Chelsea were set for an active transfer window to make up for no purchases in the last two. The post-coronavirus transfer market will be much more constrained than at any time in recent years.
Ever since Neymar’s incredible €222 million transfer from Barcelona to Paris Saint-Germain way back in August 2017, transfer fees have seen an exponential increase that some predicted would be unsustainable. However, in the two summer transfer windows since, the total spending on new signings across Europe has instead risen from £4.07 billion to £5.25 billion. Fees once deemed acceptable for the likes of Sergio Aguero and Eden Hazard now account for just 40% of the total transfer value of someone like Frenkie de Jong or Matthijs de Ligt.
But the onset of the coronavirus outbreak and the economic repercussions it will undoubtedly bring could ultimately prove to be the turning point for a return to the more sensible transfer fees of the past.
It is important to first understand the reasons behind this unhealthy, ahistoric increase in transfer valuations in the past few years.
In recent years, the increasing popularity of football has meant more fans and an ever-increasing demand for greater football coverage. This, in turn, has prompted leagues such as the English Premier League, long marketed as the most competitive league in the world, to begin signing increasingly lucrative broadcast deals with various media outlets from across the globe.
For example, Singtel, a broadcasting company based in the small island-state of Singapore, has the Premier League charging £70 million per contract for broadcasting rights. Considering that Singtel has just over 400,000 fans subscribed to its service in Singapore’s relatively tiny football market, the contract fees involved are quite simply ludicrous.
But that is beside the point. Ultimately, what matters is that this increase in global demand for European football leads directly to a growing influx of money into Europe through such lucrative broadcasting deals. The money then passes on to the clubs themselves.
However, when juxtaposed against the ever limited supply of elite footballers, this increase in the amount of money in the market means that clubs are constantly throwing more and more money at players and agents in order to compete for and attract the best talents in Europe.
This would, in large parts, explain the 28.9% increase in total transfer fees in Europe in just the span of two years.
But why does this increase in transfer fees even concern us, Chelsea fans or otherwise? Well, the fact remains that at the end of the day, the fans are the ones who will be bearing the inevitable brunt of the eye-watering sums of money their clubs are spending on player wages and transfer outlays. From increasing prices of replica club jerseys to the increments in Premier League television packages, the fans are literally paying the price for their increasing demands for greater football action.
With all that being said, the unfortunate outbreak of the coronavirus has seen broadcasting deals stall and matchday revenue stop for all clubs in Europe’s top five leagues.
As Daniel Levy, chairman of Tottenham Hotspur recently said, “football cannot operate in a bubble” and the economic ramifications of a global pandemic cannot simply be ignored. As much as Borussia Dortmund’s chief executive Hans-Joachim Watzke can continue insisting that clubs “[cannot just] go on a bargain tour with [Dortmund]” when it comes to the transfer of Chelsea target Jadon Sancho, the truth is that the aftermath of the economic damage of the coronavirus outbreak would leave few clubs capable of paying the rumoured €130 million Dortmund are asking.
Evidence to this can be found in the 2008 global financial crisis. That summer, total expenditure from Europe’s top 10 spenders in the transfer window stagnated for the only time in the entire decade, increasing by just €20 million from the previous year. For context, the summer of 2009 saw Europe’s top ten spenders splurge €972.97m, a 41.3% markup.
Moreover, the 2008 financial crisis did not result in a complete loss of television revenues or gate receipts as is the case in 2020. This unprecedented loss of crucial revenue could hence prove to be the final straw which breaks the camel’s back after years and years of unconstrained spending on an upward trajectory.
Change for the better, be it in the short-term or otherwise, will be on the cards for the first time.
Regardless of how unlikely it may be, here’s to hoping that any attempts at greater financial responsibility and a return to relatively normal transfer fees will be here to stay.