Liverpool's modest rise in commercial activity shown in the current set of accounts should see a significant lift when next year's arrive.
The Reds published their 2020/21 financial accounts on Friday for a season that included a campaign spent almost entirely behind closed doors as stadiums remained shuttered to fans across the world due to the pandemic.
Having posted a £46m pre-tax loss in 2019/20, the accounts for 2020/21 made for better reading as, despite matchday revenue falling 95 per cent and revenue falling overall by £3m to £487m, the club made a loss of £4.8m, small in comparison to many of their Premier League rivals.
In the 2019/20 accounts, which included the first three months of the pandemic, Liverpool registered a £29m rise in commercial activity to take them up to £217.4m. This season's has risen by a fraction of last year, at £0.2m to see them to £217.6m.
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The small rise doesn't tell the whole story, though.
Much of the commercial lift from 2019 was born from the back of leveraging the Champions League success and normal business practice for much of the year, with only the final months seeing the pandemic's impact. The commercial revenues had already been booked by the time that the pandemic struck.
This year's rise has had to take into account the lack of being able to deliver commercially as they would have expected to on a matchday, as well as revenue streams such as the retail sales from the Anfield megastore and other things such as stadium tours all being affected. The 2019/20 accounts were able to include a large chunk of normal life and market conditions before the pandemic hit, which was a boon to commercial revenues.
The 2020/21 accounts include, for the first time, the Nike kit deal.
Liverpool's hopes for the Nike deal are well known. The club were willing to head to the High Court to win a legal battle to extricate themselves from their relationship with former kit supplier New Balance before beginning their partnership with Nike at the beginning of last season.
The New Balance deal, at £45m, was worth some £15m more than Nike in terms of a guaranteed sum, but the revenue potential created by a 20 per cent royalty from the sale of Nike and Liverpool merchandise globally was seen as a game changer, something that would get Liverpool closer to the £70m per year that Manchester United receive from Adidas.
With retail spaces closed globally the route to market for merchandise has been more challenged, although Nike's major online presence has helped drive forward the relationship.
The accounting period also saw record breaking kit sales with the Nike partnership and mobile transactions increased by 89 per cent on the club’s online retail store.
With Liverpool having started £15m back in terms of guaranteed revenues, the Nike deal has caught up through sales, although with the deal truly beginning in the middle of a global pandemic the actual potential of the partnership has barely had the surface scratched.
The true test of just how successful the relationship is and can be will be seen from 2021/22 onwards, when a year of having fans back in stadiums and society opened up for retail experiences, as well as more confidence in consumer spending that there was at the height of the pandemic, will deliver bigger and better results.
Football finance expert and author of 'The Price of Football, Kieran Maguire said: "The Nike deal is based on there being higher volume than there was with New Balance.
"They haven't been able to leverage as they would have wanted on that because of the mentality of people during lockdowns. Why would you be buying a football shirt or merchandise when you were worrying about your own job security?"
There were a total of 13 new partnerships were announced including Nike, Expedia, Amazon, Quorn and SC Johnson, and with the club having already added new commercial partners in recent months that will boost efforts in next years accounts thanks to deals with the likes of EA Sports, Vista and Wasabi, commercial revenues are set to see a far greater boost than they did in this year's accounts.
But to register a positive commercial revenue performance, one where related party transactions don't feature and don't provide the kind of financial crutch that they do for some rivals, is something that will be taken as a positive by Fenway Sports Group from a year where it had been feared at point could see more heavy losses as a result of the pandemic.
Over the next 12 to 18 months FSG will be hoping that market conditions allow for the Nike partnership to truly flourish, with continued success on the pitch something that can be leveraged to great effect due to Liverpool's position as a global football club with a fan base in the hundreds of millions.
Leveraging the relationship they have with FSG partner and basketball icon LeBron James will be a big part of how they start to pivot to become a lifestyle brand as well as a sporting brand, opening up Liverpool to new demographics in the process.
