Ismaila Sarr's agent revealed Liverpool agreed personal terms with the Watford winger over the summer but the transfer fell through due to the Reds' lack of funds.
The 22-year-old winger was part of the Hornets side that was relegated from the Premier League last summer but ended up staying with Watford this season in the Championship as he failed to secure a summer move.
Agent Thierno Seydi claimed that the Reds failed to stump up the £35million price tag required to complete the deal - even though Liverpool winger Sadio Mane was helping his countryman find a place to live on Merseyside.