Premier League clubs splash the cash

Premier League clubs are on course to break the record for transfer spending this summer as they hire and fire managers at an unprecedented rate, underscoring the increasingly cut-throat economics of the world’s richest football league.

With 12 days before the transfer window closes, the 20 clubs in English football’s top flight have spent a combined €2.7bn on transfers ahead of the new season, which kicks off this Friday evening. Spending is running ahead of the rate of last year’s record summer transfer window, when Premier League clubs had spent €2.6bn at the equivalent point, according to data from Transfermarkt.

The outlay also exceeds the €2.3bn cumulatively spent by all of the clubs in Italy’s Serie A, the German Bundesliga and La Liga in Spain this summer.

This summer’s biggest deals include Chelsea’s €138mn purchase of Morgan Rogers from Aston Villa and Manchester City’s €135mn deal to sign fellow England international Elliot Anderson from Nottingham Forest.

Chelsea have been the top spenders this summer with an outlay of €408mn. The club’s rival Tottenham Hotspur, which narrowly escaped relegation last season, is in second place with spending of €267mn. The north London club bought midfielders Sandro Tonali and Mateus Fernandes for a combined €207mn, including add-ons.

Chelsea is also topping the charts in terms of net spending, with outlays exceeding funds from player sales by €245mn. The chief executive of a Premier League club told the Financial Times “many more big transactions” this summer, with clubs “more willing to pay up for proven, experienced players” and strike deals with each other, pointing to Arsenal’s €87mn signing of Brazilian midfielder Bruno Guimarães from Newcastle United. “The league is so competitive,” he added.

Heavy spending across the league is made possible by record revenues, which Deloitte forecasts at £7.4bn for this season, driven by the strong performances of English teams in European competitions and new commercial deals.

Tim Bridge, lead partner at Deloitte’s sports business group, said that while the Premier League was “far ahead” of rival competitions, clubs were simply spending their additional income on buying and paying players. “It’s almost like it’s eating itself from a financial perspective because there’s a significant need for additional money each year into those clubs,” he told the FT.

Despite increasing revenues, Premier League clubs have failed to collectively make a profit since the 2017-18 season, according to data from Football Benchmark. Such concerns were partly behind the introduction of new regulations this season that limit club spending on players to 85 per cent of their football-related revenues. The rules, which replaced previous regulations governing permitted financial losses, are structured so that clubs can exceed the spending limit temporarily.

Meanwhile, the average tenure of a Premier League boss has fallen to a record low. Manchester City are one of nine clubs starting the campaign with a new manager, with Enzo Maresca replacing Pep Guardiola, who stepped down after a trophy-laden decade.

Nottingham Forest, which cycled through four managers last season, have hired another boss for this campaign in Oliver Glasner. “The stakes have never been higher and you don’t get time to demonstrate whether you can deliver,” Professor Rob Wilson, dean at the University Campus of Football Business told the Pink ‘Un. “The whole ecosystem lacks patience and by that I mean the club, the board but also the support base.”

Despite their struggle to turn a profit, Premier League clubs continue to attract healthy demand from investors. Liverpool’s majority owners, Fenway Sports Group, are selling a significant minority stake in the club to a consortium backed by Amazon’s Jeff Bezos in a deal that valued it at more than $7bn. Although this set a record valuation for a Premier League club, it is well below the $12.5bn that former Disney chief Bob Iger and a group of US investors agreed to pay this month for the Los Angeles Lakers basketball franchise.

 “I think valuations are still underpriced,” said Wilson at UCFB, predicting that “it won’t be too long until we see a £10bn valuation” for a Premier League club. Deloitte’s Bridge also noted a “general consideration in the investor landscape that European football is undervalued.” He added that Premier League clubs were “nowhere near” their peak potential and had yet to fully commercialise the personal brands of global stars such as Manchester City striker Erling Haaland.