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We Shouldn’t Be Surprised At The Level Of Premier League Spending This Summer

Perhaps it’s due to the monotonous drudgery of the pre-season football calendar, but Premier League transfer spending is again in the spotlight.

Manchester United have made the most waves with their £75 million swoop for Romelu Lukaku while their cross-town rivals, City have been steadily going about finalising a jaw-dropping £220 million spending spree.

Such extravagance has conspired to paint Chelsea’s decision to shell out £58 million for a player that can’t earn a starting berth at Real Madrid as good business.

And big spending has hardly been the reserve of the top teams as recent weeks have seen the likes of Everton (in particular) and Bournemouth splash tens of millions.

The classic reaction to such extravagance has been bafflement. Recent years have seen words like ‘profligacy’ and even ‘promiscuous’ feature heavily among pundits lexicons to describe the lavish and seemingly cavalier spending of Premier League clubs.

But in truth, we should hardly be surprised.

Lest we forget, 2015 saw Sky Sports ink a mind-numbing £5.136 billion deal to earn them Premier League TV rights to 2019 but even before that, the Premier League’s ability to generate income had long left fellow European clubs trailing in their wake.

They, better than anyone else, have identified that football operates within a wider economy just like any other industry. Manchester United, Arsenal, Juventus and even Celtic are all openly traded shares on the stock-market. All vulnerable to the ravages globalisation, but crucially, also primed to capitalise on it.

The S&P 500 has been pushing to new heights continuously over the last number of months, while our increasingly connected world has seen the strongest brands of European football become easily identifiable indicators of success and status just about everywhere.

From Chesterfield to Chennai, the sea-side boulevards of Brighton to the bustling thoroughfares of Beijing, Cristiano Ronaldo and his footballing brethren are instantly recognisable and easily monetised.

As reported in January 2017, the TV revenue for the 2015 financial year is particularly staggering. The top 20 was populated by a scarcely believable 17 Premier League clubs, with just Juventus, Real Madrid and Barcelona also joining the party. That means that Aston Villa, who finished bottom of the Premier League in 2015/16, actually took home more TV money than German champions Bayern Munich.

Therein lies the rub as to why, far from being excessively extravagant, transfer spending of Premier League clubs is in fact totally understandable and well within the means of those clubs in question.

Historical context makes this plain. As pointed out by Forbes, Manchester United earned in the region of $665M in the 2015/16 Financial Year and so Paul Pogba’s fee of $130M weights in at 19.5% of revenue. The signing of Rio Ferdinand in 2003 cost United 17.7% of their turnover that year while even if one were to go back much further, we see that in signing Denis Law in 1962 United spent 20% of what their turnover would be seven years later.

Pogba’s fee is hardly extravagant but is in keeping with the enhanced financial muscle of the club, and that’s before shirt sales are considered.

Paul Pogba of course became the marketing face of Manchester United and has been leveraged endlessly in foreign markets to flog kits. While exact figures on the success of this ploy are difficult to ascertain, the success of his former Swedish teammate in this particular arena is staggering.

Zlatan Ibrahimovic is said to have earned the club an incredible £76 million in just a single week in jersey sales. The statistics aren’t available but one could imagine that the experiences of Ferdinand and Law were comparatively negligible and non-existent.

Football is now big business, a global business and thanks to astute marketing, the Premier League is at the forefront of it. As Asia begins to truly open up to the world of football and bring its considerable financial muscle to bear, English clubs have benefited the most and have understandably been left in superiors positions to their European counterparts when sat at the negotiation table.

Recent transfers prices may appear to be part of a ‘football bubble’ or at the very least unsustainable but that appears far from the truth. Modern transfer prices are in fact entirely rational, and are only set to increase.

Colm Egan, Pundit Arena

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Author: The PA Team

This article was written by a member of The PA Team.