A.T. Kearney and Deloitte: Football market cuts spending

15 February 2013 Consultancy.uk

Europe's economic crisis and new financial rules have finally forced football clubs to think twice before they go out on a spending spree in the January transfer window. Once again, England's Premier League spent the most money. At the other end of the scale, Spanish clubs spent surprisingly little.

UK: Premier League

Premier League clubs spent £120 million during the month-long transfer window, according to advisory firm Deloitte, down from a peak of £225 million pounds two years ago. Queens Park Rangers and Newcastle United both invested heavily in an attempt to remain in the top flight, while U.S.-owned Liverpool also splashed out after a disappointing first half of the season. "Premier League clubs have been relatively restrained in their player transfer fee spending, in spite of the upcoming uplift in their broadcasting revenues of between 20 and 30 million pounds ($32-48 million) each from next season," says Dan Jones, Head of the Sports Business Group at Deloitte.

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Remaining competition

Italian clubs were the second highest spenders, Deloitte said, paying out around 70% of the Premier League total. Top division clubs in France and Germany spent less than half as much as their English counterparts. Spanish clubs spent very little, a consequence of the financial problems in the country and the fact that Real Madrid and Barcelona take the lion's share of TV revenues.

Transfers

League leaders Manchester United spent a reported 15 million pounds to buy 20-year-old winger Wilfried Zaha from Crystal Palace but loaned him back to the second-tier club until the end of the season. Italian giants AC Milan bought ‘Super Mario’ Balotelli for approximately €20 million. For all the expensive transfers, it was juist a free transfer that stole the headlines of most media across the globe: David Beckham's short-term move to Qatari-owned Paris St Germain for €1.

UEFA Financial Play

Nowadays, Professional football teams also have to contend with UEFA's Financial Fair Play rules which means clubs have to move towards breakeven or risk exclusion from European competition. "There is this double effect of Financial Fair Play and also the financial markets which have made the financing of clubs a bit more complicated," said Emmanuel Hembert of A.T. Kearney. He also adds "Some clubs are willing to take lower transfer fees just to get lower salary bills because profitability is crucial these times."

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