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Big six's share of transfer expenditure increases

Premier League clubs’ total gross expenditure in the January 2020 transfer window was £230m, surpassing last year’s total of £180m and is the second-highest ever, reports Deloitte Sports Business Group. Premier League clubs spent a total of £1.6bn on transfers during the 2019/20 season, the second-highest seasonal gross transfer expenditure (record 2017/18: £1.9bn).

Net transfer expenditure (player purchases less player sales) for Premier League clubs totalled £165m for the window, a record for the January transfer window.

Intra Premier League sales made up just 2% of gross transfer spend, significantly less than the previous low of 11% set in January 2019, with Premier League club’s favouring talent from Europe. Premier league clubs spend £25m on deadline day, significantly less than the record of £150m set in January 2018.

Premier League clubs spent a total of £230m in the January 2020 transfer window, according to analysis by Deloitte. This surpasses last year’s January window total of £180m and is the second-highest gross spending total for the winter window.

Furthermore, total gross spend (i.e. before including player sales) of £1.6 billion for the 2019/20 season is the second-highest since the introduction of the transfer window in January 2003. This compares to £1.4 billion in 2018/19 and is £0.3 billion short of the all-time record of £1.9 billion set in the 2017/18 season.

Tim Bridge, director in the Sports Business Group at Deloitte, commented: 'Two seasons ago Premier League clubs spent a record £430m in the January transfer window. However, over the last two January windows spending patterns have returned to normal. Clubs are focused on long-term financial stability and are therefore less willing to spend in excess of pre-defined transfer budgets in pursuit of short term success.'

'This is further evidenced by the prominence of more agile transfer strategies, such as utilising loan transfers often with an option to buy, as well as focusing attention towards the promotion of young talent from club academies in recent years. Bridge continued: 'Premier League clubs’ restraint in transfer spending in this January may also be driven by the global value of Premier League broadcast rights for the 2019/20 – 2021/22 cycle, seeing only a slight uplift compared to the previous cycle.'

The January 2020 transfer window follows a record breaking summer 2019 window, which saw the ‘big five’ European leagues spend in excess of £5 billion for the first time, with four leagues setting transfer records for spending in a single window in the process. In January 2020, Serie A £180m (2019: £140m), the Bundesliga £165m (2019: £65m), La Liga £110m (2019: £65m) and Ligue 1 £100m (2019: £65m) have all increased their transfer expenditure since last season’s window.

Bridge concluded: 'Spending across the ‘big five’ European leagues has reached record levels this season. The unprecedented level of spending by European clubs has been driven by a number of factors, including increased income from improved domestic league broadcast agreements and the participation in and subsequent distributions from UEFA club competitions.'

Additional findings from Deloitte’s analysis of the January 2020 transfer window include:

  • Premier League clubs spent £230m to acquire new players in the January 2020 transfer window, falling short of the record achieved in 2018 (2019: £180m; 2018: £430m; 2017: £215m; 2016: £175m; 2015: £130m). A summary of Premier League clubs’ player transfer spending for each of the January transfer windows (2003-2020) is set out in the chart below; Premier League clubs recorded net transfer spend of £165m in January 2020 (2019: net spend of £55m; 2018: net spend of £90m; 2017: net receipts of £40m; 2016: net spend of £100m; 2015: net spend of £40m).
  • The ‘big six’ Premier League clubs accounted for 52% of the total gross expenditure in the January 2020 transfer window, compared to 43% in January 2019.
  • Premier League clubs have been reluctant to transfer players within the Premier League, with 2% of gross transfer spend as a result of intra Premier League sales in the January 2020 window, compared to an overall long term intra Premier League average of 29%.
  • Premier League clubs’ deadline day expenditure totalled £25m, which represented a decrease of £125m from deadline day in January 2019.
  • Total Championship clubs’ gross transfer expenditure for January 2020 was £37m, more than half of January 2019 expenditure (£60m). Fulham (£24m) were the Championship’s biggest spenders, spending c.65% of the total Championship gross transfer expenditure in order to strengthen their squad in a push towards promotion to the Premier League.
  • The Premier League was the highest-spending league amongst the ‘big five’ European football leagues in the January transfer window. Serie A (£180m/€215m), Bundesliga (£165m/€195m), La Liga (£110m/€130m) and Ligue 1 (£100m/€120m) all spending less.
  • On a seasonal basis the Premier League remains the highest-spending league amongst the ‘big five’ European football leagues, with £1.6 billion/€1.9 billion. La Liga (£1.2 billion/€1.4 billion), Serie A (£1.2 billion/€1.4 billion), Bundesliga (£785m/€930m) and Ligue 1 (£690m/€820m) clubs all spent less than Premier League clubs.

Effects of financial fair play

Andy Turner, partner at Mercer & Hole, told Accountancy Daily: ‘There has been speculation that the activity in this, most recent, transfer window is down to the impact of Financial Fair Play (FFP) rules with clubs looking closely at budgets and finance and the need to balance the desire for success with compliance with the rules.

‘The main fair play regulation is centred around the club not exceeding a certain level of loss. A club can influence its profit by either increasing its revenues or reducing its costs. There is a degree of flexibility as to how a company can quite legitimately draw up financial statements that comply with the regulations.'

'This includes management decisions around player acquisitions, amortization (lowering the book value over a set period) of players and specific judgement areas, such as the magnitude of certain provisions or reserves that could significantly affect the financial results of a club.'

‘As a result, we have seen an increase in the number of loan signings with an option to buy and clubs investing in younger talent for the future.’

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