Liverpool limited by £20m-a-year transfer cap until 2014

Liverpool will not be able to spend more than £20million a season in the transfer market for the next five years, according to a leaked report.

The Reds' financial constraints have been a source of some concern to the Merseyside club's supporters over recent months, but this latest revelation is further proof that Rafael Benitez faces an uphill struggle to maintain Liverpool's status as a top four club - with the cash-rich likes of Manchester City and Chelsea breathing down his neck.

In a report in a prospectus published in March by investment banks Rothschild and Merrill Lynch to attract potential investors in the club, figures suggest Liverpool's net summer spending will be locked at £20m until 2014 – a figure which also includes wage increases.

The document shows just how desperate Liverpool's owners Tom Hicks and George Gillett are for new finance, and reveals that the Americans - who have also put plans to build a new stadium on ice - were considering increasing the average ticket price by 8 per cent to help ease the club's debt.

The owners were also looking to raise £100m from investors and loans as pressure mounted to refinance their £290m debt.

Four months later Gillett and Hicks paid £50m to get a year's extension to the debt facility they have used to purchase and run the club since their takeover in February 2007.

And this season they have secured a new £20m-a-year sponsorship deal with Standard Chartered Bank - which is a major improvement on the previous £14.6m Carlsberg deal.

Yet the fundamental lack of finance remains a problem for Benitez, with the section of the Rothschild/Merrill Lynch document relating to "player transfer payments" stating: "Management believes that the normalised long-run level of new net player capital expenditure is £20m."

Data included with the prospectus suggests "long run" means the next five years. This figure "will grow together with increases in media broadcasting revenues," the bankers promise and although revenue from British broadcasters are expected to drop, overseas rights should grow before 2014.

The need to generate cash to finance future purchases has already been highlighted by the sale of Xabi Alonso and Alvaro Arbeloa to Real Madrid for £30m and £3.5m respectively while the curious £2.5 signing of AEK Athens defender Sotirios Kyrgiakos suggests the Reds are having to lower their expectations in the transfer market.

The latest development will also do little to dampen speculation surrounding the the future of Liverpool's Barcelona target Javier Mascherano.

Although Hicks and Gillett's decided against a ticket-price hike Liverpool fans will smart at plans in the document, obtained by Bloomberg News, to convert 1,000 regular seats at Anfield into corporate seats.

Are Liverpool's days as a top four club numbered? Is it time for Hicks and Gillett to go? What do you think? Sign in and post your comments below.