EPL transfer amount touches £1bn driven by TV money

English Premier League clubs have spent a record amount on buying new talent this summer, outgunning the other major European leagues. The recent huge TV rights deal has provided the firepower.

Leicester City’s successful 2015-16 campaign while operating off a modest budget is the exception rather than the rule in the English Premier League. Laurence Griffiths / Getty Images

Leicester City’s achievement in winning the English Premier League (EPL) last season on a comparatively modest budget was remarkable – but in football the correlation between transfer expenditure and on-field success remains extremely close.

It is a simple equation whereby the teams with the most money are able to sign the best players and win the biggest competitions. With EPL clubs spending a record £1.15 billion (Dh5.61bn) on transfer fees during the last transfer window Leicester City looks likely to go down in history as the exception that proves the rule.

The transfer window closed last Wednesday after a period of prolonged spending which concluded with £152.7m worth of deals being done in a frantic final 24 hours. The single biggest sum spent on a player during the window was the £89m Manchester United paid Juventus to acquire the services of Paul Pogba.

Among the pundits expressing surprise at the size of this fee was the former England international Trevor Francis. He knows a thing or two about transfer fees having become the first ever British player to cost more than £1m when he moved from Birmingham City to Nottingham Forest in 1979.

In the same way Francis questioned whether Pogba was really worth not far shy of £100m there were probably commentators in 1979 appalled by the fee Forest paid for him. But while these sort of sums might seem garish they are being driven by a dramatic increase in the revenue of EPL clubs.

British broadcasters paid an unprecedented £5.13bn for the rights to the next three EPL seasons. The overseas market is also lucrative with BeIN Sport having splashed out somewhere in the region of US$500m to show live matches across the Middle East and North Africa for three years.

Some 95 per cent of the TV money is slated to go directly to the clubs with each EPL team receiving a minimum of £80m over the course of the coming season. That has had a huge impact on the spending power of the so-called smaller clubs and, while Pogba’s move made the headlines, it was not the most remarkable deal.

Crystal Palace, who narrowly avoided relegation last season, spent £27m on Christian Benteke while mid-table strugglers Everton splashed out £25m to acquire Yannick Bolasie. Historically these sort of big money deals have been done only by the division’s elite but the TV money has changed all that.

Traditional European powerhouses Ajax, Borussia Dortmund, Inter Milan, Atletico Madrid did not spend more on a single player than Crystal Palace did in the last transfer window. This illustrates the financial gap which is starting to open up between the EPL and the continent’s other major leagues.

Richard Battle, the senior manager of the Deloitte Sports Business Group, highlights how the financial firepower of the English clubs is increasing,

“The Premier League now generates more than twice the broadcast revenues of the Italian top tier and three times that of the Bundesliga 1 clubs,” he says.

“Commentators have regularly questioned whether this media rights growth can continue, but again nearly every major domestic league’s negotiations for the next rights cycle resulted in substantial revenue growth.”

The first ever transfer fee to break the $1m mark was Giuseppe Savoldi’s move from Bologna to Napoli in 1975. But these days Serie A clubs are struggling to compete with their English counterparts.

“The fees being asked for top players now are inaccessible to every Italian team other than Juventus,” says the Italian journalist Paolo Bandini. “Napoli started negotiating for Mauro Icardi this summer but reported interest from England helped drive the asking price up to a reported €70m (Dh286.8m). In the end, Inter just didn’t really want to sell but it’s still crazy that these are the sums we’re talking about for a guy who, for all his talent, still only has one Argentina cap.”

Raphael Honigstein is the author of Das Reboot, a book about the recent renaissance of German football. He sees evidence that the profligacy of cash-rich EPL clubs is actually benefiting the Bundesliga.

“I spoke with Christian Heidel, the Schalke general manager, about that last week. He seemed very relaxed because Bundesliga clubs are happy to sell players, like Leroy Sane and Henrikh Mkhitaryan, to EPL clubs at double the going rate and they’re happy to take unwanted EPL players, like Javier Hernandez, who often get loaned out on subsidised wages,” he tells The National.

Sane went from Schalke to Abu Dhabi-owned Manchester City for £37m. In total City’s new manager Pep Guardiola spent £175m on new players with Ilkay Gundogan the other major addition from the Bundesliga. He was signed from Borussia Dortmund for a comparatively modest £20m. The club’s most expensive summer signing was the former Everton defender John Stones, who Guiardiola felt was worth a hefty £47.5m.

Mkhitaryan, meanwhile, was one of the Bundesliga’s outstanding performers last season but with less than 12 months remaining on his contract his club Borussia Dortmund were unable to resist a £26.3m bid from City’s crosstown rivals Man United. The Armenian reportedly earns £140,000 a week in England and Mr Honigstein says this level of remuneration would be beyond the reach of most German clubs,

“It will be more difficult for clubs like Borussia Dortmund, Bayer Leverkusen and Schalke to hang on to top players because of the wages offered in the EPL. But without release clauses clubs can decide whether to sell or not,” he says.

The then British record transfer fee Forest paid for Francis in 1979 would be worth about £6m at today’s prices. The cost of a top player has increased at nearly 16 times the rate of UK inflation but this is merely a reflection of the financial climate in which EPL clubs currently operate.

Man United’s operating revenue in the current financial year is estimated to be £510m. The £89m the club paid for Pogba represents just 17 per cent of this figure, a very reasonable investment when you consider how important the French midfielder could be in improving the team’s performance on the pitch.

In fact, by expressing transfer fees in relation to revenue we can see that Pogba does not represent the most significant Manchester United outlay on a single player. That honour goes to Juan Sebastian Veron who cost £21.8m in 2001, 22 per cent of the club’s total revenue that year.

In the past, Real Madrid and Barcelona had been the two most dominant forces in the transfer market, aggressively acquiring the absolute crème de la crème of footballing talent. This summer was a relatively quiet one for the Spanish powerhouses who were either unable or unwilling to compete with their cash-rich English counterparts.

Outside England some significant moves were made, however, with Juventus splashing out €90m (Dh368.2m) to acquire the prolific striker Gonzalo Higuain from Napoli. Zenit St Petersburg also banked €56m by selling the Brazilian attacker Hulk to Shanghai SIPG but the vast majority of the big money deals were done by EPL clubs.

Thirteen separate sides in England’s top division broke their club transfer records this summer and six of the players concerned were imported from European teams.

The EPL might not be the best league in the world, it has not produced a Champion’s League winner since 2012, but it has certainly become the richest.

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