commitment to ensuring that Liverpool's brightest on the field are sufficiently remunerated. Looking at the squad this season, including those on loan, Luis Suárez, Steven Gerrard, Pepe Reina, and Glen Johnson are the four highest paid players. Liverpool's four senior centre backs would most likely be next on the list. Jordan Henderson and Daniel Sturridge are believed to be earning very similar wages at £70,000 per week but they will most certainly be improved this summer.
Pepe Reina's wages have long surpassed his output and with only one year remaining on his contract, Glen Johnson's position at the club is the next vulnerable out of the four despite Rodgers confirming his determination to keep the player. Reina's position is simple. Last season, the Spanish goalkeeper was an under-performing first-choice player on sizeable wages and this season, he has been inconsistent on loan at Napoli. An imminent sale looms. Glen Johnson is a slightly different case. Form and fitness have fluctuated for a player who turns 30 in August. He has one year remaining on his hefty contract. Should Liverpool stick or twist? Would avoiding unnecessary upheaval in a position where Johnson can still offer excellent service with young right backs such as Flanagan, Wisdom, and McLaughlin coming through deem a six-figure weekly salary worth it? Or does the mere existence of such a contract for a player, who isn't at the top end of Liverpool's performers, make it difficult to renegotiate existing contracts for those whose performances outstrip Johnson's?
Liverpool's reallocation of wages has been clever for the most part by a combination of selling under-performing but highly paid players, buying hungry replacements, coaching players, improving contracts to reflect player value, and promoting young talent. Simon Mignolet effectively replaces Pepe Reina, Jordan Henderson is value for his transfer fee and wages due to rapid improvement under Rodgers, Daniel Sturridge provides the goals Liverpool fans wished Andy Carroll would, Raheem Sterling is nurtured to become one of the most exciting young talents in Europe worth more than Stewart Downing's £20 million price tag, a young Philippe Coutinho provides genuine excitement in the number ten shirt in a way that Joe Cole never could, and Joe Allen offers the composure, game intelligence, and mobility in midfield that Charlie Adam lacked. All the replacements are younger, cheaper, and simply better. While there are areas Liverpool must address such as no comparable depth for SSS or insecurity in the left-back position (Flanagan has performed excellently and will be rewarded with a new contract with one year remaining but we need another player in that position), many areas of the first eleven have witnessed rapid improvements with transfer business that hasn't always been successful.
Liverpool are a Champions League club again and virtually all the first-team players permanently contracted to Liverpool will be around next season. Suárez's new contract is evidence of ambition for the right players and a flurry of improved contracts will be agreed this summer, including that of a certain positive and ambitious Antrim gentleman. Astonishingly, Liverpool's wage bill is far behind the top three wage bills in the Premier League but a title is still in play and automatic Champions League qualification has been secured with comparative ease to any previously imagined scenarios. That this has been achieved without a powerhouse summer transfer window is a marvel.
Liverpool have been active in three of the four transfer windows under Brendan Rodgers spending an average of £20 million net. Aly Cissokho, Victor Moses, and Nuri Sahin have been high-profile loans that have not yielded expected results. Oussama Assaidi and Iago Aspas arrived for fees and wages that will ultimately ensure relatively stress-free sales this summer if they are deemed surplus to Liverpool's requirements. In terms of holding players whose wages outstrip their value, then Pepe Reina and perhaps Glen Johnson are the players who stick out because of their wages. Should Kolo Touré remain on the playing staff as a clear fourth choice centre back with the wages he earns? Players with questions over their future such as Fabio Borini and Luis Alberto have youth as well as reasonable wages to avoid being a long-term burden financially. Of course, their transfer fees dictate either regular involvement or patience while they develop but they pose simpler financial questions than those floating around in Rodgers' first season.
And so the wage reallocation undertaken under Brendan Rodgers' tenure to date is nearly complete with Champions League football secured for year three of the Rodgers era. Arsenal continue to match their fourth highest wage bill in league performance while Tottenham Hotspur's increase in wages combined with Daniel Levy's impatience will probably result in a drop from last year's Gareth Bale-propelled fifth place finish. Manchester City's gargantuan wage bill may sneak the title on goal difference when the salary gap between Liverpool and Pellegrini's outfit is close to £150 million. Roman Abramovich should note that it is not only Diego Simeone who is extracting more value from his squad than José Mourinho and Manchester United's wage bill is three times that of Everton so we should be thankful for David Moyes' seemingly ceaseless generosity.
Liverpool may not be in the position to spend £100 million in the summer (although January's £20 million transfer fund was unused and will most likely be added to the summer's fund) but there is scope to improve a number of contracts and add a number of players on competitive wages. Attracting the players to a thin squad that possesses a fearsome attack, a vibrant playing style, a talented young manager, and a young squad should be far easier than recent years especially with Champions League football on offer and an unexpected title challenge. The only worry is the fees attached to the players the transfer committee desires to bring in but at least, this current Liverpool team is one that is upwardly mobile and proving exceptional value for its owners. This should provide the impetus for continued and sensible investment in the playing staff and the continued reduction of players who are not providing sufficient "value" for the club.