The transfer window is red hot - be careful you don't get burned.
Mark Gregory
Visiting Professor of Business Economics. Author. Speaker. Director, Claybody Theatre, Stoke-on-Trent. Senior Fellow, Institute of Place Management. Advisor, economics of football.
Spend, spend, spend...
The 2016 summer transfer window was truly spectacular: around ￡1.2bn was spent by Premier League clubs. A new world transfer fee record was set by Manchester United in signing Paul Pogba and 13 clubs broke their transfer fee records. Yet the 2017 window seems likely to put last year's spending* into the shade.
The story is spectacular. With over a month to go, Manchester City with gross spend of ￡210m are close to breaking Real Madrid's all time spending record in a window, Manchester United are reported to have spent over ￡100m on two players and Tottenham Hotspur's Chairman, Daniel Levy, has described the spending levels as "unsustainable".
The numbers tell the story. Estimated gross spend is already around ￡870m, nearly two thirds of last year's final total. With Tottenham Hotspur yet to make a signing, Jose Mourinho talking about needing two more players, Liverpool involved in several high profile pursuits and many of the mid-table clubs, including Stoke City, yet to make their major moves, I confidently expect that the final total spend will be significantly greater than last year's record amount.
...with the rich leading the way...
As is usually the case, the major share of initial spending is driven by the clubs with the greatest resources. The richest clubs have the greatest power and effectively shape the landscape. As new players join these clubs, other players have to consider their options and this drives the next wave of activity.
Despite Tottenham Hotspur having not spent any money, the expenditure by the teams who finished in the top 6 places in the Premier League last year is already ￡533m, which is around 62% of total spend. This compares to 55% of total spend in the whole summer window of 2016 and so it does appear that there is a good chance the "Big 6" will account for an even greater amount of spending than last time around.
There is no doubt in my mind that it is the increased intensity of competition between the “Big 6” that is driving the transfer window activity. As I previously identified, 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. The top teams know how tough the coming season will be.
...and pulling others along with them...
But this is not just a story of the "Big 6", activity on the scale we are seeing has knock on effects and these go beyond the UK's borders. Real Madrid are reported to be considering a world record shattering bid of ￡160m for Monaco's Kylian Mbappe as prices rocket throughout the game.
However, the real impact of higher spending by the richest clubs will be felt closer to home. Everton stand out as a team looking to push on from their seventh place last year with gross spend so far of over ￡90m with quality additions throughout the team.
Even more striking is the potential impact on average prices. In the 2016 window, average spend per player acquired was ￡8m, a 60% increase on the 2015 window. Currently average spend per player in 2017 is around ￡12m, another 50% increase.
...with uncertain consequences...
The consequence of what appears to be the new normal for the Premier League is more pressure on managers and owners. As discussed, for the top 7 spending teams, there will now be losers in the bid to win a place in the Champions’ League but the rest of the division could be the real "pressure cooker". 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 - points from the top 7 will be ever harder to obtain and so the battle between the other 13 teams will be even more intense.
We can already see certain clubs making their moves. West Ham United with spend to date of ￡41m are leading the way, no doubt capitalising on the benefits of the larger attendances at their new stadium. Leicester City (gross spend of ￡26.5m) and AFC Bournemouth (￡20m) have spent some of their proceeds from success in recent seasons and the promoted clubs, Huddersfield Town (￡40m), Newcastle United (￡31m) and Brighton and Hove Albion (￡11.5m) have started aggressively.
What is interesting is the relatively limited level of spending by the remaining mid-table clubs. Only Watford have spent over ￡20m so far and total spend by West Bromwich Albion, Crystal Palace, Stoke City, Burnley, Swansea City and Southampton is under ￡50m in total. This is just over ￡8m a club - significantly below the average of ￡43m per club.
...be careful out there.
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 6 into 4 means there will be losers. However, the real pressure is most likely to be in the rest of the division. We can see already a number of clubs trying to find the right balance between paying ever inflated prices and avoiding financial risks. At this stage it is very difficult to call but my bet would be that the competition between 8th and 20th places will be the fiercest ever.
* Throughout this piece, transfer fees are based on the most common estimate being used in the UK press as at 25th July. As many fees are undisclosed these numbers are informed estimates.
CFO at Tag Digital
7 年Dont know an awful lot about this, but are the government missing out on a 'Stamp Duty'esque' transaction tax revenue source here? Probably won't fix the parity between the larger, better resourced clubs and smaller clubs as I'm sure the "big 6" would have pockets deep enough. However proceeds from any such tax revenue could be pumped straight back into grassroots football/other sports. I'm sure China were considering something like this a while back when their football clubs were paying ludacris amounts for players.
Product Owner at enerflo
7 年Enjoyable piece, I agree. I think it will be one of the closest seasons in the history of the PL. However, as someone who has followed the PL since the early 90's, I used to be very excited by marquee signings and big fees being spent to improve the squad. The spending this year is leaving me more saddened than happy though. I think it is shocking the fees spent on players, 45-50m on Kyle Walker for instance (no doubt he is a good player, but 50m, really?). I agree with Daniel Levy, it's unsustainable, even with the huge broadcasting deals and increase in commercial business. I think it's bad for the game as a whole. I'm a big United fan and would much rather see us promote youth players than spend another 60-100m on two more players. I love Tottenham's business model and hope they continue to have the success they do given they posted a post-tax profit of 33m pounds in their latest financial results (from BBC Sport) while finishing in the top 4 the last 2 seasons including 2nd last year. No doubt it will be an exciting season, but I am hopeful that some youth players can break through the ranks and prove that you don't have to spend big to win big.