Following the end of this season’s winter transfer window, there is a glooming sense that something is quite not right with the football world. After PSG signed Neymar for €222 million and Barcelona spent €255 million to sign Coutinho and Dembélé last season, there was a general assumption that the market would soon be made up of €100 million+ transfers
It has, however, been au contraire. Expectations were high, but results were strange. An analysis of the top 10 transfers of the season illustrates the weirdness:
- Transfers ranked #1 and #6—Mbappé and Keïta—were agreed the season before.
- Transfer ranked #8—Pulisic—is agreed for next season.
- Transfers ranked #3, #7 and #9—Kepa, Courtois and Alisson—were goalkeepers.
A compilation of the transfer data presented in the ‘Football Transfer Review’ by Prime Time Sport showing a significant decline in transfer values adds to the uniqueness of the football industry’s behavior this year.
Adding Prime Time’s report to the data presented by the website Transfermarkt, one can raise a number of questions regarding the current situation of player trading, the exchange that drives the whole football industry forward. Here are four key questions, which I believe can be answered with some research and insights:
What happened to the transfer market?
The only city you need to look at to see how the transfer market has shrunk is Manchester. In the five seasons between 2013-14 and 2017-18, Manchester City and Manchester United spent a combined amount of €1,755 million, by far the two biggest spenders in the period. For this season, however, the combined value fell to a mere €160 million. According to Transfermarkt, United was the 22nd club in total expenditure, behind Brighton. City was 26th, lower than Sevilla:
The Manchester clubs, however, are not alone. Bayern Munich, also a big and rich club that usually makes headline signings, spent only €10 million on one player, the 18-year-old Canadian, Alphonso Davies. Even the Brazilian club Santos spent more than Bayern in the last transfer window.
The fact that these rich and traditionally big spenders took a step back on their recruitment investment had a major impact on the overall transfer window, but it is hard to imagine that these clubs will remain quiet for long. Liverpool and Dortmund’s recent forms, plus their ageing squads, will surely demand action soon.
It doesn’t mean, however, that total transfer values will necessarily increase. The halt on media rights values growth worldwide, the global economic slowdown and the many questions involving the immigration rules for a post-Brexit world may still have a significant impact for the next transfer window.
Uncertainty was a big factor in the reduction of transfer values this season and will probably still have a significant impact in the near future.
Why did Serie A and La Liga increase investment?
If the EPL (-22%), the Bundesliga (-16%) and Ligue1 (-41%) have reduced the amount spent on transfers, why did Serie A (+37%) and La Liga (+10%) increase their investment in signings?
For Serie A, the main driver of value is Juventus, a club that has relied heavily on making new and expensive signings year after year. It is the first time since the 01/02 season, the one when they signed Buffon, Thuram, Nedved and Sallas, that the club has topped the ranking of biggest spenders in the world. Combining the past three seasons, Juventus ranks second, having spent €5 million less than the leader Barcelona. But while the Catalan club has reduced its investment for this season, the Vecchia Signora has increased its transfer expenditure:
Also, the American owners of both Milan clubs and Roma have not been holding back. Combined, the three clubs have spent around €575 million, almost half of the total expenditure of the entire league. The fact that Italy is going through a very poor period for developing young talent has helped to inflate the market and drive players’ value upwards:
Spain, on the other hand, is possibly enjoying the dividends of the increasing commercialization of La Liga and the more balanced revenue distribution system, which which enables smaller clubs to have deeper pockets and invest in more expensive players. Evidence of this is that this season is the first time in at least a decade—possibly ever—that five Spanish clubs have ranked among the world’s top 20 biggest spenders. To see Villarreal outspending Borussia Dortmund, Inter Milan, Manchester United, Arsenal and Manchester City is surely remarkable.
What about China?
In 2015, the Chinese government announced plans to develop the local football industry. It didn’t take long for investment to flow into the transfer market, with clubs spending almost €1 billion on players in the following two seasons, making the Chinese league the fifth biggest spenders in the period, ahead of the French Ligue1.
The rapid growth combined with the country’s superlative numbers naturally generated expectations that China would soon become the most important market for football players on the planet. Two years later, however, the feeling has changed notably. The amount of money flowing to foreign countries sounded alarm bells in the government, triggering a series of measures to control expenditure on players that quickly brought the expenditure to previous levels. It would be hard to find a better graph to illustrate a boom period than this:
There is no indication that Chinese teams will revert to another spending spree anytime soon, so the main trends of the global transfer market will probably remain based on the investment behavior of European clubs.
Unless, of course, another country with strong cash reserves and ruled by a central power with multiple reasons for soft-power investment around the planet decides to start investing in football:
Has the transfer market peaked?
The final question has an uncertain answer. The growth of the transfer market is connected to the European business scenario: if the European economy is doing well, the transfer market will do well. If the European economy slows down, so will the trading of players between clubs worldwide.
There is one main challenge facing the market: Brexit. The UK has been the driving force behind the advances of the football transfer market for the past seasons. There are still many uncertainties surrounding the process by which the UK will leave the European Union. No surprise then that the market has shrunk. But if this is a trend or not, we’ll probably discover shortly.
Big clubs all over the world will continue to fight for the best players available and, therefore, have incentives to overspend rivals year after year. If one club spends a lot of money, others will soon follow. How much money will be considered to be a lot in the next transfer windows, however, is a question that cannot be answered just yet.
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Oliver Seitz is the Academic Director of the Master in Football Business in partnership with FC Barcelona and Football Business Development at the Johan Cruyff Institute, where he leads the projects in consultancy for clubs and other organizations. Before joining the Institute, Dr Seitz worked as a consultant and as a lecturer in Football Business at the UCFB in London in partnership with the FA. Prior to moving to London, he lived in Brazil, working as the Head of Marketing of Jacquet Brossard, a French multinational consumer goods company, and previously as Head of Marketing of Coritiba Football Club, where, in 2012, he was awarded the Best Overseas Marketing Campaign by the FC Business Awards in London. Dr Seitz holds a PhD in Football Business from the University of Liverpool.