Footballing Finances: Transfer spending slashed as the end looms for some football clubs
October 21, 2020
2 min read
What's going on here?
As football attempts to tackle the economic effects of the COVID-19 pandemic, clubs have been forced to cut costs. FIFA, the sport’s international governing body, has reported clubs have slashed transfer spending by 30%, dropping below $5bn for the first time since 2016.
What does this mean?
Football’s transfer windows are notorious for their multi-million-pound deals. In recent years, football clubs net spending has been on an upward trajectory. However, since the return of the sport in spring 2020, matches have been played in empty stadiums without fans, significantly affecting club revenues. Instead of splashing their cash, many opted to sign unattached players who were not contracted to clubs, consequently the number of transfers involving a fee declined by 25%. Even world-famous football clubs like Real Madrid CF struggled as they did not spend a penny on transfers this window for the first time in 40 years.
Many clubs fear the worst is yet to come given reports of a projected £700m loss if fans are not allowed back into stadiums. As a result of this pressure, some clubs are even fearful of their existence.
What's the big picture effect?
A decline in transfer spending this summer draws attention to the economic crisis clubs across the football pyramid face. Without support clubs could “disappear within five to six weeks” according to Leyton Orient chairman, Nigel Travis. In response Liverpool FC and Manchester United FC recently proposed a radical restructuring of the Premier League that involved a £250m rescue plan for the lower divisions. However, due to controversy over voting rights “Project Big Picture” has been rejected.
The financial consequences of the pandemic do not only affect the football clubs but everyday people. To recuperate revenue, the Premier League have controversially introduced a pay-per-view service for games that were otherwise not due to be televised. At a time when many fans are strapped for cash themselves due to the pandemic, outrage grows over the cost of £14.95 a game. Employees of the clubs are also facing economic consequences. For example, Arsenal FC recently let their mascot, Gunnersaurus, go after 27 years at the club. Such a decision has been questioned following Arsenal’s £45m transfer of Ghanaian midfielder Thomas Partey.
Some may question how much can be read into declining transfer spending considering it is only 11% down on last season. However, there is no doubt these are testing times for the sport and its clubs, as the recent winding up of Macclesfield Town FC demonstrates. For now, all eyes are on the Premier League and the Government for a bailout as only time will tell who survives and who is relegated to the history books.
Report written by Henry Bee
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