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SOCCER

Why the soccer transfer fee bubble might be about to burst

LaLiga hope that the bubble is about to burst regarding player transfers in elite football.

LaLiga hope that the bubble is about to burst regarding player transfers in elite football.
OLI SCARFFAFP

In the summer, transfers are almost as important as getting away to the sun and beach. They are the fans’ great hope and, for now, Spanish clubs are delivering. So far this summer, they have announced the signing of 77 new players.

LaLiga has spent just €223 million ($240m), the least of all the major leagues. First division teams are reluctant to spend in a market in which exorbitant transfers and salaries have been paid in recent years. However, some think that the bubble could well be about to burst...

The bubble comes from the Premier League,” Javier Gómez, corporate general manager of LaLiga, told AS. “All of this is made by the Premier as they are able to spend above what they generate in revenue. Now, this bubble seems to be coming back to reality and that trend should be maintained”.

Spending falling in the Premier League

Does this mean an end to the Premiership’s big spending? For now, the English have spent almost a third less than they did a year ago; a similar situation to France. However, there is still a month to go before the transfer window closes.

When it comes to the future of the market, all eyes are on England, where economic control is beginning to be tightened in order to avoid unbridled spending. In the winter, when the first sanctions were announced for breaching financial fair play (Everton were docked eight points) and investigations were opened into Manchester City, spending fell from €843m ($901m) to €137m ($178m) in a year. Now it remains to be seen if that trend continues in the summer market; although their player investment is already over €1 billion, it is still far from the almost €2.8 billion ($3bn) of the previous season.

“I think the market is going to follow last year’s trend. There is one thing that everyone knows about which is England and the new regulator. That should continue to have an impact on the market, because in January you saw a slowdown in the Premiership. As for Saudi Arabia, I think it will be at the same level,” said the LaLiga executive.

‘We were not surprised that they opened a case regarding Manchester City’

Although, if the Premier League slows down, this will have a direct impact on Spanish teams, as LaLiga is one of the main markets for the English. “In the short term there will be an impact. There will be a revenue line that won’t come in, but at the same time there will be a positive effect in the medium to long term, since there won’t be as many purchases, liabilities and amortisations will go down. It has been good for us that this transitional period has been mitigated by the contribution of Saudi Arabia. The clubs are clear that this is going to happen and they have accepted it,” says Gómez.

“There will be two or three years of transition in the market, in which there will be less income from player transfers. However, Spanish clubs are also growing a lot in terms of commercial income, ticketing and fans, which is compensating a lot.

Although for the end to the bubble to happen, the Premier League clubs will actually have to comply with the new economic controls. “They have announced that they are going to do it. Now we have to see it. It makes sense and it looks like they are going to do it. They will have to spend what they generate. That economic control is aimed at sustainability is going to be good for the league and the rest of the clubs. The Premier League makes more than LaLiga, so it will have more possibility to buy more players. But as long as they generate it through their commercial income, ticketing and TV”, says Gómez.

As for the investigation into Manchester City, he said: “We were not surprised that they opened a case regarding Manchester City because we reported them years ago. We are not surprised at all. What surprises us is that we are still waiting since the case was opened. Let’s see how that situation ends. Everton were dealt with quickly. Let’s see how the Premier League resolves this situation, because it will be important for the credibility of fair play.

In Spain, clubs have been tightening their belts in recent years due to the COVID crisis. Now, even without those economic burdens, the trend will continue. “We’re going to be like last year in terms of spending. At the same levels, somewhere between 500 ($540m) and 600 ($650m) million euros throughout the year, including the winter market,” says Gómez.

Gómez, in addition to predicting that the bubble will deflate, also rules out that Spain will return to the trend of the pre-pandemic years in which LaLiga reached a billion euros in player deals: “In 2018-19 we sold more than a billion and I do not think it will happen again. The same goes for purchasing, because we are always balanced in income and expenses for player transfers. This is what we call stabilisation.

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