CIES Football Observatory Monthly Report n°47 - September 2019

Financial analysis of the transfer market in the big-5 European leagues (2010-2019)

Drs Raffaele Poli, Loïc Ravenel and Roger Besson

1. Introduction

Since its creation in 2005, the CIES Football Observatory has been monitoring the transfer of players through information published by clubs and the media. The 47th edition of the Monthly Report analyses from a financial per- spective paid transactions having taken place since 2010 which involved teams from the five major European championships: the English , the Spanish Liga, the German , the Italian and the French . In four chapters, the study analyses the sums paid in transfer indemnities by big-5 league teams, the clubs and championships who benefited from these investments, the net balance sheets for both teams and leagues, as well as inflation observed year by year since 2010. The latter is calculated on the basis of the exclusive CIES Football Observatory trans- fer value algorithm. The figures published in this report include fixed indemnities for permanent transfers, eventual add-ons, as well as sums invested for paying loans. The amounts paid in the case of loans with an obligation to buy are computed for the year of the transfer. Within the limits of the information available, the data on the beneficiaries take into account the resale per- centages negotiated by former clubs.

1 Monthly Report 47 - Financial analysis of the transfer market in the big-5 European leagues

2. Investments Figure 1: big-5 league club transfer fee investments, € million

A new record for spending was recorded in ear Smmer nter otal

2019: €6.6 billion. This sum is almost a 10% in- 2010 194 14 142 crease over the previous record of 2017. In ten 2011 11 22 2 years, the investments in transfer indemnities carried out by big-5 league clubs have grown 2012 1 27 19 by more than four times. In only two cases, in 201 22 7 271 2012 and 2018, were the amounts paid out less 2014 214 90 2904

than those for the preceding year. 201 7 44 1 In 2019, a new spending record was estab- 201 7 01 424 lished in three of the leagues studied: the Liga, 2017 279 7 04

the Serie A and the Bundesliga. As for the pre- 201 47 1040 0 vious nine years, English clubs invested the 2019 77 22 most for the recruitment of new players: €1.9 billion. Over the last decade, transfer indem- nity investments of Premier League teams ac- counted for 35.8% of the total measured for Figure 2: transfer fee investments by league, the big-5. This proportion has decreased since € million two years in line with the decision to close the E ES I ER FR summer transfer window before the opening of the season. 2010 47 0 41 17 19 2011 4 41 4 217 207

2012 722 17 4 09 24

201 922 47 79 11 447

2014 12 47 0 2

201 104 29 49 499 70

201 1774 07 71 2

2017 209 79 122 797 1117

201 212 1292 117 1 79

2019 190 10 100 0 0

2 Monthly Report 47 - Financial analysis of the transfer market in the big-5 European leagues

The rankings of clubs having invested the Figure 3: transfer fee investments by club, most in transfer fees since 2010 demonstrate € million (2010-2019) the incredible financial clout of a handful of 1 Manhester Cty FC E 1 dominant teams. While no club has spent as much as Manchester City, eight other teams 2 FC arelona ES 12 have invested more than a billion euro over Chelsea FC E 142 ten years. All of the Champions League final- 4 ars St-erman FC FR 192

ists since 2005 are part of the twenty teams vents FC I 1272 having spent the most over the past decade. Manhester nte FC E 12

In 2019, three Spanish teams were at the top of 7 Real Mar CF ES 12

the rankings for clubs having spent the most Clb tlto e Mar ES 1110 on transfer indemnities. This finding reflects a 9 verpool FC E 107 cyclical need for squad renewal, but also the availability of considerable financial possibili- 10 Internaonale Mlano FC I 9 ties linked to the establishment of the Span- 11 S Roma I 9 ish top division as the second most powerful 12 S Monao FR 2

league on the planet after the English Premier 1 Mlan C I League. 14 rsenal FC E 0

1 ottenham otspr FC E 7

1 Everton FC E 72

17 FC ayern Mnhen ER 727

1 09 orssa ortmn ER 702

19 SSC apol I 9

20 alena CF ES 11

Figure 4: transfer fee investments by club, € million (2019)

1 Clb tlto e Mar ES 29

2 Real Mar CF ES 24

FC arelona ES 2

4 Internaonale Mlano FC I 212

vents FC I 1

Mlan C I 1

7 Manhester Cty FC E 177

ston lla FC E 174

9 09 orssa ortmn ER 17

10 ottenham otspr FC E 170

11 Sevlla FC ES 1

Manhester nte FC E 1

1 rsenal FC E 10

FC ayern Mnhen ER 10

S Monao FR 10

1 ars St-erman FC FR 10

17 Everton FC E 147

1 Real ets alomp ES 124

19 Chelsea FC E 11

20 SSC apol I 11

3 Monthly Report 47 - Financial analysis of the transfer market in the big-5 European leagues

3. Receipts Figure 5: beneficiaries of transfer fees invested by big-5 league clubs

The analysis of teams who have benefited Clbs n the same leae oer vson lbs 2010-2019 n the same ontry from the transfer fees invested by big-5 league on-EF lbs 8.1% clubs over the last decade shows that most of 6.1% the money stays within these championships: 31.2% 66.0% of the total. A similar percentage was Clbs n other 18.4% EF assoatons recorded in 2019. The high level of these per- centages reflects the fact that the most- ex 1.4% pensive transfers generally take place between oer vson lbs 34.8% n other b- clubs of the five major European leagues. leae ontres With more than one billion euro received since Clbs n other b- leaes January 2010, Monaco is the team having ben- efited the most from investments made by Clbs n the same leae oer vson lbs 2019 n the same ontry big-5 league clubs for the recruitment of new on-EF lbs 9.5% players. Chelsea and Juventus also received a 5.1% lot of money. However, as with the other major 27.8% clubs in this ranking, the amounts received are Clbs n other 19.0% EF assoatons lower than those spent. Only three teams out- side of the five major championships figure in 1.2% the top twenty places: Benfica (4th, €780 mil- oer vson lbs 37.4% n other b- lion), Porto (11th, €592 million) and Ajax (14th, leae ontres

€513 million). Clbs n other b- leaes

Figure 6: clubs having received the most transfer fees by big-5 league teams, € million (2010-2019)

1 S Monao FR 1029

2 Chelsea FC E

vents FC I 77

4 SL Benfica (POR) 70

Real Madrid CF (ESP) 7

Club Atlético de Madrid (ESP) 74

7 S Roma I 72

FC (ESP) 72

9 verpool FC E 71

10 09 orssa ortmn ER 7

11 FC Porto (POR) 92

12 Sevilla FC (ESP) 2

1 CF (ESP) 9

14 FC a E 1

ottenham otspr FC E 1

1 (FRA) 497

17 Manchester City FC (ENG) 492

1 LOSC Lille (FRA) 4

19 FC enoa 19 I 472

20 Paris St-Germain FC (FRA) 4

4 Monthly Report 47 - Financial analysis of the transfer market in the big-5 European leagues

4. Net balance Figure 7: net balances of transfers, big-5 leagues

For an optimum understanding of the econ- E I ES ER FR

omy of the transfer market, aside from the 2010 -2 -7 2 -29 1 amounts spent and the beneficiaries, it is es- 2011 -11 -100 -104 - -17 sential to examine the net balance of opera- tions. Over the past decade, the big-5 league 2012 - 1 4 -124 -9 clubs have recorded a cumulative deficit of 201 - - -74 -141 €8.9 billion. English Premier League clubs 2014 -0 - - -14 1

alone have a total net negative balance of €6.5 201 -720 -197 -1 100 billion. 201 -10 9 -19 -1 11

Despite the considerable investments by Paris 2017 -77 -14 -2 -99 -209

St-Germain (cumulative deficit of €901 million 201 -121 -2 -220 12 over the past decade), the French Ligue 1 is the 2019 -72 -40 -7 -17 12 only championship of the big-5 with a positive net balance (+€359 million). During the last otal -4 -121 -00 -7 9 two years, the net balance of transfer opera- tions carried out by French top division teams have reached historic new heights (+€485 mil- lion overall).

5 Monthly Report 47 - Financial analysis of the transfer market in the big-5 European leagues

The rankings of big-5 league teams with the Figure 8: most positive net balances for most positive balance sheets on the transfer transfers, big-5 league clubs market since 2010 highlight again the excep- 2010-2019 2019 tional case of the Ligue 1. Three teams of the French top division are in the first four posi- 1 OSC lle FR 249 tions of the rankings: LOSC Lille, Monaco and 2 S Monao FR 21 -7 Olympique Lyonnais. In addition, ten of them FC enoa 19 I 19 2

are in the top twenty places. 4 Olympe yonnas FR 174 4 Manchester City, Paris St-Germain, Manches- nese Calo I 19 1 ter United and Barcelona have the most neg- S 199 oenhem ER 19 94

ative net balances regarding transfers over the 7 thlet Clb lbao ES 114 - past decade. Twelve teams from the Premier Montpeller ralt SC FR 111 22 League are also in the top twenty rankings. Moreover, all of the clubs from this champion- 9 talanta C I 109 2 ship have a negative net balance. This reflects 10 RC Espanyol ES 9 the importance of the financial resources 11 Sevlla FC ES -2

available to all of the Premier League teams. 12 S St-tenne FR 1 4 This is a unique situation in comparison to the 1 FC ronns e orea FR 77 2 four other championships of the big-5. 14 olose FC FR 2

1 llarreal CF ES 1

1 Stae Rennas FC FR 2

17 OC e FR 1 -1

1 ners SCO FR 44 2

19 Real Soea e Ftbol ES 7 -14

20 1 FS Man 0 ER -7

Figure 9: most negative net balances for transfers, big-5 league clubs

2010-2019 2019

1 Manhester Cty FC E -1091 -9

2 ars St-erman FC FR -901 -29

Manhester nte FC E - -1

4 FC arelona ES -720 -11

Mlan C I -49 -1

Real Mar CF ES -42 -17

7 vents FC I -414 -1

Chelsea FC E -9 12

9 Internaonale Mlano FC I -91 -12

10 rsenal FC E - -1

11 FC ayern Mnhen ER -09 -

12 Everton FC E -297 -1

1 est am nte FC E -291 -

14 verpool FC E -2 42

1 ston lla FC E -29 -174

1 rhton ove lbon FC E -24 -7

17 olverhampton anerers FC E -21 -1

1 ornemoth FC E -212 -7

19 eester Cty FC E -199 -12

20 R ep ER -191 -7

6 Monthly Report 47 - Financial analysis of the transfer market in the big-5 European leagues

5. Inflation Figure 10: inflation of transfer prices (2011-2019)

400 The algorithm estimating transfer values ex-

clusively developed by the CIES Football Ob- 00 1 servatory allows for the calculation of inflation. Indeed, the statistical model includes a varia- 22 ble for the year during which the paid transfers 200 22 22 included in the sample were carried out. The 2 11 differences observed at the level of this varia- 100 ble thus reflect the annual variations of pric- -22 es, all other factors being equal. This analysis shows that there was a +181% inflation since 2011 2012 201 2014 201 201 2017 201 2019 2011 and that the average growth rate for the five last years was +25.8%. The model was built on a sample of 1,852 paid Figure 11: correlation between estimated values transfers. The correlation between estimated and fees paid, summer 2019

values and fees effectively paid is very high: ranser ees mllon 86%. The correlation between transfers oc- 100 curred during the last transfer window based on a model built on fee paying operations 10 concluded between January 2010 and January 2019 was also very strong: 77%. This confirms R² = 77% the high predictive strength of the algorithm 1 developed by the CIES Football Observatory.

01

Estmate vales mllon 01 1 10 100

7 Monthly Report 47 - Financial analysis of the transfer market in the big-5 European leagues

6. Conclusion Figure 12: main cash balances (>100 million €) for big-5 league club international transfers (2010-2019) The amounts at stake on the football players’ transfer market have strongly increased over 1 remer eae  e 1 124 the past decade. At big-5 league level, the in- 2 remer eae  nesla 77

vestments in transfer indemnities have grown remer eae  Sere 729 from €1.5 billion in 2010 to a new record of €6.6 4 remer eae  a billion in 2019 (+340%). The biggest increase in absolute terms was observed in the English a  OR 14 Premier League (+€1.4 billion), while the most remer eae  OR 24

noteworthy growth in relative terms was re- 7 remer eae  E 4

corded for the German Bundesliga (+395%). a  R 24

The spatial analysis of net financial flows for 9 remer eae  E 04 international transfers concerning big-5 league 10 Sere  E 24

teams illustrates the key role played by the 11 Sere  a 244 Premier League. Since 2010, six out of the sev- 12 C  remer eae 22 en international relations with the greatest net monetary flows involved the English top divi- 1 e 1  OR 221 sion. 14 Sere  R 212

1 nesla  SI 209 Despite the increase in spending and a strong- ly inflationary context, the growing recourse 1 e 1  Sere 201 by clubs to payments spread out over several 17 a  e 1 197

years shows that more and more teams are 1 Sere  R 1

finding themselves at the limit of their financial 19 remer eae  R 1 capabilities. In an ever more speculative and 20 Sere  OR 11 unequal environment, an increasing of clubs, even within the most powerful leagues, 21 C  a 147 include the profits made on the transfer mar- nesla  147

ket into their financial model. This situation is 2 a  E 14

not without danger for their stability, their in- 24 e 1  R 1 dependence and their competitiveness. 2 nesla  E 124

2 e 1  E 114

Sere  CRO 114

nesla  R 114

29 remer eae  SCO 11

0 nesla  e 1 109

1 a  R 10

8