The Political Economy of Football V2

Club Brugge’s exciting draw in the Champions League attracted attention with them once again being seen as a club punching above their weight.  Club Brugge has built a reputation for smart recruitment, developing young players and supporting them through its academy pipeline. That model has allowed it to compete sustainably, even against far larger opponents. Yet a strategy like this requires operational discipline as well as sporting ambition. Top clubs recruit internationally, negotiate across jurisdictions, and move significant sums across currencies. In many respects, they operate like mid-sized multinationals. The complexity is simply less visible to supporters. Transfers are one of the clearest examples. Deals are often completed under intense time pressure during short transfer windows, with multiple parties involved and payments moving across currencies and banking systems. In that environment, small inefficiencies can quickly become expensive. Foreign exchange costs ...

Fifa has published its annual international transfer report:  https://digitalhub.fifa.com/m/2b542d3b011270f/original/FIFA-Global-Transfer-Report-2021-2022-indd.pdf There were 18,068 international transfers in men’s professional football, representing an increase of 5.1% compared to 2020 and signalling a return to the levels of 2019 despite the ongoing COVID-19 pandemic. Transfer fees decreased for the second consecutive year in 2021 to USD 4.86 billion, a fall of 13.6% from 2020 and 33.8% from the all-time high of 2019.

Premier League clubs spent £1.1 billion in the summer transfer window, the lowest amount since 2015, but still above expectations.   Overall, spending is robust.   Deloitte Sports Business analyse the figures:  https://www.bt.com/sport/news/2021/september/premier-league-spending-still-robust-despite-falling-again-deloitte  

 Fifa has published a comprehensive report on international transfers over the past decade:  https://www.fifa.com/legal/football-regulatory/stakeholders/fifa-fund-for-players/media-releases/fifa-publishes-report-on-ten-years-of-international-transfers The top thirty clubs by spend were all in Europe, twelve in England and five each in Italy and Spain.  they accounted for 47 per cent of all fees.  The combined loss made by English clubs was £5.2bn with £670m going to agents. The top ten clubs by spending on transfer fees were: Manchester City Chelsea Barcelona PSG Real Madrid Atletico Madrid Manchester United Arsenal Juventus Bayern Munich Clubs outside the top six in England in the top thirty were (in order) Leicester City, Southampton, Wolves, West Ham, Everton and Newcastle.

Clubs' need for financing has never been greater than since the start of the pandemic, resulting in an influx of new players on football's discreet loan market.  Despite never commenting publicly, few have made as much noise as MSD Capital that has provided loans to clubs such as Southampton and Burnley in relation to ALK Capital's takeover, but there are others who have gone more under the radar.  One of them is Oldenburgische Landesbank (OLB), a more than 150-year-old German bank who launched a football finance unit in April last year, providing receivable financing and traditional lending solutions focusing on the top five European leagues, according to its CFO, Dr Rainer Polster. "Football finance requires very specific know-how and good networking in the community. That's exactly what we brought on board last year with our new team of football finance experts," he told offthepitch.com. The company targets a business volume of €500 million in the c...

The effects of the Covid-19 pandemic have been felt in this year’s transfer window, although Brexit has also had an effect. Clubs in Europe's nine biggest leagues plus the Chinese Super League have this season spent almost €3.5 billion less on players than in 2019/20.   Premier League clubs spent just €300 million less meaning the league's transfer balance deteriorated while others such as LaLiga improved, report offthepitch.com Europe's nine biggest leagues plus the Chinese Super League this season spent just €4.1 billion on players compared to a figure of €7.6 billion in 2019/20. That is a 46 per cent decrease - in actual numbers €3.5 billion less – a big difference seen in relation to the way spending has continued to rise for many years. "It's pretty much due to the financial implications of Covid-19 and the considerable amount of time with little to no fans coming through the door," says Chris Winn, MSc Football Business programme leader at UCFB...

Transfer spending across Europe's top five leagues is estimated to have fallen by 61 per cent as a result of the Covid-19 pandemic according to a report by CEBR:  https://www.standard.co.uk/sport/football/january-transfer-spend-expected-to-fall-by-61-due-to-covid19-pandemic-b917928.html The transfer market in the UK held up well in the summer when more than £1bn was spent by top English clubs.  However, it was distorted by one or two clubs with unlimited funds. The winter window is usually quieter than the summer one.  Even so, Premier League clubs spent £230m in last year's pre-pandemic transfer window.   They have spent just £65.1m so far this month.  The last time the total was below £100m was in 2012. In addition to the effect of the pandemic which has made clubs more reluctant to spend money, Brexit has also been a factor.  All foreign players must adhere to a new points-based system, based on factors such as how often they have played in top leag...

Fifa has produced its annual transfer report which considers the impact of Covid-19:  https://img.fifa.com/image/upload/ijiz9rtpkfnbhxwbqr70.pdf The report notes: 'In January 2020, the number of international transfers was up 9.2% compared to the same period in the previous year, and this increase would probably have been even more significant in the second transfer window.' 'But after the pandemic started spreading across the globe, the usual peak in July did not happen, with a large number of competitions not being completed and many member associations shifting their registration periods. Instead, there was a longer and more extensive period of transfer activity, beginning in early July and reaching its peak in September and even continuing into October.'

Work permit rules may seem a dry subject, but they will affect the ability of clubs to acquire players from Europe after January 1st as the free movement rules will no longer be in place. It's a complicated subject and I am not pretending that this authoritative blog post from top sports lawyer Daniel Geey is an easy read:  https://www.danielgeey.com/post/five-key-takeaways-from-the-post-brexit-fa-work-permit-rules/ From a purely football point of view, some fans will welcome what they hope will be more opportunities for young British players.   Clubs will not be happy about being able to easily pick up players from Europe.  In some cases their heritage is not European or they fall into some special case like the French overseas departments.

The pandemic has not hit Premier League transfer spending as much as many anticipated.   This was not the case in La Liga, Serie and the Bundesliga where spending fell drastically from last summer.   La Liga and the Bundesliga both turned a small profit. The Premier League spent £1 billion overall with a net spend of more than £800m, a considerable increase on last summer.  Chelsea (£155.9m net) and Manchester City (£87.1m,) were responsible for much of the spending, followed by Leeds (£79.4m), Tottenham Hotspur (£76.9m) and Aston Villa (£74.1m).  Between them these five clubs were responsible for 59 per cent of the net spend. Of other top six clubs, Liverpool had a net spend of £34m, Manchester United £32.3m and Arsenal £16.5m.   Burnley's net spend was negligible and West Ham, Crystal Palace and Brighton all made net profits. One sign of caution was that there was no run on superstars in their late prime.  Of the 27 biggest fees paid this s...

The extension of the summer transfer window is most significant for the way in which the decision was reached. The 'big six' caucused before the Premier League meeting (Arsenal, Chelsea, Liverpool, Tottenham Hotspur and the two Manchester clubs). The 'big six' feared they would be at a disadvantage if their rivals across Europe had free rein to sign players throughout August, but they did not. They also managed to stop a hybrid proposal which would have allowed only international transfers after the start of the season. The Premier League also continues to do well with overseas TV deals. The new deal for the Nordic countries sees a 20 per cent mark up on the current arrangement.

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 t...

A late flurry of signings saw Premier League transfer deals reach £1.41bn by the close of the transfer window, just short of the record of £1.413bn. The bounce usually seen at the start of a new tv deal didn't happen, in part because some top flight clubs will see a fall in broadcasting income this year. In the summer of 2013 transfer spending rose by 29 per cent and it increased by 30 per cent year on year in the summer of 2016. The value of the latest domestic tv deal has fallen by eight per cent. Six clubs are potential losers under the new distribution formula and although 14 will get more, but it will be nothing like the increases they have had before. In addition, Chelsea, who are often one of the biggest spenders, are under a transfer ban. There has been a trend towards clubs spending more on defenders. The biggest net spenders were Aston Villa who spent £133.7m on 12 new players, underwritten by the new owners. They were followed by Manchester United on £84.6m and W...

The authoritative Swiss Ramble has taken a look at transfer spend over the last decade. It is evident that clubs are increasing transfer spend, particularly since the new Premier League TV deal in 2017. In the last three years (2016-18) the highest gross transfer spend of around half a billion came at Manchester City £559m and Manchester United £487m, followed by Chelsea £416m, Liverpool £351m, Arsenal £288m and Everton £259m. Lowest spend of the Big Six was at Tottenham Hotspur £182m, surprisingly behind Leicester City £195m and Newcastle United £184m. In the last three years (2016-18) Chelsea recouped most with £274m player sales, followed by four clubs around £200m: Liverpool £225m, Spurs £221m, Southampton £207m and Manchester City £191m. Lagging behind were Manchester United £137m and Arsenal £103m, though Aston Villa did well to earn £102m. In terms of net spend in last three years (2016-18), City and United again led the way with similar outlays: £368m and £350m respectively....

The January transfer window is generally quieter than the one in the summer. It is difficult to secure value and panic purchases may not change a team's fortunes. Sometimes it makes more sense to prepare for relegation rather than spending large sums in a futile attempt to avoid it. However, it does seem that there is a feeling this year that unrealistic sums are being asked for average players and this will lead to a quieter transfer window than usual. Some commentators think that the final sum spent could be less than a third of last year's record total. The total spent up to deadline day this year has been £110m, compared to £280m in 2018. Last year £150m was spent on deadline day alone, but more of a flurry than a last minute splurge is anticipated for today. This year's total expected is expected to be £130m - £140m, similar to 2014 and 2015. Clubs are looking for loan deals with the possibility of a signing in the summer. In most incoming loan deals Premier...

This week Fifa released figures on the amount clubs spent in the 2018 transfer window: Big 5 leagues spending The numbers show that clubs in the Premier League spent $1.44bn on transfer fees, a slight decrease from last year's figure of $1.46bn. This is the first fall in the summer window when most of the spending takes place. The winter window often involves discarding disgruntled or failing players and some panic buying by under performing clubs. In contrast, clubs in Germany, Italy and Spain increased their spending. English side recouped almost $560m in player sales, more than in any other season since the start of the decade. The shorter transfer window and the absence of many players at the World Cup affected the time available to do deals. The fall in the value of the pound against the dollar and the euro also affected the spending power of English clubs, although some of them have income in euros from European competitions. However, there may have also been a Brexit...

David Conn observes that the transfer window has seen big signings of overseas players with England's participation in the World Cup a distant memory: Premier League financial power Conn notes, 'The Premier League is so financially dominant now, its £8.4bn 2016-19 TV deals are double those of the next richest league, the Bundesliga, and a similar bounty is all but sealed up to 2022. So its clubs can buy and pay seductive wages to almost any player they fancy, apart from the topmost stars still residing at the rich handful of clubs in Madrid, Barcelona, Munich, Paris and Turin.' Everton, Fulham and Leicester all made big-money signings as the earliest transfer deadline in Premier League history came to life late in the day. However, the amount spent in the window by Premier League clubs fell for the first time in eight years, to £1.2bn. Tottenham and Manchester United made no signings on 9 August. Spurs became the first Premier League club to not make a summer signing si...

The authoritative Swiss Ramble comments, 'Looking through the Premier League finances for 2016/17, one thing I noticed was a dramatic increase in the reported profit on player sales.' He sets out to analyse this increase and also tries to explain the mysteries of player trading accounting. Total profit on player sales in the Premier League in 2016/17 was £512m, which was a massive £215m (73%) higher than £297m in the previous season (£295m in 2014/15). In 2016/17 Chelsea had the highest profit on player sales for the second season in a row with £69m, mainly due to Oscar’s transfer to Shanghai SIPG, followed by Everton £52m, Southampton £42m and Spurs £40m. Interestingly, Manchester United and Arsenal only had £11m and £7m respectively. It’s a similar story for the last 4 years combined with Chelsea again leading the way with a hefty £224m profit on player sales, followed by Tottenham £192m, Southampton £147m and Liverpool £136m. Again, Arsenal £45m and Manchester United £32m...