The history of Liverpool Football Club from 1985 to the present day covers the appointment of Kenny Dalglish as manager, the Hillsborough disaster, and the club's return to European competition in 1991. Throughout this period, the club played in the top tier of English football, which in 1992 became the Premier League.
Dalglish was appointed as player-manager after Joe Fagan resigned following the 1985 Heysel Stadium disaster, which resulted in Liverpool's indefinite ban from European competition. Liverpool won a league and FA Cup double in Dalglish's first season, and won a further league title in 1987–88. The Hillsborough disaster, which occurred during an FA Cup semi-final against Nottingham Forest at Hillsborough Stadium in April 1989, resulted in the deaths of 97 of the club's supporters. After the disaster, Dalglish led the club to their eighteenth title in 1989–90; he resigned in February 1991. The Taylor Report into the Hillsborough disaster recommended the end of standing terraces; to comply with its findings, Anfield was converted to an all-seater stadium during the early 1990s, which greatly reduced its capacity. Dalglish's successor Graeme Souness won the FA Cup in his first full season. In the newly formed Premier League, he struggled to sustain the club's domestic successes and was replaced by Roy Evans midway through 1993–94. Liverpool improved to fourth the following season and won the League Cup.
In 1998, Gérard Houllier was appointed co-manager alongside Evans. The arrangement lasted until November when Evans resigned and Houllier became the sole manager. The club won a unique treble of trophies in 2001, and a year later finished second to Arsenal, their highest league finish in 11 years. Houllier departed the club in mid-2004. Liverpool won the UEFA Champions League for the fifth time in Rafael Benítez's debut season, and he guided the club to a further FA Cup success in 2006. Midway through the 2006–07 season, the club was bought by Americans Tom Hicks and George Gillett. At the start of the 2010–11 season, Liverpool were on the verge of bankruptcy; the club was sold to New England Sports Ventures following a high court ruling. Roy Hodgson, who took over from Benítez, left the club in 2011; Dalglish was again placed in charge of team affairs and won the 2012 League Cup, Liverpool's eighth win in the competition.
Dalglish was replaced by Brendan Rodgers after the team finished eighth in the 2011–12 Premier League. Rodgers guided Liverpool to second in 2013–14, but board disagreements over transfers and poor team performances led to his sacking in October 2015. His replacement, Jürgen Klopp, led the club to a resurgence in form as they appeared in consecutive Champions League finals, winning the latter in 2019 to earn a sixth European Cup ending a seven-year trophy drought. The following season, he guided the team to the 2019–20 Premier League title, the club's first league title in 30 years and the first under the Premier League format. Klopp left Liverpool in 2024, and his successor Arne Slot won the 2024–25 Premier League before being dismissed the following year.
1985–90: Success at a cost Dalglish became manager following the resignation of Fagan after the Heysel Stadium disaster. He started by replacing long-serving full-backs Phil Neal and Alan Kennedy with Steve Nicol and Jim Beglin. Liverpool began the 1985–86 season poorly and were ten points behind Manchester United at the end of September. The club continued to struggle until the end of the season when they won eleven of their last twelve matches, as their rivals were dropping points. Liverpool needed to beat Chelsea in the last game of the season to win the league championship. A goal from Dalglish secured the championship. The club also progressed to the 1986 FA Cup Final, where they faced Everton. Liverpool went behind to a first-half goal from Gary Lineker, but two goals from Ian Rush and a Craig Johnston goal in the second half secured a 3–1 victory. The club had achieved a double of league championship and FA Cup in the same season for the first time.
At the start of the 1986–87 season, Rush announced his intention to leave Liverpool for Italian team Juventus when the season was finished. Rush did not want to leave but the club decided to sell him, as they were short of money due to their expulsion from European competition. Midway through the season, Dalglish signed John Aldridge to replace Rush when he left. Prior to his departure, Rush scored 40 goals. Liverpool finished second in the league behind Everton, and were knocked out of the FA Cup in the third round by Luton Town. The club did reach the 1987 Football League Cup Final, but they were beaten 2–1 by Arsenal. At the end of the season, Dalglish signed Peter Beardsley and John Barnes to improve their attack. Liverpool regained the league championship; they did not suffer defeat until their 29th match against Everton, one of two losses during the season. The club had the chance to complete the double, as they reached the final of the FA Cup against Wimbledon. Although favourites against a club who had become a member of the Football League only eleven years previously, they lost the match 1–0.
Rush returned to Liverpool for the start of the 1988–89 season, due to homesickness. Liverpool struggled at the start of the season and by January they were nine points behind leaders Arsenal; by April the teams were level on points, and Arsenal were ahead on goal difference. By this time, Liverpool had reached the semi-finals of the FA Cup against Nottingham Forest at Hillsborough stadium on 15 April 1989. Within six minutes the match was abandoned; overcrowding at the Leppings Lane end of the ground resulted in the death of ninety-seven people, as they were crushed against perimeter fencing. Ninety-four fans died, in what became known as the Hillsborough disaster, that day; the 95th victim died in hospital from his injuries four days later; the 96th died nearly four years later, without regaining consciousness; the final 97th victim died in 2021. Liverpool won the replay 3–1 to reach the final against Everton. They led for the majority of the match from an Aldridge goal. Everton's Stuart McCall scored in the 89th minute to take the game into extra time. Substitute Rush scored in the 95th minute, but McCall scored again in the 102nd minute to level the match. Another goal from Rush two minutes later secured a 3–2 victory for Liverpool. Once again, Liverpool had a chance at the double. Their final match of the season was against second-placed Arsenal, who were three points behind. The game had originally been scheduled for 23 April, but Liverpool's FA Cup commitments meant it was postponed and rearranged for 26 May. Arsenal needed to win the match by two clear goals to win the league championship. They took the lead in the 52nd minute when striker Alan Smith scored. With the match in injury time, Michael Thomas scored to give Arsenal a 2–0 victory. The result meant Arsenal won the championship on goals scored.
After the season, an inquiry headed by Lord Taylor was set up to establish the causes of the Hillsborough disaster. The subsequent Taylor Report, published in 1990, found that failure of police control was the main reason for the disaster and recommended that major stadiums remove terracing and become all-seater venues. Liverpool started the 1989–90 season in good form, exemplified by a 9–0 victory over newly promoted Crystal Palace. Eight different players scored for the club, the only time this has occurred in English football. In October and November they lost four games, but they recovered to go unbeaten until a 1–0 loss to Tottenham Hotspur in March. Following the match, Liverpool signed forward Ronny Rosenthal on loan from Standard Liège. His impact was immediate; he scored seven goals in eight appearances, including a hat-trick against Charlton Athletic to help Liverpool to their eighteenth league championship. The club progressed to the semi-finals of the FA Cup, but they lost 4–3 to Crystal Palace after extra time.
1990–98: Decline
Liverpool started the 1990–91 season by winning their first eight league games. They remained unbeaten until a 3–0 loss to Arsenal in December, followed by another to Crystal Palace at the end of the month. The club's form began to tail off and Arsenal moved above them in January. After a 4–4 draw against Everton in an FA Cup replay in February, Dalglish announced his resignation as manager, citing stress as the reason. Coach Ronnie Moran became caretaker manager; he won three of the ten matches he was in charge of, as they fell further behind Arsenal. Former player Graeme Souness was announced as manager in April, but the club were unable to catch Arsenal, who won the league by seven points. Souness reshaped the team during the 1991–92 season. Beardsley, Gary Gillespie and Steve McMahon were sold. Souness bought Dean Saunders for £2.9 million, but Liverpool finished in sixth position, the first time they had finished outside the top two since 1981. The club did reach the final of the FA Cup against Sunderland, which they won 2–0. The season saw Liverpool compete in Europe for the first time since the Heysel stadium disaster in 1985; they were readmitted a year after other English clubs. Liverpool reached the quarter-finals of the UEFA Cup, where they lost to Italian team Genoa 4–1 over two legs. The Boot Room, which had been a meeting place for Liverpool's coaches since Bill Shankly was manager, was demolished during Souness' time at the club. A new press room was built in its place.
Anfield was redeveloped at the start of the 1992–93 season following the recommendations of the Taylor report. A second tier was added to the Kemlyn Road stand, which included executive boxes and function suites as well as 11,000 seats. Renamed the Centenary Stand, it was officially opened on 1 September 1992 by Union of European Football Associations (UEFA) president Lennart Johansson. In the inaugural season of the Premier League, Liverpool again finished in sixth place, losing fifteen of their forty-two matches. They exited early in the FA Cup, League Cup and UEFA Cup Winners' Cup. In the 1993–94 season Liverpool won their first three games, but their form dipped as they lost four consecutive games. One positive was the emergence of striker Robbie Fowler from the club's youth team. He scored on his first-team debut against Fulham in the first leg of a League Cup tie, and scored all five goals in the return leg as Liverpool won 5–0. Liverpool continued to struggle during the season, culminating in a defeat to Bristol City in an FA Cup replay. Souness was sacked after the match and replaced by coach Roy Evans. The club ended the season in eighth place after losing sixteen of their games. Liverpool began to fall behind their rivals off the pitch. Manchester United made £93 million after they were floated on the stock market, while Liverpool made £22 million when media company Granada bought 9.9% of the club.