4 things we can learn from the Premier League Transfer Market

Premier League Clubs spent a staggering £760 Million in the transfer market and much of it on the very last day. Aakash Munjal writes about some key conclusions from the hectic deadline day of the Premier League transfer market.

It’s done and dusted. Millions are spent. Squads are strengthened. Fans’ demands have been obliged and pressure from them has been offloaded, for some time. Now only time will tell how right the spending was.

But, in any case, we learnt something from the last month’s spending by Premier League clubs and a lot from the last day of it.

1)      Money is everything today in Football and transfer deadline is desperate

Radamel Falcao moved from Atletico Madrid to Monaco for an undisclosed fee, believed to be around 60 Million Euros, with his net annual salary being reported to be around 18.2 Million Euros. His latest move to Manchester United nets him a salary in the region of £265,000 a week.

 Now it’s debatable as to why he was offered by Monaco at all. Some Say about a “third party ownership rights” where in an investment company owns a player and decides his sale/transfer based on the highest bidder.

Football has changed so much over the years. It should not be forgotten that his move to Monaco meant he cannot play Champions League football, something every player in the planet dream about and now it’s the same with United.

In the same category is Angel Di Maria who was earning 5/6 Million Euros annual salary (debatable) and his demotivation due to that is globally known and now he is at United for better economics.

His father was quoted “Real Madrid never offered a €6m a season salary to my son. The last proposal was €5m, which represented only a million and a half more than the salary he was receiving. Now Angel is happy at Manchester United. Economically, he is being treated better than at Real Madrid. Real Madrid has lost a key player”.

The man who made that goal for Bale in the Champions League final against Atletico Madrid won’t be playing Champions League either – at least for a year.

Lastly, it’s worth mentioning what happened with the likes of Fabio Borini of Liverpool. He could not reach an agreement with Queens Park Rangers, who wanted him and Liverpool was happy with an offer of around £10m. This means, instead of getting a fresh challenge and regular football, he will now, wait to get an opportunity behind Sturridge, Mario and Lambert.         

 He says on Twitter ““I protected the MAN and the player that I am today … taking all the responsibility of the situation and for people who didn’t want it … and I m VERY happy with myself to have taken such an important decision.”

Well, you make a call on this.

2)      Whatever did not make sense, does after all make sense

Clubs throwing stupid money during the stupid deadline day and changing the squad upside down. Players leaving one club to another for reasons they know. It doesn’t make much sense at all. But it’s not that stupid either.

The media is full of shock on Manchester United’s spending. It’s really maddening to think they spend in the region of £200 million, after winning the league just 2 years back!

And once Sir Alex was quoted “we invest in young players. This is what we are good at. We invest in those who will be with the club for a long time. We know that Manchester City are going to pay stupid money, pay silly salaries and all that. We can’t do anything about it.” (source: Martin Samuel for Mail Online)

Economics and Accounts can make sense though.

When you do the whole accounts, it’s not as big as it seems. United sold some players to other clubs this year – Rio Ferdinand, Nani, Welbeck, Shinji Kagawa to name a few of them. Now that brought some money.

Manchester United is one of the biggest earners in England. In 2012-2013, the club revenue was £ 363m and a profit of 146m. In 2014-15, they are expected to have total income of £500m or more.

The key reasons of increase in such earnings are match day income, commercial and broadcasting. They have just done huge deals with Chevrolet and Adidas too.

So what it leads to is, when Falcao and Maria makes appearance for Manchester United, shirt sales will roar in the club’s megastores, so as match day money and commercials. So, as long as the club sees success at the season, everything is forgotten and everything makes sense in football. After all, Glory is what the fans want week in week out.

3)      Sports on TV is a Huge deal now

One of the reasons for clubs to able to spend that amount of money, is the fact that this can be recovered to some extent. And one of the key sources of this earning is the broadcasting share.  According to Deloitte, in 2013-2014 season, Manchester United broadcasting revenues were close to £89 million. That is something we discussed above.

But can be highlight here, is the way sports is getting richer on TV, as a whole. Above has happened because the collective broadcast deal for Premier League for 2013-2014 season was close to £5.5 billion. Out of this total paid out to clubs were close to 1.56 Billion. The top earning club this season were Liverpool on £97.5million, followed by champions Manchester City on £96.6 million.  

And it’s not just football, 2011 F1 group revenue from TV Rights amounted close to £ 300 Million

By the way, “Global Box Office made a record GBP 21 Billion in 2013”

4)      Premier league is the most marketed and competitive league in the world

When I started watching club football, it was Chelsea, United, Liverpool each Saturday/Sunday. To a huge surprise, it took me a while to realize that there are two big clubs in Spain with the name of Real Madrid and Barcelona (and I was not even in India, I was in Doha).  But Premier League is what used to come on my TV all the time and that’s what we used to discuss all the time – may be because I did not have too many Arab friends back then.

What also made Premier league more popular, in spite of legends of Real and Barcelona, is the competitive ness of 20 clubs in the league. Champions City needed injury time goal against QPR (then struggling to come out of relegation) to win the league. This is what gets us hooked to the TV, irrespective of the opponent.

Not surprisingly and to highlight what we talked above, below is how the TV revenues are divided among leagues

League	Revenue 2012-13	Wages 2012-13
Premier League, England	2.9bn euros	2.1bn euros (71% of revenue)
Bundesliga, Germany	2bn euros	1bn euros (51% of revenue)
La Liga, Spain	1.9bn euros	1bn euros (56% of revenue)
Serie A, Italy	1.7bn euros	1.2bn euros (71% of revenue)
Ligue 1, France	1.3bn euros	0.9bn euros (66% of revenue)
Source: Deloitte

How you may drive any sense with respect to Transfer Market, is that, though players like Suarez and Bale have moved to Spanish League, Premiere League Clubs still attract huge names to its league. During 2012-2013 season, half of the clubs had foreign owners, compared to with only one 10 years earlier.

In summary, we have seen the drama of the transfers and we are settled with our new squads and new excitement to a lot of extent. It’s time to focus on football now and the transfer saga will be back in January, 2015.