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Ayre: Liverpool Increasing Number of Performance-based Contracts

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With so many contract negotiations going on at the club right now, Ian Ayre recently revealed that Liverpool are taking a new approach to contracts in order to reduce costs and get the best out of their players.

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Since purchasing Liverpool FC in 2010, Fenway Sports Group have made major strides in improving the club's financials. Reducing debt and increasing commercial revenues have been two major areas of focus, but improving the club's wage bill over the past few seasons has also been instrumental in decreasing expenses.

Liverpool's inability to pay exorbitant wages to players has come under fire from those who feel it shows a lack of ambition on the part of the owners, but the club have slowly been moving to performance-based compensation that allows them to pay top dollar to their best talent without losing money on underperforming players.

"We spend a lot of time and our Performance and Analysis team spend a lot of time analysing and structuring," Ian Ayre explained, "so that when we put a deal to a player that has performance related bonuses or elements, we are not just showing them what they can earn, we are showing them the realism of that. It’s realistic because we have all the statistics. And they can see that they are actually very capable of it.

"It's perhaps that we’d just like to see more of it. And they can then feel energised to achieve that. That’s a far cry from deals where it doesn’t matter whether they perform or do not perform. And it’s certainly working for us – we have a happy bunch of players."

It's a smart approach for a club that is only just beginning to turn a profit and that is trying very hard to avoid running afoul of Financial Fair Play regulations. Performance escalators can often seem arbitrary, but Liverpool's approach in tying those escalators to each player's individual statistics will likely go a long way towards convincing the player that the odds of being paid more than the base salary on offer are fairly good.

Whether Raheem Sterling's contract negotiation — and, to a lesser extent, Jordan Henderson's — hinges on this switch from cash up front to cash plus incentives is unclear, but the player's agent holding out for higher wages for his client has been a sticking point since talks were first opened. Liverpool fans are still hoping for a speedy resolution to the deal, whether or not it gets done with an eye towards financial stability.