Will the rich clubs get even richer when European football resumes?
Late last month, Manchester United chief executive Ed Woodward warned the club’s supporters that speculation around transfers running into hundreds of millions of pounds “seems to ignore the realities that face the sport.”
Woodward, who made the comment at a quarterly fans’ forum organised by the club, said: “We need visibility of the impact across the whole industry, including timings of the transfer window and the wider financial picture, before we can talk about a return to normality.”
Woodward’s comments point towards Europe’s biggest clubs cutting down on transfer spending in the coming months, or, plausibly, in the years ahead.
“In two or three years, it will not be possible to spend the sums we have been seeing because every country will be affected. In all likelihood a new footballing world will emerge from this,” Uli Hoennes, the Bayern Munich president, has said.
Woodward’s remarks are significantly downbeat from what he had proclaimed at the previous fans’ forum, in February. “As part of the rebuild, we see this coming summer as an important opportunity,” he had said of the summer transfer window.
That was then. With the global football industry halted by the pandemic, clubs big and small are feeling the heat. United are no different. Many Premier League clubs have furloughed staff. Some, like United and crosstown rivals Man City, haven’t yet gone down that road, while others, such as European champions Liverpool and Champions League finalists Tottenham, reversed decisions to furlough non-playing staff following a public backlash.
As Europe moves towards flattening the Covid-19 curve, its football transfer market may witness its own flatlining after years of colossal spikes in player prices. But while transfer market inflation could dip due to the pandemic, it may still widen the already growing inequalities between the elites of the sport and the rest. In its annual ‘benchmarking’ report, released earlier this year, UEFA acknowledged some of the imbalances plaguing the sport, and, in the backdrop of the coronavirus crisis, they serve as warnings for what could lie ahead.
Impact of ‘Big Five’
The report by Europe’s apex football body assessed finances of clubs in the continent for the financial year 2018. While the total revenue generated by top-division clubs across Europe in FY2018 was €21 billion, three-fourths of the amount went to clubs in the ‘Big Five’ leagues – England’s Premier League, Spain’s La Liga, Italy’s Serie A, Germany’s Bundesliga and France’s Ligue 1. And almost half of that revenue – 49%, over €10 billion – was generated by just 30 clubs. The top 11 clubs in this list, including six from the Premier League, accounted for almost 30% of the total revenues.
“England’s 20 top-tier clubs reported more revenue in 2018 than all 617 clubs in the bottom 50 countries combined,” UEFA said. Profitability too was dominated by Premier League clubs. While all leagues across Europe totalled operating profits of €697 million, United, Tottenham and Bayern Munich together generated €480 million of those profits by themselves. Premier League’s combined net profit of €382 million was also significantly higher than the €140 million combined net profit across Europe. According to the chapter on the transfer market, the ‘Big Five’ leagues dominated spending (85%) and earnings (75%). These leagues also accounted for a vast majority of transfer debt.
“On the back of rapidly inflating transfer spending, transfer payables posted on European clubs’ balance sheets in FY2018 totalled €5.1 billion, up 37% in just one year from €3.7 billion in FY2017,” the report said. Of the €5.1 billion, Europe’s top five leagues account for 87% of the pending transfer payments. “Any delay or non-payment can have a knock-on effect on the carefully planned cash flow of many clubs along a chain of transfer balances,” the report warned.
Cash flows of clubs across the world have been affected by the pandemic-induced halt. The situation could deteriorate future and this is where Europe’s big clubs could find themselves at an advantage. Clubs with less financial clout in the Premier League, or in another top-tier league, or in a lower-tier league in England itself, may find it hard to resist the temptation of selling some of their best players at prices they probably would not have considered some time back.
Woodward’s attempt to quell speculation about megabuck transfers came only a couple of weeks after United manager Ole Gunnar Solskjaer said the club could ‘exploit’ the transfer market owing to its financial might.
“Who knows how the market is going to react to this? Who knows which clubs need to sell players? There might be just a situation there where you can exploit, and I know that we at Man United, we are one of the biggest, and financially well-off,” he told Sky Sports. And while transfers running into hundreds of millions of pounds may not happen over the next few transfer cycles, the power equation in world football could be further skewed in favour of Europe’s uber-rich clubs, helping them exploit the financial realities of a post-pandemic world.