The economics of big-5 league transfers: past decade and post-pandemic

1. Introduction

Since its creation in 2005, the CIES Football Observatory has been monitoring the transfer of players through information published by clubs and the media. This Monthly Report analyses from a financial perspective paid transactions having taken place during the last decade which involved teams from the five major European leagues: the English Premier League, the Spanish Liga, the German Bundesliga, the Italian Serie A and the French Ligue 1.

The study analyses the sums paid in transfer indemnities by big-5 league teams (chapter “investments”), the clubs and championships who benefited from these investments (chapter “receipts”), as well as the net balances for both big-5 league teams and the five major European leagues themselves (chapter “net spending”). The period covered stretches from the winter 2012 transfer window to the last summer one.

The figures published in this report include fixed indemnities for permanent transfers, eventual add-ons, as well as sums invested for paying loans. The amounts paid in the case of loans with an obligation to buy are computed for the year of the transfer. Within the limits of the information available, the data on the beneficiaries take into account the possible resale percentages negotiated by former clubs.

As we do not have access to the information on the effective payment of possible add-ons, we use the term "committed" rather than "paid" by referring to investments made by clubs.

2. Investments

After having more than tripled between 2012 and 2019, the investments in transfer fees of teams of the five major European leagues have dropped considerably: -28% in the 2020 calendar year with respect to 2019 and a further -20% in 2021. However, for summer only, the 40% drop registered between the last pre-COVID (2019) transfer window and the first after-COVID (2020) one was followed by a slight increase between 2020 and 2021: +1%.

In relative terms, the fall measured in the calendar year 2021 in comparison to 2020 was particularly noticeable in the Spanish Liga: -37% (and -77% in comparison to 2019!). This situation is notably linked to the financial difficulties of the two biggest Iberian clubs: Real Madrid and Barcelona. A decrease in spending was observed in all of the championships. Even though having spent more than the teams from other leagues, the English Premier League clubs are no exception (-13% between 2020 and 2021).

The rankings for clubs having committed the most money in transfer fees since 2012 highlights the financial clout of a handful of dominant teams. Five English, three Italian, three Spanish and one French team are among the twelve having committed more than one billion euro. The vast majority of these clubs are part of those that were destined to take part in the aborted European Super League project.

Chelsea is the big-5 league club having committed the most in transfer fees in the three transfer windows since the pandemic: €403 million. Six teams from the English Premier League are in the top seven places of the rankings. This reflects the financial power of clubs from this competition compared to those of the other major European Leagues.

3. Receipts

The analysis of teams having benefited from transfer fees committed by big-5 league clubs over the past ten years shows that most of the money stays within the five major championships: 65% of the total. The percentage measured for 2021 is even greater than that recorded for the last decade: 67%. The high level of these percentages reflects the fact that the most expensive transfers generally occur between clubs of the five biggest leagues.

Figure 5: beneficiaries of transfer fees committed by big-5 league clubs

The top Portuguese division is the one outside of the big-5 leagues that has benefited most from transfer fee investments of clubs from the five major European championships. It has collected more than two billion euro over the last ten years. Next, we find the English Championship and following further back, the Dutch, the Brazilian and the Belgian top divisions. The Argentinean and Uruguayan leagues are the only other two non-European competitions in the top 20.

With over a billion euro since January 2012, Monaco is the team that has benefited most from transfer investments made by big-5 league clubs. Only three teams outside of the five major European championships figure in the top 20: Benfica (7th, €792 million), Ajax (12th, €617 M) and Porto (14th, €592 M). Though several wealthy clubs, such as Chelsea (2nd, €1,037 M), are in the top 20, as shown in the following chapter, their transfer operations are, without exception, in the red.

4. Net spending

For an optimum understanding of the transfer market, beyond the sums spent and received, it is relevant to study the net balance of operations. With an accumulated deficit of over €8 billion, the English Premier League stands apart from the rest. Conversely, despite Paris St-Germain’s very negative balance (-€957 million), the French Ligue 1 is the only competition from the big-5 with a positive net transfer spending (+€158 million).

The net balances by league during the three transfer windows since the pandemic show that English Premier League clubs continue to accumulate large deficits through transfer operations: -€1.9 billion. Despite a difficult financial situation, Serie A teams also recorded a negative net spending. This occurs within the framework of a headlong rush with payments increasingly spread over time. Conversely, Spanish clubs modified their strategies and have a positive net balance: +€196M.

Two French clubs, LOSC Lille (+€342 million) and Olympique Lyonnais (+€225 M), are at the top of the rankings for big-5 league teams with the most positive net balances on the transfer market since January 2012. Three Italian teams specialised in the trading of players follow them: Genoa, Udinese and Atalanta. Athletic Club stands out among Spanish Liga teams, as well as Hoffenheim in the German Bundesliga.

Manchester United, Manchester City and Paris St-Germain have the most negative net transfer spending over the past decade. The other teams are clearly further behind, with thirteen clubs from the English Premier League in the top 20. All of the current English top division teams have negative net transfer balances, except for freshly promoted Brentford (+€42 M).

The over-representation of Premier League clubs among those with the most negative net balances for transfers is also very noticeable since the pandemic. Manchester United (-€218 million) tops the table ahead of five other English teams: Arsenal, Chelsea, Leeds United, Tottenham and Manchester City. The best-ranked non-English club is Juventus, which has relied on payments spread out over time and a capital increase to strengthen its squad.

5. Conclusion

After having more than tripled between 2012 and 2019, the transfer fee investments of clubs from the five major European leagues have swiftly decreased due to the pandemic. A 58% drop was recorded between the last full pre-COVID calendar year (2019) and the first full post-COVID one (2021). Per league, the decrease varied between -10% for the English Premier League and -74% for the Spanish Liga.

However, while a strong drop of 40% was observed between the first post-COVID summer transfer window in 2020 and the last pre-COVID one in 2019, this declining trend has stopped. In the summer 2021, big-5 league clubs paid 1% more transfer indemnities than in the previous summer. The strongest increase was recorded in the German Bundesliga: +31%.

The pandemic has reinforced the domination of English Premier League clubs on the transfer market. The percentage of transfer spending of the latter in comparison to the total big-5 league clubs’ expenditure has increased from 36% between January 2012 and January 2020 to over 45% for the three post-COVID transfer windows.

The percentage of investments of the ten clubs having committed the most money in transfer indemnities has also increased between these periods (from 33% to 35% per transfer window on average), as that of the ten most expensive transfers in comparison to the total (from 30% to 33%). All of the indicators indicate a trend towards a concentration of spending from the richest clubs, and most particularly the wealthiest English Premier League teams.

Six English teams are at the top of the rankings for the most negative post-pandemic transfer net balances, with Manchester United heading the table (-€218 million) ahead of Arsenal (-€217 M) and Chelsea (-€205 M). Since the COVID crisis, English top division clubs recorded a total deficit of almost two billion euro in transfer operations. Conversely, teams from the second wealthiest league, the Spanish one, registered a positive net spending (+€196 million).

Within the context of a general crisis, the English Premier League is the only competition where a majority of clubs continue to invest massively in the recruitment of new players. This money has allowed many teams from the other big-5 leagues, and - in a cascade effect - further down, to limit the impact of the health crisis. This demonstrates the importance of a global transfer system as it currently exists, a system that the creation of a closed and self-regulated European Super League would put in jeopardy.

At the same time, the dependence of a growing number of clubs even within the wealthiest leagues on incomes linked to the transfer market highlights the weakness of the current professional football economic system. In a context of increasingly disparate wealth, the survival of more and more teams pivots on the profits generated through the transfer of their best players. This situation is both financially dangerous and sportingly limiting.