Why European football clubs won’t break the bank now
After football club Inter Milan won the main Italian League for the first time in 11 years, a next natural goal would have been to be Europe’s best. That would have required it to spend money to buy more players. Instead, the club’s Chinese owners reportedly told Antonio Conte, Inter’s no-nonsense football manager, they would like to raise 80 million euros by selling some players from a championship-winning side on the rise. Conte quit, not wanting to deal with a predicament facing many premier football clubs in Europe: to spend or not?
European football clubs spent less to buy new players in 2020-21, a year played under the shadow of the pandemic. This was the case for the five main leagues in England, Italy, Spain, Germany and France. The quantum of cutback varied. Clubs playing in the English Premier League, which is financially the most robust today, saw a decline in spending of 16% against the average of the previous four years. By comparison, the main leagues in Spain and Germany saw transfer spending drop by 58% and 52%, respectively.
The coming year is expected to see clubs spend more than 2020-21 to acquire players, though not at the level of earlier spending-frenzy years. For one, crowds are back. For another, clubs chasing sustainable revenues don’t have a choice. Nothing adds to revenues like winning. And in order to improve prospects of winning, clubs have to invest in players. The recent success of English clubs partly rests on this paradigm. In 2020-21, clubs there spent 75% more than the next best league in buying players.
Revenue Reversals
The past 15 months have been tough for European football clubs. The pandemic affected one full season (2020-21) and a quarter of another season (2019-20). The total revenue loss for top-flight clubs over these two seasons was 7.2 billion euros, according to Uefa, the body governing European football. In 2018-19, combined revenues stood at 21 billion euros. According to Deloitte Football Money League 2021, in the 2019-20 season, the top five clubs by revenues all faced a fall, ranging from 4% at Bayern Munich to 19% at Manchester United.
This reverses some of the revenue gains of the preceding five years. Clubs were riding the virtuous cycle of success, spending and commercialism. Take Liverpool. Under the managerial spell of Jurgen Klopp, the English club has seen its annual revenues graduate from the 400 million euros band to the 600 million euros band, and into the top five. It’s won trophies, it’s had compelling stories, and its players have been sought after.
Course Correction
