Economists often speak of endless cycles of boom and bust periods that leave speculators perpetually anxious and pondering the exact moment when a bubble will burst and wreak havoc on the marketplace.
From the inception of the Premier League in 1992, there were a number of said speculators who thought it only a matter of time before the runaway money train hit the buffers at speed, bringing the good times crashing to an end for the wealthy elite clubs of English football.
The Premier League though, turned out to be something of a monstrous financial anomaly. After doubling up on their first ever TV right’s package in 1997/98, Sky threw increasingly jaw-dropping wads of cash at its new, finely polished crown jewel.
The pairing of the new league with Sky’s Americanized marketing know-how was a perfect marriage of commercial convenience that led to the mother of all economic booms. This time, however, the bubble was reinforced and not for bursting.
TV money continued to pour into the game at an astonishing rate. Every time renewal came back on to the negotiation table the package swelled and clubs got richer. In all but one cycle, the value of the rights bundle grew at a rate that had previously been the stuff of wild fantasy in most other industries and global financial market places.
By 2016/17 that value spiked yet again. Only this time the emergence, ambition and success of BT Sport’s coverage accelerated matters further. Sky had no choice but to dip into their pockets yet again. Renegotiation this time stood at a colossal £5.136 billion pounds. For the twenty owners and executive staff at top-flight clubs this was a truly seismic event.
Top-flight membership alone now guaranteed a wealth of income never before seen in English football. Even a finish at the foot of the table in the first season of the new deal, would see revenue of £93 million for Sunderland. For champions Chelsea that figure was nudged just north of £150 million.
While outsiders squirmed at a form of rampant capitalism on steroids, Premier League executives saw only a cascade of pound signs before them. With access to such eye-watering revenue streams there was only one thing to do: spend big.
The summer window of 2016 proved to be a high watermark for top-flight sides and their newly unleashed spending artillery. Of course, big clubs parting with exuberant amounts of money on players was nothing new. The teams chasing titles and Champions League spots had been making transfer headlines since 1992, but this was altogether different.
— Manchester United (@ManUtd) August 9, 2016
This time, it wasn’t just the big clubs flexing their muscles to sign the best names. Now the leagues less fashionable, fair-to-middling sides could also get their wallets out and chase big money signings as well. The 2016 window saw thirteen top-flight teams break their transfer record. Southampton, Stoke City, Crystal Palace and Everton were all in the market for big money signings, pushing the spending needle ever closer to the billion park mark.
Years of shock and awe in the transfer market had somewhat taken away the sheen of big money signings. However, the significance of the 2016 window cannot be downplayed.
Of course, it was only a matter of time before the billion pound barrier was broken in a solitary window. That feet alone is not all that remarkable. Spending during the 2015 summer window peaked at £870 million, leaving the billion pound barrier there for the breaking. What makes the 2016 transfer window all the more significant and formative was the foreign clubs watching on from the sidelines as the bullet train of Premier League high finance pulled ever further away on the horizon.
News of the Goliath TV rights deal and the riches it had bestowed on English clubs, had not escaped rivals in Spain, France, Italy, Germany and beyond.
While each foreign powerhouse league boasted their own clique of wealthy clubs, grouped around the top of the table, generally speaking they were simply no match for their English counterparts. This scenario was only exasperated further down the rankings in Europe’s other domestic leagues.
Mid-table tables in Spain for example, were already ill-equipped to compete with Barcelona and Real Madrid to say the least. Their best players knew it too and often only stuck around long enough to earn a lucrative move. The arrival of a whole new raft of wealthier, mid-sized clubs from England only added to the list of predatory clubs sniffing around for their top talent.
The one thing these clubs could console themselves in, however, was by ratcheting up their prices whenever an English club came in for their players. Cashing in and at least getting some of the drip down wealth in the financial food chain would be vital for clubs living in near-hand to mouth existences on the periphery of football’s ecosystem.
— Shkodran Mustafi (@MustafiOfficial) August 30, 2016
Arsenal’s then manager Arsene Wenger, who also happened to have a handy degree in economics had some foresight in what would become a fracturing of the market place. Speaking before the summer transfer window closed in 2016 Wenger observed in his softly-spoken tone:
“Today in Europe you have two markets, one for the English clubs and one for the rest of Europe…When the buyer is English that multiplies the transfer by two, three or sometimes by 10. If an English club does not come for a player he is worth £5m. If an English club comes in he is worth £35m, £40m or £50m.”
In the past, top Premier League clubs had been left with little choice but to navigate through the white waters of inflated prices and hard-ball negotiations with foreign clubs who were wise to their collective wealth.
Now, with everyone else seemingly in on the act, the market really had broken in two. There was now seemingly a normal asking price for everyone else and an altogether separate premium tag for English buyers. Clearly, the new money, welcome as it was, had only served to create an extra layer of negotiations for English sides to cut through in their pursuit of new recruits.
Some may have complained about exploitation and like Wenger, bemoaned the headaches that came with such staggering riches. However, so-called smaller Premier League clubs could also double down and insulate against the big boys. After all, not every penny of their new money had to go on transfer fees.
Longer contracts and better wages throughout the division would make it even harder for the big six to do their shopping in domestic markets. If they wanted to move for a rival English club’s star playmaker or imposing centre-half they would have little choice but to pay the crazy asking prices bestowed upon them. Like their counterparts on the continent, the likes of Southampton and Swansea City could dabble in their own brand of protectionist behaviour. Such actions only served to further inflate prices and bump off any notions of clever negotiation tactics.
By the time that September came blinking into the light in 2016 and bewildered Sky Sports presenters staggered home to their beds after hectic Transfer Deadline Day night shifts, summer spending had peaked at £1.175 billion.
Few, if any, of the boom and bust spectators could have foreseen such a bonanza evolving out of Sky’s roll of the dice back in 1992. However, as football fans buckled up for the 2016-17 campaign, it was clear that days of wheeling and dealing in the transfer market were long gone. The super-rich clubs had arrived and had been left with little choice but to spend their mounds of cash in a hostile, altogether tougher market place.