Connect with us

News

Is the Premier League recession-proof? What summer transfer window says about sport’s financial health

Published

on

Is the Premier League recession-proof? What summer transfer window says about sport’s financial health

To what degree was the 2020 summer transfer window impacted by COVID-19, the subsequent empty stadiums, rebates offered to TV companies, fleeing sponsors and the circa €4.5 billion loss across two seasons predicted by the European Club Association? It depends which numbers you choose to look at and how you read them.

If you look at the total volume of transfers in the big five European leagues, then sure, it’s down. Way down, in fact. We went from €5.82 billion in 2019 to €3.31 billion in 2020. That’s a drop of 43% percent. You have to go back six years, to 2014, to find a lower total. But if you look at net spending, a slightly less cataclysmic picture emerges.

If you think of the Big Five as their own ecosystem, their cumulative net spend was just under a billion. That’s a billion euros flowing out of the Big Five leagues and flowing (mostly) to other European leagues, lower divisions and South America, as opposed to millions just recirculating among clubs in those five leagues. That’s a decline of 29.1% in 2019, but roughly equal to what it was in 2017, when it was €1.04 billion, and again, the situation varies from league to league.

Overall spending was down everywhere, but in the Premier League it only declined 8.7%, while in La Liga it fell around 64%. Look at net spend: La Liga recorded its first positive net spend in three years (meaning clubs took in more than they paid out), while Serie A’s was the lowest in four years. But in the Premier League, it actually increased, from €701 million to €962m, a 37% jump and the second-highest total ever.

So which is it: are clubs hunkering down and being conservative, or are they fiddling while Rome burns? And is the Premier League really recession-proof?

Unsatisfyingly, all three things might be true to different degrees. We’ll get to that, but first, a word on the data.

All of the above comes from Transfermarkt. It’s the most comprehensive and accurate database out there, but it often does rely on media reports, which sometimes can be incorrect although rarely far off. So don’t treat it like the Nasdaq index.

The other Transfermarkt quirk is that it photographs deals when they happen, not when they’re agreed. So, for example, Alvaro Morata joined Atletico Madrid from Chelsea in January 2019 on an 18-month loan. Then, in July 2019, Atletico committed to buying him outright on July 1, 2020, for €56 million. In the Transfermarkt database, that counts as €56 million spent in the summer of 2020, although the commitment to spend it was made a whole year earlier, when nobody knew what COVID-19 was.

A whole bunch of deals fall into this category (Giovani Lo Celso to Tottenham Hotspur for €32 million, for example, or Nicolo Barella to Internazionale for €25 million). Would these deals have happened after the pandemic hit? And if so, would they have happened at those fees? We’ll never know, which is why all these figures need to be taken with a grain of salt.

It works in reverse, too, of course.

Juventus acquired Federico Chiesa from Fiorentina in a complex deal. Nominally, it’s a loan, with a fee of €3 million this year. But it’s a two-year loan, so there’s another €7 million next season. And, if Juventus finish in the top four either this season or next, it becomes a permanent deal for another €40 million, plus up to another €10m in performance-related bonuses. So, given there’s virtually no chance of Juve failing to finish top four for two consecutive seasons, we really should be speaking of a €50m fee (rising to €60 million), because that’s the money Juve have committed.

Then there are the virtual swaps.

Nicolas Otamendi moved from Manchester City to Benfica for €15 million and Ruben Dias went the other way for €68m. How is it different from City giving Otamendi away for free and buying Ruben Dias for €53 million? On a net-spending basis, it doesn’t make one jot of difference. Presumably it was done this way to use amortisation, which spreads the transfer fee across the length of the contract, to make the books look better. But when viewed through the prism of overall spend, there’s an extra €15m coming in to both clubs for the year 2020.

So, in this transaction, Man City are actually in the black for the year: €15 million in from the sale of Otamendi, €11.33 million out for Ruben Dias, given that the €68 million fee is amortised over six years. You could also use the Miralem Pjanic-Arthur business between Barcelona and Juventus, which generated an extra €120 million of transfer volume out of thin air.

So the numbers are … fuzzy.

Then there’s the simple recirculation principle. Chelsea buy Ben Chilwell form Leicester City for €50 million. Leicester acquire Timothy Castagne from Atalanta for €24 million. Atalanta purchase Aleksey Miranchuk from Lokomotiv Moscow for €14.5 million and Sam Lammers from PSV Eindhoven for €9 million What if Chelsea hadn’t bought Chilwell? Would the nearly €50 million generated by the other moves have happened?

If it’s just money moving through the system, what does it really mean?

Well, for starters, all clubs have been hit hard financially by the pandemic. But some, like Chelsea — in part because they have access to cash, which is different from being profitable … see this thread by the excellent Swiss Ramble for further reading — decided that this summer was a good time to acquire assets, figuring everybody was hurting and they could get good deals. Hence, their summer spending spree of nearly a quarter of a billion euros.

But what if they had less access to cash, or simply decided to be more conservative, perhaps by spending just €100 million? The amount by which the overall volume of transfer spending wouldn’t be €150 million less; it would be several multiples of that. That’s the magic of money working its way through the system.

Most summers, there are five or six superclubs doing what Chelsea did. (There’s obviously a very limited number of clubs who can even do this at all.) This summer, for various reasons, there were very few. Some, like Atletico Madrid or Real Madrid, did virtually nothing. Others, like Manchester United, spent a lot less than they might have if, say, they had pulled the trigger on that €120 million Jadon Sancho deal.

The other factor is what we mentioned above: cash. Football clubs, more than most businesses, generally keep very little cash on hand. It comes in and goes straight back out to make payroll, acquire and retain players, pay vendors and if there’s a lot of it, sometimes pay dividends to owners. When there’s no cash coming in because the stadiums are closed, suddenly, you have a big problem.

You can get around it and still invest by taking on debt, selling assets (players) or cutting costs, but debt can be scary (and expensive). Shifting players during a downturn means sometimes selling them for less than they might be worth. Cutting costs takes time: you have to wait for contracts to expire or find takers for players.

So football has, for now, done what most industries do. With some exceptions, it has retreated and opted to ride out the storm. What clubs hate most is uncertainty, considering, well, playing out a full season is uncertain enough. And right now, there’s plenty, from when fans will be allowed back in to what new TV and sponsorship deals will look like.

Take this window’s numbers with a pinch of salt. And if I may make a bold prediction, expect January to be somewhat closer to normality. Not just because, hopefully, we’ll have a clearer picture of when things might improve, thereby making it easier for clubs to acquire some more certainty and actually plan and budget. But also because there’s a whole raft of players who were ripe for a move this past summer but did not, because clubs froze.

Come January, they will be that bit keener to get them off their books and cash in, with a clearer idea of what they can actually get for them.

Source link

Entertainment

Man Faces Murder Charge For The Deadly Shooting Of His Wife Man Faces Murder Charge For The Deadly Shooting Of His Wife
Entertainment5 hours ago

Man Faces Murder Charge For The Deadly Shooting Of His Wife

A Texas man is currently facing a murder charge following the deadly shooting of his wife, Markeita McCleary. According to...

‘The View’s Sara Haines Goes Giggly Over Jeffrey Toobin As Cohosts Don’t See The Humor ‘The View’s Sara Haines Goes Giggly Over Jeffrey Toobin As Cohosts Don’t See The Humor
Entertainment6 hours ago

‘The View’s Sara Haines Goes Giggly Over Jeffrey Toobin As Cohosts Don’t See The Humor

Not since Chuckles the Clown’s funeral has a giggling fit seemed harder to contain: Sara Haines couldn’t get through today’s...

Jean-Claude Van Damme saves chihuahua from being euthanized over passport dispute Jean-Claude Van Damme saves chihuahua from being euthanized over passport dispute
Entertainment6 hours ago

Jean-Claude Van Damme saves chihuahua from being euthanized over passport dispute

Jean-Claude Van Damme has stepped in to save a 3-month-old chihuahua from being euthanized over a passport problem. The chihuahua,...

Matthew Morton: 5 Things To Know About Sofia Richie’s Mystery Dinner Date Matthew Morton: 5 Things To Know About Sofia Richie’s Mystery Dinner Date
Entertainment6 hours ago

Matthew Morton: 5 Things To Know About Sofia Richie’s Mystery Dinner Date

Matthew Morton was spotted enjoying a dinner with newly single Sofia Richie at a popular Malibu hotspot on the night...

FilmLA Says 17 Movies, TV Series & Reality Shows Are Shooting On Location Or Recently Wrapped In L.A. FilmLA Says 17 Movies, TV Series & Reality Shows Are Shooting On Location Or Recently Wrapped In L.A.
Entertainment7 hours ago

FilmLA Says 17 Movies, TV Series & Reality Shows Are Shooting On Location Or Recently Wrapped In L.A.

EXCLUSIVE: The latest crop of projects that are currently filming on location or have recently wrapped in greater Los Angeles...

Going For the Mirrorball Trophy: Here’s Who Is Still in the Competition on DWTS Going For the Mirrorball Trophy: Here’s Who Is Still in the Competition on DWTS
Entertainment7 hours ago

Going For the Mirrorball Trophy: Here’s Who Is Still in the Competition on DWTS

Dancing With the Stars season 29 is in full swing! Following a round of incredible performances, the series sent home...

Kristin Cavallari on dating, ‘Laguna Beach’ reunion and that Stephen Colletti photo Kristin Cavallari on dating, ‘Laguna Beach’ reunion and that Stephen Colletti photo
Entertainment9 hours ago

Kristin Cavallari on dating, ‘Laguna Beach’ reunion and that Stephen Colletti photo

Kristin Cavallari is in a serious relationship amid her divorce from Jay Cutler — with herself. The Laguna Beach alum,...

Sports

Week 7 NFL DFS Picks: Best value players, sleepers for FanDuel, DraftKings daily fantasy football lineups Week 7 NFL DFS Picks: Best value players, sleepers for FanDuel, DraftKings daily fantasy football lineups
News3 hours ago

Week 7 NFL DFS Picks: Best value players, sleepers for FanDuel, DraftKings daily fantasy football lineups

Week 7 is shaping up to be another good one for NFL DFS players. The bye weeks aren’t too bad...

How a text from Dad helped turn Cody Bellinger into an October hero How a text from Dad helped turn Cody Bellinger into an October hero
News4 hours ago

How a text from Dad helped turn Cody Bellinger into an October hero

Clay Bellinger sat in Section 122 at Globe Life Field alongside his wife Sunday when Cody Bellinger came to bat...

Fantasy Waiver Wire Week 7: Christian Kirk, Cole Beasley among top free agent pickups after Monday night breakouts Fantasy Waiver Wire Week 7: Christian Kirk, Cole Beasley among top free agent pickups after Monday night breakouts
News5 hours ago

Fantasy Waiver Wire Week 7: Christian Kirk, Cole Beasley among top free agent pickups after Monday night breakouts

Monday night’s doubleheader yielded two more wide receivers who will be among the top Week 7 fantasy waiver wire pickups and...

Best Fantasy Week 7 Waiver Pickups: Boston Scott, Gus Edwards among backups who could take advantage of injuries Best Fantasy Week 7 Waiver Pickups: Boston Scott, Gus Edwards among backups who could take advantage of injuries
News5 hours ago

Best Fantasy Week 7 Waiver Pickups: Boston Scott, Gus Edwards among backups who could take advantage of injuries

We’re at the point in the season where injuries generally dictate the most sought-after pickups in a given week, and we...

Marsch: Lampard didn’t rate Pulisic as he’s U.S. Marsch: Lampard didn’t rate Pulisic as he’s U.S.
News5 hours ago

Marsch: Lampard didn’t rate Pulisic as he’s U.S.

RB Salzburg boss Jesse Marsch has said Frank Lampard did not rate Christian Pulisic at the start of his Chelsea...

Fantasy Injury Updates: Baker Mayfield, Zach Ertz, Jonnu Smith, among injuries impacting Week 7 waiver wire decisions Fantasy Injury Updates: Baker Mayfield, Zach Ertz, Jonnu Smith, among injuries impacting Week 7 waiver wire decisions
News6 hours ago

Fantasy Injury Updates: Baker Mayfield, Zach Ertz, Jonnu Smith, among injuries impacting Week 7 waiver wire decisions

In recent weeks, the wide receiver position has been dealing with a lot of injuries across the NFL, but in...

Predicting the big decisions surrounding Giannis, the 76ers, CP3 and the Warriors’ pick Predicting the big decisions surrounding Giannis, the 76ers, CP3 and the Warriors’ pick
News6 hours ago

Predicting the big decisions surrounding Giannis, the 76ers, CP3 and the Warriors’ pick

This NBA offseason is full of decisions that could impact the hierarchy of the league for years to come. Will...