Premier League clubs' trade deficit predicted to hit £698m as spending continues despite Covid-19 pandemic
Premier League clubs are continuing to dwarf European sides when it comes to spending in the transfer market, despite the financial impact of Covid-19.
That is according to a new report conducted by the Centre for Economics and Business Research (CEBR) and commissioned by Football Index, which investigated the effect of the coronavirus outbreak on the transfer market.
The 2019/20 season saw a record spend from Europe’s five major leagues at £5.8billion, with the Premier League responsible for 28 per cent of that (£1.61bn) and 49 percent (£781m) of the trade deficit.
That deficit is calculated by working out a club’s sales and purchases from outside leagues, so as to calculate how much money is leaving the division.
For example, Emiliano Martinez’s £20m move from Arsenal to Aston Villa would not be included in the Premier League’s trade deficit as the money remained in the division – as opposed to going abroad when Chelsea signed Edouard Mendy from Rennes for around £22m.
New research conducted by the CEBR is predicting Europe’s five major leagues will spend 46 per cent less on transfers this summer due to the financial uncertainty of Covid-19.
The Premier League, however, looks set to be responsible for a staggering 99 per cent of Europe’s trade deficit this summer at a cost of £698m.
In contrast, La Liga (£60m) and the Bundesliga (£26m) are on course to record small transfer deficits, while Ligue 1 (£65m) and Serie A (£23m) are set to register a surplus.
The trend is in keeping with last year, when Premier League sides recovered just 52 per cent of the money they spent on new players. Every other major league recovered at least 71 per cent and for Ligue 1 it was 110 per cent.
Pablo Shah, senior economist at CEBR, said: “The coronavirus pandemic represents the greatest financial shock to the football industry in generations, with ticket sales wiped out overnight and TV and sponsorship revenues set to come under sustained pressure amid the global economic downturn.
“These effects have already fed into the transfer market, with the amounts of money flowing between clubs this summer considerably down on previous years.
“However, even the jolt delivered by the pandemic has not been enough to eliminate the huge structural transfer deficits operated by Premier League clubs, with English teams on course to spend £698m more on new players than they receive from the sale of players this summer – this would eclipse the record summer transfer deficit of Europe’s four other major leagues.”
Mike Bohan, co-founder and CMO at Football Index, added: “The Premier League has run up the biggest trade deficit in world football transfers for many years now, but the overall income it generates from the likes of ticket sales and broadcasting rights has far outweighed the cost of imported players.
“However, with the emergence of Covid-19 set to have a huge impact on the finances in football, new questions have been asked around how the top clubs in Europe will fare.
“Working with the Centre of Economics and Business Research, we were able to highlight the varying approaches that each of the top five European leagues tends to adopt in the transfer market, and then look at the potential impact Covid-19 could have on this summer transfer window.”
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