Liverpool were jokingly called Seventhpool by fans of rival clubs for a while, until they went and made that joke into a compliment. Last year, the Reds finished eighth in the Premier League. This season, Eighthpool is probably going to be something more like Fifthpool.
It's not that Liverpool actually got that much better in the offseason. They needed a central defender and didn't buy one. They probably still need another forward as well. The holes in their team are going to prevent them from getting back to the Rafael Benitez days when they were just a little bit worse than Manchester United, but a top-four lock. They bought some decent players, though, and the good players they already had are returning from injury.
Lucas Leiva has been Liverpool's best player of the post-Champions League era by some serious distance, and the team's hopes of a top-four finish were completely erased when he went down with a knee injury last season. He's made a full recovery and should anchor the Liverpool midfield throughout the season. Steven Gerrard is also fit, and should be much better than last year. Jonjo Shelvey is a year older, Charlie Adam can't possibly get any worse and Joe Allen should be a big boost to the Reds in the center.
New manager Brendan Rodgers favors a more possession-based style of play than his predecessor at Anfield, and he has the players to pull it off in theory. Even if Joe Cole is the most overrated English player of his generation, he's still a half-decent winger who is coming off of a good season on loan at Lille, and he'll almost certainly do more for the team than the departed Maxi Rodriguez did last year. He never did fit in with anything Roy Hodgson or Kenny Dalglish wanted to do, but he should find a role in Rodgers' system. One of Fabio Borini or Luis Suarez is probably going to play out wide and cut in a lot, and they also fit the system well.
Liverpool also recently pulled off a crazy coup, snapping up Oussama Assaidi from Heerenveen for a reported fee of just under £3m. He won't slot into a starting role on the wing right away, but he should grow into it, especially considering his competition. Stewart Downing probably isn't as bad as his 2011-12 season seems to suggest he is, but he was also never that great at Middlesborough or Aston Villa. Jordan Henderson isn't really a winger and Cole isn't a world beater, even if he is serviceable. Assaidi rounds out a nice first team.
If Daniel Agger sticks around, which looks likely, Liverpool have a pretty solid starting XI that holds up against the big teams and fits Rodgers' system well. Their problem, and the reason that they will ultimately fall short of a top-four finish, is because of their lack of depth.
Andy Carroll is nothing but a bench option if he doesn't leave, and he can't leave without a replacement coming in because of Liverpool's lack of strikers. He's not a good fit for Rodgers' tactics at all and there's no reason to believe he's useful to a top team playing any kind of modern football. Jamie Carragher isn't good anymore. Sebastian Coates and Danny Wilson aren't good yet. Martin Kelly has probably found his ceiling. Raheem Sterling, Jon Flanagan and Jack Robinson aren't ready for prime time yet. Jay Spearing is not adequate cover for Lucas. If Lucas, a defender and a forward are out for any extended period of time, the team is likely to implode.
Liverpool have the talent in their starting XI to stay competitive, but come February, their fans will probably start talking about 'next year'.
Last year: 8th; 14W, 10D, 14L
This year: 5th. Brendan Rodgers is a good manager, they made some decent signings and Lucas is healthy. Too bad one injury could completely derail their season.
Key player(s): Lucas Leiva. The days of Steven Gerrard being the on-pitch leader of Liverpool are over. He's still the captain, still a solid player and still synonymous with the club. He's probably the leader in training and in the locker room. But when the game starts, Liverpool goes as Lucas goes. They can't withstand poor performances by him, or injuries to him. He's the best holding midfielder in the Premier League when healthy.