Media attention has focused on the fact that the 2016 summer transfer window was the first in which over £1 billion was spent (£1,071.5m in total), but it has to be remembered that this is a gross figure. The net figure was £612.9m, still very substantial. For example, in summer 2014 the net figure was £374m.
Media attention has focused on the fact that the 2016 summer transfer window was the first in which over £1 billion was spent (£1,071.5m in total), but it has to be remembered that this is a gross figure. The net figure was £612.9m, still very substantial. For example, in summer 2014 the net figure was £374m.
Clearly the main factor behind enhanced spending is the additional television money. Many have argued that this leads to excessive sums being paid for players who are simply good quality rather than being truly world class. However, this is what happens when you have limited supply and enhanced demand.
Dan Jones, lead partner at Deloitte’s Sports Business Group, thinks that two other factors help to explain the enhanced spending. The first was the winning of the title by Leicester City and the improved performance of Tottenham Hotspur. This has pushed rivals to spend so that they can challenge for a coveted place in the Champions League.
The second factor is that some top clubs have hired new ‘super’ managers, notably at the two Manchester clubs. New coaches push their clubs to spend to reshape a playing squad that suits their requirements, e.g., a keeper who can operate as an outfield player by kicking out effectively, which Joe Hart was supposed not to be able to do at Manchester City.
No surprise then, that In terms of net spending this summer, Manchester City headed the list with £163m, followed by their red neighbours with £137.2m. Arsenal, with a slight air of last minute panic, came in third at £75.5m, followed by Chelsea at £68.4m. West Ham were next with £44.4m.
Manchester City cleared out what Pep Guardiola regarded as dead wood from their squad at a considerable cost. The club could pay as much as £13.5m as a contribution to the wages of loaned out players this season.
For example, it has been suggested in Italy that City will pay £90,000 of Joe Hart’s £140,000 weekly salary while he is at Torino. It is believed that City will pay more than half of Wilfried Bony’s £120,000 or so weekly wages while he is at Stoke City, although they did extract a £2m loan fee.
Manchester United’s world record signing of Paul Pogba represented 20.2 per cent of the club’s operating income for 2015, but could fail to less than 18 per cent if the expected earnings for 2016 are achieved. It’s still a substantial slice of income, but at the turn of the millenium Real Madrid spent more than 50 per cent of their income in signing each of Luis Figo and Zinedine Zidane.
Goal.com reckon that Manchester United had the shrewdest transfer window, leaving aside the inability to offload Schweinsteiger.
Some clubs actually made a profit on their transactions, headed by Southampton with £16.2m. However, from the point of view of a Saints fan, the losses of the likes of Mané and Wanyama were painful.
Swansea made a net gain of £10.8m, but the real cost may be a relegation fight. Liverpool made a net gain of £6.8m, and offloading Benteke was good business, but questions remain about the strength of their defence. Everton’s small net profit reflected their last minute failure to secure the signature of Moussa Sissoko who went to Spurs.
Elsewhere in Europe, the Italian league spent £591m, but the net spend was just £27m. The Bundesliga spent £459m (net £63m), La Liga £390m (net £14m) and the French league made a net profit of £77m which says something about its status.
The transfer window has produced predictable complaints about the ‘obscene’ sums of money involved and comparisons with the amounts spent on research into serious medical conditions. However, it is worth remembering that the Premier League contributes a considerable sum in tax revenues.
In 2013/14, the last season for which I can find figures (and they will certainly have increased since then), the total tax contribution of the Premier League was £2.4bn, of which well over half came from levies on players’ salaries (£941m in PAYE and £475m in National Insurance). VAT contributed £390m and corporate taxes £298m.
A more nuanced critique is offered by Henry Winter, chief football writer of The Times,. He argues that there is a need for a better balance in a sport polarising between the haves and have nots. In the first six months of this year, the Football Foundation awarded grants of £28.9m, largely funded from the Premier League. This leveraged a further £25.3m of partnership funding, making a total of £53.4m for community sport.
Winter points out that this is roughly what Arsenal invested in Shkodran Mustafi and Luis Pérez. It may be that there is a case for some kind of turnover tax on the transfer window to raise additional funds.