As tough as it gets? What does the transfer window tell us about the season ahead?

Another record transfer window...

As I wrote at the time, at the halfway mark the 2017 summer transfer window was red hot. The 2016 summer transfer window was truly spectacular with around ￡1.2bn spent by Premier League clubs with 13 of the 20 clubs breaking their transfer fee records. Yet at the midpoint, the 2017 window seemed likely to put last year's spending* into the shade.

And so it did. Total transfer spend was around ￡1.4 Billion, an increase of around 20% on the previous summer and not far short of double the figure for 2015. Total spend per player, excluding loans, was over ￡12 million, 12 of the 20 Premier League clubs broke their transfer records, Manchester City broke the world record for expenditure, as did Paris Saint Germain (and that is without counting the €165m future deal for M'Bappe), and Manchester United bought 3 players at an average of almost ￡50 million per player.

...driven by more competition at the top...

The major share of spending has unsurprisingly been led by the clubs with the greatest resources. The expenditure by the teams who finished in the top 6 places in the Premier League last year was over ￡750m, 54% of total spend compared to 55% last year. When we add in Everton's spend of over almost ￡140 million, the share of total spend accounted for by the top 7 teams last season was 64%. Roughly two thirds of spend by one third of the teams.

As I have previously discussed, last season saw the "Big 6" achieve record levels of dominance – most points, most goals scored and highest aggregate goal difference. But it is the fact that Arsenal missed out on the Champions League for the first time since 1999 that will have the greatest impact. There is now real competition for the top 4 places and this has undoubtedly impacted transfer activity. Manchester City broke the ￡200 million barrier and Manchester United, Chelsea and Everton all had gross spend of ￡140 million of more.

...with a possible gap appearing in the elite...

There are signs that the market may be too hot for some clubs. Tottenham Hotspur, Liverpool and Arsenal spend significantly less than ￡100 million each with Arsenal's spend of under ￡50 million being less than both Watford and Leicester City. In fact Arsenal had a negative net spend, raising more from sales than paid out in transfer fees. With spend of nearly ￡80 million, Leicester City do seem to be willing to push to at least repeat their Champions' League adventure.

However, the significant differences in the expenditure levels between the top spenders does suggest we may be seeing this group segment into aspiring champions and clubs aiming to be in the Champions' League. The Manchester clubs and Chelsea appear to be clearly in the first group, on a net spend basis so do Liverpool but how aggressively Tottenham Hotspur, Arsenal and Everton are able to compete will become clearer over subsequent windows.

...but more bunching in the pack...

A feature of last season was the tightness of the competition between the clubs below seventh place. Two points separated the teams from 8th to 13th, and the situation is likely to be similar this coming campaign - given the expenditure levels, points from the top 7 are likely to be even harder to obtain and so the battle between the other 13 teams will be even more intense.

At the midpoint of the window, there had been a relatively limited level of spending by the clubs outside of last season's top seven places. Only Watford had spent over ￡20m by the end of July and total spend by West Bromwich Albion, Crystal Palace, Stoke City, Burnley, Swansea City and Southampton was under ￡50m in total.

I speculated that there was a risk that clubs could be drawn into spending more than they should. By and large this hasn't happened. As discussed above, Leicester City have set out their stall and Watford continued their spending to total over ￡50 million of gross spend and over ￡40 million net. However, the rest of the clubs were much more tightly bunched with spend ranging from ￡23 to ￡44 million across the 12 clubs.

When we consider net spend, it is clear most clubs have sought to manage their expenditure carefully. With the current television deal, clubs can expect to receive at least ￡100 million in appearance and prize money and clubs can reasonably expect to be able to afford net spend of around ￡30 million and still have enough resources to cover wages and other costs. Only Watford and Huddersfield with net spend of around ￡40 million each went significantly beyond this level.

...with a search for quality...

Throughout the division, there is evidence of a search for quality over quantity. Average spend per new player is over ￡12 million, excluding loan players, a 50% increase on 2016. Manchester United paid nearly ￡50 million per new player and Manchester City and Chelsea over ￡30 million each, a major difference to Brighton's spend of around ￡2 million per player. The number of new signings has fallen for the second successive year with 129 new players compared to 143 in 2016 and 156 in 2015. Clubs appear to be trying to reduce the size of their squads and improve the quality of players.

...time to light the blue touchpaper.

This is going to be an intense season for everyone involved in the Premier League. The top spenders will be expected to dominate the competition but not everyone can win. Arsenal are already under pressure but other members of the supposed elite can expect to be under the spotlight as the weeks go by. With only 4 Champions' league places, every point is going to be vital.

But there will be not be an easy life for any club. It does appear that finance will not be the primary driver of outcomes for teams outside of the largest 8 spenders and we can expect an ever more competitive battle to stay out of the relegation places. Sit back and enjoy.

* Throughout this piece, transfer fees are based on the estimates being used in the UK press as at 1st September and total spend figures sources form the BBC website. As many fees are undisclosed these numbers are informed estimates.

@MarkGregoryEY

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