Liverpool were in marauding form coming into the European Cup final in 1981. Under manager Bob Paisley, they had scored 11 goals against FC Oulu, and had won comfortably against Alex Ferguson's Aberdeen FC and CSKA Moscow. In the semifinals, they beat FC Bayern Munich which further boosted their morale.
However, they had some serious injury concerns ahead of this match. Their goal machine in Kenny Dalglish had not trained for a couple of weeks, while Alan Kennedy came back after six weeks as he was recovering from a broken wrist. Yet, Paisley fielded both of them in the starting XI. They had to win this final not only because that would ensure their third European Cup, but it was also a passage for participation in the next edition as they had finished fifth in the league that season.
The English side started brightly and in the 11th minute, Kennedy's shot tested Real Madrid's goalkeeper Agustin Rafael under the sticks. They created a couple of more opportunities but neither Terry McDermott nor Dalglish could make the most of those chances. Meanwhile, Madrid's midfielder Juanito started pulling the strings at the centre of the park which helped the Spanish side grow into the match.
After a goalless first half, Liverpool started using their flanks more effectively to put pressure on Madrid's defence. Wing-backs Kennedy and Phil Neal would join the attack at every opportunity which further pinned Madrid's back to the wall. Finally, in the 81st minute, left-back Kennedy broke the deadlock. He dribbled past defender Rafael Garcia Cortes and then rifled a shot that beat Agustin.
With this win, Liverpool bagged their third European Cup and Paisley became the first manager to win the trophy thrice. The trophy also stayed in England for the fifth consecutive year, only swapping the cabinet at Nottingham Forest with that of Liverpool.