How Liverpool saved £18m on Luis Diaz in deal Porto insider thought was ‘impossible’
A few short days ago it was widely anticipated that Liverpool wouldn’t be making any moves in the market before the January transfer window closed, and certainly there weren’t too many that would have called them landing their number one summer transfer target.
But Luis Diaz is a Liverpool player. A player who the club believe can follow the same kind of trajectory as Mohamed Salah and become a world class performer for years to come, the Colombian arrives at what looks like a snip in the current climate, with a deal of £37.5m concluded, one that will rise as high as £49m should a number of add-ons kick in.
Liverpool stole a march on Tottenham Hotspur, who had sparked the bidding process in the first place with their own move for Diaz. Not willing to let a target move to a rival, the Reds entered the race and had the ability to offer Porto more security than Spurs over a number of things, not least the value in the add-ons for such things as making Champions League football and the amount of goals scored, with both things more achievable with the Reds.
But why, with a release clause of €80m (£67m) did Porto agree to let their prized asset go for £18m less than the clause they put in place to ensure they were compensated as they felt they should be in the event of him being the object of desire from Europe’s biggest clubs?
Porto needed the money, and they needed it fast. Liverpool and owners Fenway Sports Group had a great bargaining position.
Many clubs have been hit hard by the pandemic, but Porto have been one of the clubs to really feel the bite. The year-on-year financial decline shown in their 2019/20 financial accounts that took in the onset of the pandemic. The 2019/20 season also saw them miss out on qualification for the group stages of the Champions League after they were beaten in the play-off round. That meant a huge whole in income for the 2020/21 accounting period.
Porto were hit with a €300,000 fine by UEFA for overdue payables, a violation of Financial Fair Play (FFP) regulations. At the start of December they were also threatened with exclusion from European competition for a season if they did not meet their debt obligations within two months, and with that deadline looming large and European football vital to Porto given the comparatively tiny amount of media revenues they rely on when held up against the Premier League, the need to find cash quickly was vital.
And Liverpool, sensing the weak bargaining position that Porto had, paid €8m to the Portuguese giants almost immediately so that they could meet their debts and improve cash flow. It was a deal that Porto had to make happen, one that they couldn’t put off until the summer.
Journalist and Portuguese football expert Aaron Barton, who runs the Proxima Jornada football website, told the ECHO: “Porto had to send proof of payment for €300,000 to UEFA by January 31.
“The one thing that gave Liverpool a massive edge over Tottenham was this up front payment of €8m. That basically arrived at Porto by the time that he’s had his medical finished. Any payments that were needed to UEFA or former clubs the owed money, they would use this up-front payment to pay it.
“Liverpool and Porto have built up a nice connection over the past couple of years. They’ve got some similar staff, the assistant at Liverpool now, Pep Lijnders, used to be at Porto, and Vitor Matos, who coaches at Liverpool in that gap between the academy and the first team, he used to coach at Porto. Then there’s the Marko Grujic deal.
“Porto do very well from player sales. They operate very close to the wind, there’s a player every year that goes. Last season they made £76m from player sales, the season before that it was £88m, the season before that was £72m, the season before that it was £70m. It is usually around the £70m to £80m mark, but this season after the Luis Diaz deal they are now at £70m. Without that money they are well short.
“They didn’t have too many other saleable assets. Players like Vitinha in a couple of years will be going for £40m but they only had young players right now.