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SBD Global/September 4, 2014/Finance

Premier League's Increased Resources Key In Record Sum Spent On Transfer Market

As the dust "settles on English football's annual festival of wanton consumption, the power and the primacy" of the Premier League is "all too clear," according to Rory Smith of the LONDON TIMES. England’s top flight spent about £835M ($1.37B) on players this summer. That is "not far off what the elite sides of Italy, Spain and Germany managed between them." Once adjusted to "allow for outgoings, the effect is even more pronounced;" £392M ($645M) "seeped out of the Premier League to other divisions, other lands, this summer." Its closest competitor was the Bundesliga, with a figure of £95M ($156M). There is a "simple explanation for this." Deloitte Sports Business Group partner Dan Jones said, "We continue to see the increased resources that Premier League clubs enjoy -- as a result of improved broadcast deals -- translate into investment in players." It is "those television rights that give the Premier League its unrivalled clout." That is why, whenever a new deal is announced, it is "heralded as a sign of the division's status, its pre-eminence." The present TV arrangements, at home and abroad, are worth £5.5B ($9B). When they are renegotiated for the '16 season, that amount "will soar." The day is "not far away when West Ham United will have as much money as Bayern Munich." If that sounds like a "cause for celebration, it is worth noting some of the other figures that have been released since the window closed." Of the £835M spent by English clubs, some £520M ($856M) was directed to clubs overseas. There is, though, "another consequence of the soaring television deals that often goes ignored: the perennial rise in the Premier League’s rights deals is not just good news for its constituent clubs." If anything, it is "better news for those clubs in Europe who inevitably end up pocketing much of the money" (LONDON TIMES, 9/3).

TRENDING DOWN: ESPN's Gabriele Marcotti wrote like clockwork as "soon as the transfer window closes, folks start drawing broad conclusions based on the volume and nature of spending around Europe." You can "read the numbers in different ways to support different arguments, but there are some very obvious trends out there." First and foremost, "spending is going down, not up." Or "rather, meaningful spending." EPL clubs spent £835M -- "but all it really tells you about is volume." If "I sell a bunch of players" for a combined worth of $100M and buy a bunch worth $100M, "you could say I'm profligate" for shelling out $100M. Or "you could conclude I'm parsimonious because I've spent as much as I've taken in." If anything, "while it may not seem that way, for most clubs this has been a summer of restraint." UEFA's Financial Fair Play "undoubtedly plays some part." Indeed, UEFA General Secretary Gianni Infantino was "positively glowing last week as he announced some figures from UEFA's benchmarking survey of some 500 clubs." What's more, "around Europe, for the first time since they started tracking these figures five years ago, revenue was growing" at a faster rate (5.7%) than wages (3.7%) (ESPN, 9/3). The London GUARDIAN reported Swiss-based CIES Football Observatory's report into the summer transfer window in Europe has claimed that the continent’s leading clubs "have paid 16% more for players than five years ago," with new ManU signing Ángel di María and former Chelsea defender David Luiz "among those transfers considered way over the market rate." CIES compiled data from across Europe's big five leagues in England, Spain, Germany, Italy and France. CIES said, "Our new data analysis has revealed that overall, clubs paid on average 16% more than they invested in the five previous years for players with similar characteristics. This confirms the ongoing inflation trend of the transfer market at the top end of the football pyramid" (GUARDIAN, 9/3).
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