A League of Their Own: Premier League spending tops £1bn despite being down on previous year

September 25, 2021


3 min read

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What's going on here?

Clubs competing in the Premier League, the top tier of English football, have spent over £1bn in the 2021 summer transfer window despite overall spending falling for the second consecutive year.

What does this mean?

With football clubs globally suffering from financial shortfalls due to lack of matchday revenue caused by coronavirus restrictions, many expected this summer to be a quieter transfer window – a three-month period in which teams can sign players. Instead, England’s leading football clubs have flexed their financial muscle by shelling out £1.1bn on players, yet this figure was 11% lower than that of summer 2020 (£1.3bn), which itself was a 9% drop compared to summer 2019 (£1.4bn). According to financial services firm Deloitte, this is the lowest collective gross spend since 2015, and the first time there has been a consecutive decline since the global financial crisis between 2008 and 2010.

While such a decline was predicted, industry experts note that the ability of Premier League clubs to spend over £1bn for six years running is remarkable. Dan Jones, a partner in Deloitte’s Sports Business Group, commented: “many would have actually predicted the drop to be much larger”. This is accentuated by the nature of the transfers themselves: Cristiano Ronaldo, arguably the best player of the last decade, made a sensational return to Manchester United, England’s newest favourite Jack Grealish left his boyhood club Aston Villa to set a new British transfer record of £100m, and European champions Chelsea signed Serie A’s best player Romelu Lukaku for £97.5m. While the higher volume of free transfers – enabled by the 1995 ECJ Bosman ruling – somewhat reflects the revenue squeeze that most clubs have suffered, the Premier League’s transfer activity has been hardly touched by the financial crisis caused by the pandemic.

What's the big picture effect?

With the majority of clubs across continental Europe suffering from coronavirus-induced revenue shortfalls, the Premier League has capitalised to cement its position as Europe’s most elite football league. When assessing clubs’ net spend (player acquisitions minus sales), the Premier League’s spending power advantage becomes even starker. England’s top-flight invested £560m, more than four times the combined outlays in Europe’s other four “big” leagues of Spain, Germany, France and Italy. It is therefore unsurprising that Real Madrid and Barcelona of Spain and Juventus of Italy are clinging to their dream of launching a European Super League to stay at the top of the game. This project would significantly ease their financial plight but is one which other clubs, including all of England’s “Big Six”, have now abandoned.

This summer’s transfer window has once again highlighted the harsh financial inequalities that remain at top-level football. Arguably, the pandemic has exacerbated them by offering a chance to big clubs to widen the gap between those who have money and those who do not. For many, the uncontrolled spending of clubs such as Manchester City and Chelsea threatens to take them so far clear of almost every other club that meaningful competition is unattainable. Financial regulation in football has thus come under further scrutiny, most notably Financial Fair Play (FFP) which prevents clubs from spending more than they earn to ensure long-term sustainability. Although FFP rules were relaxed to help clubs navigate their way out of the pandemic, they remain ineffective, unenforceable and not fit for purpose.

UEFA, European football’s governing body, has vowed to review FFP to see if a more effective system of checks and balances could be introduced to monitor and control spending. It wants the new rules to focus on the high levels of spending on wages and transfers fees which have now spiralled out of control, with a salary cap and a “luxury tax” on transfers among the measures being considered. Whatever measures are implemented, lawyers working in-house for clubs will need to educate their superiors on the incoming regulatory landscape and how to remain compliant. With the Premier League conducting a live investigation into Manchester City’s historical spending, who previously had a two-year Champions League ban for seeking to avoid FFP rules overturned, other clubs will want to avoid similar scrutiny.

Report written by Charlie Parkman

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