The Premier League has so much money it literally doesn’t know how to spend it. It knows how to waste the money, but it doesn’t seem to know how to spend the money. And with Facebook and Amazon and probably Twitter and every other media company out there vying for a piece of the action I have a feeling that it’s only going to get worse over the next decade.
Manchester United announced fiscal results today and during the conference call with investors Ed Woodward suggested that media interest in the Premier League will only grow. Speaking about Facebook and Amazon, Woodward said. “Absolutely, I think they will enter the mix; anecdotally, there was incredibly strong interest in the last cycle. We are hearing that around the Premier League table and we are also hearing that from a European perspective in terms of interest in the Champions League and Europa rights. I do think we are going to see an increasing engagement from these and we would welcome the interest.”
If true, it means that Premier League clubs will have an even further influx of cash to an already cash rich league. But the problem isn’t that they have money, it’s that these clubs don’t seem to know how to spend it. Take this summer’s transfer business as an example. Nearly every team overpaid for players and some of them paid outrageous fees for average or even below average players.
Chelsea – Danny Drinkwater £35m, value £8m
Man City – Benjamin Mendy £51m, value £11m
Liverpool – Alex Oxlade-Chamberlain, £35m, value £19m (last year of his contract)
Everton – Gylfi Sigurdsson – £45m, value £23m
Bournemouth – Nathan Ake – £20m, value £7m
Crystal Palace – Mamadou Sakho – £26m, value £14m
This isn’t meant as a “back in my day” tale because it was literally just last year that Paul Pogba cost £95m and this year we have turned around and more than doubled that record with the transfer of Neymar to PSG for £195m. Obviously, the Neymar transfer is outside the bounds of normal football business but the inflated prices that Premier League teams are paying for mediocre players this summer are now normal football business.
Manchester United announced today that they have increased their income by £66m for fiscal year 2016/17 (last year!) and that their pre-tax profits for the year, this was the year that they bought Paul Pogba and didn’t play in the Champions League, was £57m. It’s difficult to wrap my head around how a team could spend £100m on a player, miss out on Champions League football, and still post nearly £60m in profits.
Yes, I understand that they are amortizing Pogba’s transfer fees and contract which makes his transfer a “mere” £35m per year on the books (£20m transfer and £15m wages). But as an Arsenal supporter that type of expenditure is unheard of. Wenger just broke the Arsenal transfer record on Lacazette and even at the highest reported figures, Lacazette is costing £20m per year amortized.
The Lacazette Arsenal deal, though, shows how much money is available to clubs in the Premier League. Arsenal are a notoriously stingy club when it comes to transfers. Mesut Özil, Arsenal’s previous transfer record, amortized at somewhere around £15m per season. Alexis Sanchez cost a bit less than Özil but tips in at a slightly higher £17m per year amortized. So, even Arsenal – who are tighter than a tick – are growing their expenditures, though at a more reasonable rate.
And as the Premier League splashes cash all over the world to buy up the talent they need, the result is that even teams in Italy and Spain have to pay more for players. And players cost more regardless of the position that they play.
Nathan Ake is a decent center back but he cost Bournemouth more than Chicharito cost West Ham. This was a doubly stupid move on their part – not only did they overpay for a center back, but they gave that money to a fellow Premier League team – giving Chelsea the money to waste on Danny Drinkwater, which in turn gave the money to Leicester who bought wisely in the market and got CF Iheanacho for £25m. In essence, Bournemouth bought Leicester the very player which could help Leicester relegate Bournemouth. They better hope Nathan Ake turns out to be a world class center back.
Even if your team needs center backs, you don’t break a record for them because it’s not center backs which are going to ensure your survival in the Premier League, it’s forwards and attacking players, as Bournemouth are going to find out this season.
But all of this foolish spending is just a symptom of the larger problem in the Premier League: too much money and not enough experience knowing how to spend it. This is only going to accelerate as the money pot grows.
There is a danger in holding on to money during an inflationary market. In theory, Nathan Ake might cost £40m next year. So, if you have the chance to buy a top player then you almost have to spend the money because your money is going to be worthless (literally worth less) next year. But even in an inflationary market you can’t just spend for spend’s sake and you even need to be better at spending on the players who are going to improve the team. It’s a Catch-22: you gotta spend the money because if you don’t it will cost you more next year but if you waste the money you’re going down.
And finally, as for the idea of “kicking greed out of football” I’m sorry to inform you that greed is here to stay. In this kind of market, one of huge growth for growth’s sake, it’s unlikely that owners, players, managers, or agents are suddenly going to take the less greedy route. One way which they could – especially if they aren’t going to spend money on players – is to lower ticket prices. There are some signs of some clubs, like Arsenal, doing that for away fans but a widespread effort to lower prices all across the market seems unlikely.