Premier League clubs bucked the current economic trend by spending a record £225m in the January 2011 transfer window, beating the previous record of £175m in January 2008 by £50m, according to analysis by the business advisory firm Deloitte.

Dan Jones, Partner in the Sports Business Group at Deloitte, commented: “Whilst Premier League club revenues have never been higher, we were surprised to see more than £200m spent in a January window for the first time, particularly after only around £30m was spent in January last year. However, when you scratch beneath the surface you find that around 80% of the total spending of £225m is concentrated across only four clubs (Chelsea, Liverpool, Aston Villa and Manchester City) and spread across only six players, so this was a particularly polarised window, with only a few clubs flexing their financial muscles, on what was a deafening final day of an otherwise quiet window.”

Commenting on the overall trends and the wider European picture, Jones added: “January is often a relatively ‘quiet’ window, with total gross spending driven and dominated by a small number of high value transfers, as has certainly been the case again this year with only four Premier League clubs spending more than £10m. For the majority of clubs, the combination of a continued lack of available credit and reduced operating profitability and liquidity continues to be the norm, which has put the brakes on their spending. However, the higher and more evenly shared revenues seen in the Premier League have again seen its clubs outspend clubs in the top divisions in France, Germany, Italy and Spain.”

Some of the key findings from the analysis by Deloitte include:

• Premier League clubs have committed to around £225m in respect of player transfer fees in January 2011 (2010: £30m; 2009: £170m; 2008: £175m; 2007: £60m; 2006: £70m; 2005: £50m; 2004: £50m; 2003: £35m);
• Spending between Premier League clubs accounts for just over half (£115m, 51%) of all Premier League clubs’ gross transfer spending, followed by spending with overseas clubs (£105m, 47%) and with Football League clubs (£5m, 2%);
• Premier League clubs’ net transfer spend was also a record at £90m (2010: £10m), being the net amount that flows to non-English clubs and Football League clubs;
• Premier League clubs’ transfer spending in the January window far exceeded that in other European leagues in January 2011.

Reflecting on the record spending, Alex Byars, Senior Consultant in the Sports Business Group at Deloitte commented: “With only 10 points separating the teams in 8th and 20th position, this season’s Premier League is one of the most competitive on record. Clubs receive an extra c.£1m broadcast payment per higher league finishing position, so it is no surprise that five of the top six transfers by value relate to strikers, as clubs seek the goals needed to propel them up the league. For Aston Villa and Liverpool, this was the first chance for their new managers (and, for the latter, its new owners) to invest in their playing squads as they seek to improve their league position. Manchester City were relatively restrained by recent standards but continue to strengthen an already formidable squad, whilst the window’s biggest spenders, Chelsea, spent more than £70m to send a strong message to their rivals about their intent to finish in the Top Four.”

Byars added: “Premier League clubs benefit from loyal supporters, high quality modern stadia, long-term broadcast and commercial partners and the resulting strong and stable revenues, which allows them to plan with some certainty. The fundamental requirements for a sustainable business model remain the same as always; for clubs to appropriately manage their cost base, particularly player wage costs, relative to their largely predictable and stable revenue streams.”

When the Deloitte Football Money League is published next month, it will confirm the position of several Premier League clubs amongst the ‘Top 20’ highest revenue generators in the world.

Source: deloitte.com

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