Liverpool were quick to take advantage of the disharmony at Valencia CF and Benítez was appointed manager of the English Premiership club on June 16, 2004, replacing Gérard Houllier. Arriving at Liverpool, he found himself in a very similar position to the one he had found at Valencia CF. The club had a talented but underperforming squad that included, among others, Michael Owen, Steven Gerrard, Jamie Carragher, Dietmar Hamann, Harry Kewell, Steve Finnan and Sami Hyypiä.
Benítez had barely arrived at Liverpool when Michael Owen was sold to Real Madrid. He subsequently signed several players from La Liga, most notably Luis García and Xabi Alonso. During his first season Benítez failed to improve the club's form in the Premiership. Key players such as Steven Gerrard, Milan Baroš, Djibril Cissé, Xabi Alonso and Dietmar Hamann missed much of the season through injury and Liverpool failed to challenge Chelsea and Arsenal for the league title. They eventually finished fifth. However, they did reach the Carling Cup final against Chelsea at the Millennium Stadium but Liverpool lost 3–2 after extra time.
In the UEFA Champions League it was very different, despite a poor start. Liverpool began their campaign with an unimpressive 2–1 aggregate win over Grazer AK in the qualifying rounds and were minutes away from going out of the competition in the group stages before an 87th minute goal by Gerrard defeated Olympiakos 3–1 and saw the club progress to the last sixteen. Bayer Leverkusen were beaten 3–1 home and away followed by Juventus who were beaten 2–1 on aggregate.
In the semi-final Liverpool faced Chelsea, runaway leaders in the Premiership and favourites to win after overcoming the highly rated FC Barcelona in a previous round. Chelsea had already beaten Liverpool in the League Cup final and twice in the Premiership. After a goalless leg at Stamford Bridge, an early goal from Luis García saw Liverpool win 1–0 on aggregate and reach the final against AC Milan. In a classic final, Liverpool came from 3–0 down at half-time to level the score at 3–3 and eventually won on penalties with the assistance of Jerzy Dudek, giving Liverpool an historic fifth European Cup.
2005–06 - FA Cup winners
For the 2005–06 season Benítez further reinforced the Liverpool squad by signing Peter Crouch, Mohamed Sissoko, José "Pepe" Reina, Boudewijn Zenden and Daniel Agger, as well as former Liverpool player (and fan favourite) Robbie Fowler in the January transfer window.
It is notable that Dudek's heroics in the Champions league final were not enough for him to stay as first choice keeper, as Reina replaced him in goal right away. Benitez also quickly discarded unlikely heroes Vladimír Šmicer and Igor Biscan, who played key roles in the European success but seemingly did not figure in Benítez' long-term plans. Benitez also quickly sold two of his first signings in English football, Josemi and Antonio Núñez after they failed to establish themselves. This is an example of what some may see as Benítez' ruthlessness.
The improvements saw the club's Premiership form improve considerably. Liverpool finished third in the league, qualifying for the UEFA Champions League and only narrowly missed out on second place by 1 point. Liverpool also won the FA Cup beating both Manchester United and Chelsea on the way to the final against West Ham Utd. History repeated itself in the final as they then went on to lift the trophy after a penalty shoot-out, following a dramatic 3-3 draw. Liverpool came from 2–0 down and were losing 3–2 in stoppage time when Steven Gerrard scored a dramatic late equalizer. This time Pepe Reina saved three penalties during the shoot-out to secure the silverware.
In winning the FA Cup 'Rafa' became the only manager in the history of Liverpool Football Club to win major trophies in both of his first two seasons at the club.
2006–07 - Another European Cup Final
Benitez's Liverpool claimed the first domestic honours of the 2006–07 season with a 2–1 victory over Chelsea in the Community Shield, despite fielding a weakened side with Gerrard and Alonso on the substitutes bench. The English Press were predicting Liverpool would challenge Chelsea for the Premiership crown after Benitez addressed Liverpool's perceived weaknesses in the transfer window by signing striker Craig Bellamy as well as wingers Jermaine Pennant and Mark Gonzalez.
Although Liverpool had qualified for the knockout stage of the UEFA Champions League with two games to spare (a new record for the club), and then going on to win the group with one game still left, Benitez's future at the Liverpool was called into question after poor away results in the league: his agent was quoted as saying he would consider offers to manage in Italy[4]. Benitez swiftly issued a statement through the club's website re-affirming his desire to remain with Liverpool for the long term[5].
Although the team's league results improved, their defence of the FA Cup lasted just one game as they were knocked out by Arsenal at Anfield; and four days later they were knocked out of the League Cup, also by Arsenal losing 6–3 at Anfield, Liverpool's heaviest home defeat since 1913. However this was soon forgotten when Liverpool beat Chelsea 2–0 at Anfield, Benitez's first league victory over Jose Mourinho's side. At the end of the league campaign, Liverpool were on 68 points, beating Arsenal to third place on goal difference but their poor away form had prevented the title challenge many were expecting - they did not win away in the League until December.
Liverpool's 2006–07 Champions League campaign proved successful. Liverpool finished top of Group C in the group stages after beating Maccabi Haifa in the 3rd qualifying round. They were then drawn against defending champions FC Barcelona in the first round of the knockout stages. Benitez' side did not have ideal preparations with a reported altercation between Liverpool players Craig Bellamy and John Arne Riise [6] days before the winning the first leg 2-1 at Camp Nou. This was seen as a major test of Benitez' man-management at the time and he subsequently fined both players[7]. Remarkably, Riise and Bellamy combined to score the second goal of a 2–1 victory in the first leg and Liverpool held Barca to just one goal in a 0–1 loss in the return at Anfield, thus progressing on the away goals rule. In preparation for the second game, Barca's Dutch coach Frank Rijkaard described Liverpool's style of play: "The style Liverpool have - quite physical and tactically disciplined - once you have seen a couple of their games you know how they play."[8]
In the quarter-finals, Liverpool achieved a 3–0 first leg lead over PSV Eindhoven, before sealing their place in the semi-finals with a 1–0 win at Anfield with Benitez resting several key players including Gerrard.
In the first match of the semi-final against Chelsea, Liverpool lost 1–0 at Chelsea, but won the return leg 1–0, and then ultimately winning 4–1 in a penalty shoot-out after extra time. After the game, Liverpool's new co-owner George Gillett said: "Rafa has been tremendous ... We knew of him but I don't think we realized how good he was, and not just as a coach. Not only was he a brilliant coach but he is a very sharp, savvy businessman. He knows what he wants and how to get it. The more we have seen of him the more impressed we have become."[9] During the penalty shoot out, Rafa was noted for sitting down cross-legged in his technical area. He later explained that it was because fans were complaining that they couldn't see.
Liverpool contended with AC Milan for their sixth European Cup in Athens, Greece on May 23, 2007, in a repeat of the 2005 final but lost 2–1, after two goals by Filippo Inzaghi. Dirk Kuyt's late consolation goal from a header off Jermaine Pennant's corner was in vain, as Milan held on to win the game. Following the defeat Benitez insisted his club's new owners had to back him in the transfer market in order for Liverpool to progress.[10] It was reported Benitez did not feel he had the complete support of the new owners, a thought that was compounded by Liverpool's initial lack of activity in the transfer window, although the club played these rumours down. [11]
During the season, Benitez continued to develop the youth team, bringing in players such as Emiliano Insua, Sebastián Leto and Jordy Brouwer. The scouting programme had already successfully captured the likes of Daniel Agger, Mark González, Gabriel Paletta, Fábio Aurélio, Scott Carson, Miquel Roque, Godwin Antwi, Astrit Ajdarevic, Paul Anderson and Nabil El Zhar.
2007–08 - Cash flow and crisis
Liverpool's new owners Tom Hicks and George Gillett provided Benítez with additional transfer funds for the new season to attempt to bridge the gap to Premiership rivals Manchester United and Chelsea, but in fact Hicks and Gillett just used money the club generated itself through additional television revenues and the prize money from getting to the Champions League final, without dipping into their own pockets. Benítez broke Liverpool's transfer record when signing Spanish striker Fernando Torres from Atletico Madrid as well as signing young Dutch forward Ryan Babel, West Ham attacking midfielder Yossi Benayoun, Brazilian player of the year Lucas Leiva and Andriy Voronin on Bosman. During the pre-season he also invested in a number of young foreign players such as Bulgarian under-21 goalkeeper Nikolay Mihaylov, Australian Dean Bouzanis Hungarian starlets Krisztian Nemeth, Andras Simon, Peter Gulacsi and poached young superstars Dani Pacheco and Gerardo Bruna from Barcelona and Real Madrid respectively. Charles Itandje was signed as cover for Pepe Reina after Scott Carson was reluctantly loaned to Aston Villa for the season.
Benítez released several players in the summer, including fan-favourites Robbie Fowler, Luis García and Jerzy Dudek as well as Djibril Cissé and Craig Bellamy. Benitez also tried to sign left-back Gabriel Heinze from Manchester United, however on August 21, 2007 an FA panel ruled that Manchester United were under no obligation to sell Heinze to a rival club[12].
Liverpool made a good start to the new league season and remained unbeaten at the end of November, having topped the Premier League table for the first time under Benitez after a comprehensive 6–0 win over Derby County. Despite this, poor results in the Champions League and a disagreement over future transfers lead to a public falling-out with the club's owners, played out in the media at the end of November and it was suggested that Benitez's position was now under serious threat. The resulting coverage resulted in an overwhelming show of support by fans in support of Benitez which culminated in a fans' march in support of Benitez ahead of the critical Champions League home tie with Porto, which they won 4–1.[13] It has since emerged that at the time Jürgen Klinsmann was offered the Liverpool job before accepting the post of Bayern Munich manager and numerous sources have linked Benitez to Real Madrid.
