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Real Madrid, who have long admired the English talent, were set to secure him at no cost at the end of next month.
However, with Real eager to have their standout summer acquisition ready for the FIFA Club World Cup, terms were agreed between the clubs that will net Liverpool around $13.5 million (£10M), considering the saved wages.
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Although Liverpool stands to gain financially from the arrangement for a player heading out on a free transfer otherwise, Gabriel Agbonlahor has slammed the Premier League champions for their decision.
The ex-Aston Villa striker believes they should have held firm and made the England international miss the beginning of the Club World Cup.
He said, "Do you know what I would have done
I would have loved it - and I'm sure Liverpool fans would agree - (had they said) stuff you, you've gone after our player sneakily, you've made a deal for him to say he's going to Real Madrid, you've cost us £100m, he's a £100m player at a great age, you can wait until July 1 and he's going to miss two games of the Club World Cup, how about that?
"You think you can bully everyone, Real Madrid, biggest club in the world, but you're not bullying Liverpool."
Ex-Aston Villa striker Gabriel Agbonlahor has criticized Liverpool for giving into the pressure from Real Madrid
But sometimes I look at it and think wouldn't it be nice if Liverpool said, 'Nah, he's not going to play a game for you until July 1.'
"You you think you can get anything you want, Real Madrid
You've got (Kylian) Mbappe on a free transfer, you've got Trent on a free, and now you want him you're offering £10m for a £100m player."
Alexander-Arnold will be available to play for Los Blancos when they take on Al-Hilal in their first match of the tournament next month.
The lifelong Reds supporter has inked a six-year contract with the Spanish heavyweights and will officially become a Real Madrid player when the transfer window opens on June 1.