Premier League finances
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By Tony Attwood
Arsenal’s injury list has grown again, as you may have heard with Gabriel Jesus out having had a second operation on his knee that was injured in the world cup. Arteta said, “he looks to be out for a few weeks, I think. It is a big blow because we had him back to his best, especially the way he played against Barcelona.”
And although that is frustrating this is of course where the club’s policy of having multiple goalscorers in the team really shows its worth. If we look at all games in all competitions last season we can see that Martinelli, Saka and Odegaard each got 15 goals while Gabriel Jesus got 11 – a difference totally accountable through him playing in Qatar.
According to the Telegraph however, “The loss of Jesus, who is fundamental to Arteta’s plans this season, represents a significant problem for Arsenal.”
Also Saka did not play because he was, we are told, sick. On the other hand aside from Nketiah, Arsenal do now have Kai Havertz, and Leandro Trossard who can both play in that position.
Meanwhile one of the prime talking points are the consequences of the increasing transfer fees and salaries paid by Premier League clubs.
This is a topic that was the subject of an investigation by Football Observatory in 2019, and their words are worth considering now as much as then, given the huge rise in transfer fees we have seen since then.
At that time in 2019, they said that during the previous transfer window the price of players went up by 31% over the previous year, and across the previous five year period that cost had risen on average by 26% a year. Thus a player in 2019 would cost three times what he would cost in 2014.
The Athletic also noted recently that most discussions (or haggling as they call it) over the issue of transfers is not so much over the fee but the length of time it takes the buying club to pay it – indicating of course that clubs neither have the cash nor a bank willing to lend it.
Which is a good reminder that the amount of money clubs in the five biggest leagues have paid out in transfer fees has risen from €1.5 billion in 2010 to €6.6 billion in 2019.
But at the same time those same clubs have traded at a deficit of €8.9 billion of which the Premier League accounted for €6.5 billion,
Off the Pitch added, one year ago, that “After incurring depreciation, other amortisations and exceptional items, we estimate Premier-League clubs will record an operating deficit of £941 million in 2021/22, which, quite astonishingly, is £60 million worse than last year.”
Now all of this debt is based on the notion that even if a player loses value in the time he plays for a top club there will still be some value left in him when he is sold. Also it is quite possible that one or two players within the Premier League club, possibly having come up through the academy, can be sold at these highly inflated prices, to reduce the deficit somewhat.
But all such calculations are thrown out the window when the new approach by Saudi Arabia is taken into account. Their high prices paid for older players are very welcome to the selling clubs, but it means that the value of younger players is now raised even further as it is expected that in the future they might be sold to the Saudi league at a time when otherwise their value would be falling.
One complicating factor in all this is that single-year profit and loss figures can be very misleading because of the way the payment of transfers are arranged. A club could indeed still be paying for a player whom they bought, after they had sold him elsewhere.
It is generally expected that at most only five clubs will make a profit each year in the Premier League, which means that 75% of the PL clubs are making a loss, some of them year after year. On an industry-wide scale, that is only sustainable if clubs can keep on moving players on to Saudi Arabia each year.
Which is fine as long as the Saudi league doesn’t go the same way as the Chinese League. The Jiangsu team that won the 2020 Chinese title included the Brazilian Alex Teixeira, who chose China ahead of Liverpool. Didier Drogba and Nicolas Anelka had played there, and David Beckham became a global ambassador for the league. Debts mounted, clubs went bust, the league collapsed and a source of revenue for PL clubs vanished.
But what now? Are PL clubs really paying out huge sums for players in the belief that for years to come Saudi Arabia will enable them to recoup much of that transfer money? If so it is one hell of a gamble.
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