Premier call for 1bn in the time of CR7 highlights everything that’s wrong in football

WE’VE SEEN it before with bail-outs during the 2008-09 financial crisis, but the latest move by the Premier League, seeking a £ 1 billion fund to help their cash flow, smacks of the rich seeking to make their life easier by holding out their bowl and pleading, “can I have some more”.

The UK government’s economy-saving measures in 2008 were actually essential, and didn’t save jobs by any means, but when an industry founded on financial excesses and no small amount of greed looks for a leg-up, it does leave a bitter taste in the mouth. 

The Premier League spent £ 1.1 billion in the last summer transfer window, hardly the behaviour of a crisis-torn competition. Admittedly, clubs are rarely asked to pay every penny of their transfer fees in one tranche, but as a demonstration of their hubris and over-confidence, it doesn’t look like good public relations – particularly when the rear-end has almost fallen out of other sectors of society. 

Advocates of the Premier League’s approach may point to a downward trend that has seen transfer fees fall to their lowest level since 2015, but it’s undeniable that top level football has lived beyond its means and has little margin for error.

One of the problems for the Premier is that conventional financiers are generally shy of lending money to football clubs, mostly because of risk management concerns as well as reputational issues – nobody wants to call time on a club if they cannot pay their debts.

But those that will provide facilities try and leverage the huge appeal of the Premier and offer assistance at uncompetitive rates. For example, one family office lent money at 9% to a Premier club, in an era of historically low rates. Clubs have been using factoring of broadcasting and transfer revenues to raise capital, but they’ve reached a point where the cost has become prohibitive.

The Premier League wage bill amounted to £ 1.6 billion in the 2019-20 season, with the average wage £ 3.2 billion. The average for Manchester City was £ 7 million. That’s small beer compared to what Manchester United are currently paying Cristiano Ronaldo, and it is the arrival of CR7 that really makes the Premier League’s hope of help almost obscene.

United did not need Ronaldo, indeed their biggest problem was midfield, but the circus element of signing the Portuguese icon was too much to resist. Now, every United performance is scrutinised even more than it was before and their manager at times looks like a dead man walking. Moreover, the CR7 deal is already being picked apart as serious over-indulgence that underlines the sheer hedonism of the Premier League. United have paid £ 20 million and £ 20 million per year for a 36 year-old, undoubtedly bending a few people out of shape in the process. 

But what does the Ronaldo deal tell us about the Premier, and their subsequent hard luck story around their financing woes? It reminds us that despite the worries of the past couple of years, the most over-hyped league in Europe feels somewhat untouchable. Did they seriously think that looking for financial help would not attract criticism when it so willingly makes decisions that portray the league as a slave to conspicuous consumerism?

Juventus and project CR7

SOMEWHAT grim news from Turin has given the first indications of the massive financial loss suffered by Juventus in the 2020-21 season. It coincided with the departure of Cristiano Ronaldo from the club and a lack-lustre start to the new campaign for the bianconeri.

The jury is still out on whether the Ronaldo era at Juve was a success. In some ways, the club benefitted, but the objective of signing a 30-something striker on huge money was to win the UEFA Champions League. Given Juventus reached two finals in a three-year period (2015 and 2017) without him, two last 16 exits and a quarter final defeat (all against teams with lower budgets and squad values) represented failure. Furthermore, Juve’s run at the top came to an end after nine consecutive scudettos. Ronaldo scored 81 goals in his three years, so from a personal perspective, he kept his side of the bargain, but Juve’s team has been in decline.

Financially, Juve’s total losses in the past three years amount to € 320 million, the 2020-21 figures, thought to be € 190.7 million, are more than double the previous season. Little wonder the club’s president, Andrea Agnelli, was one of the leading advocates of the European Super League project. 

There can be no denying that Cristiano Ronaldo, notably in the last pre-lockdown season, 2018-19, was the catalyst for revenue growth at Juve. In 2018-19, matchday revenues (which were wiped out in lockdown) grew by 25% and merchandise income went up by 58%. As for the value of the club’s jersey, the total income rose from € 40 million to € 101 million over the course of the Ronaldo years.

Was it realistic to expect that the addition of Cristiano Ronaldo was the final piece in the jigsaw for Juve? Most people are not too surprised that he did not inspire them to the biggest prize as they simply did not have enough top players to achieve their goal. They also had an ageing squad, which they have, admittedly, tried to remedy. But it was too much to believe CR7 would catapult the club over Manchester City, Paris Saint-Germain, Bayern Munich and Chelsea.

One player who was on fire before Cristiano Ronaldo’s arrival was Pablo Dybala, who netted 22 goals in 2017-18, but in three years, he scored 20 in 83 games. He was 24 when CR7 joined and still had his best years ahead of him. He’s now 27 and at his peak, but his stock has fallen since 2018 as he was pushed, to a certain extent, into the shadow of his legendary team-mate. Cristiano Ronaldo is a corporate brand, hence he has swiped the number seven shirt of Edinson Cavani at Manchester United. Even at 35, Juve were tailoring their game around him.

In 2018, Juve had, in their ranks, around seven or eight players who would gain entry to anyone’s top 100 footballers in the world. By the end of Ronaldo’s stint at the club, probably only three – CR7 himself, Dybala and Ligt – could be considered that highly. Some have aged, some have departed, but mostly, Juve have been victims of old father time.

Juventus were unlucky in that Ronaldo’s three years were blighted by covid-19 as the club lost substantial sums around matchday income. In order for the transaction to work, Juventus needed to build a team around him rather than hope that their existing set-up could accommodate him. 

Manchester United may find they have the same problem, although they have bought well in the summer transfer window. Juve, by contrast, are suffering from their financial problems and their new arrivals are predominantly frees. While Juventus were hoping that Cristiano Ronaldo would win them the Champions League, Paris Saint-Germain’s squad is far better equipped to achieve that goal with Lionel Messi in their line-up.

Investing in long-in-the-tooth players doesn’t always work out, although there is no doubt that both Ronaldo and Messi are exceptional and extraordinary. It is tempting to suggest buying a player of their age group is a little like acquiring a vintage car – great when they perform but vulnerable to break-down costs. Sometimes, great players arrive too late for some clubs – when Chelsea signed Andrei Shevchenko in 2016, for example, he was approaching 30 and his golden years were behind him. You could also argue that Fernando Torres was also past his best when Chelsea paid £ 50 million for him in 2011. Both players were coveted by the club’s owner, Roman Abramovich but both failed to live up to their billing.

Superstar players cannot do it on their own, though. George Best is a good example, his last medal was won in 1968 with Manchester United, while Bobby Moore never got near a league title when he played for West Ham. Pelé’s last major club honour with Santos was in 1968 when he was 27. Johan Cruyff won La Liga with Barcelona in 1974 but his only other medal with the club was the Copa del Rey in 1978.

Nobody is suggesting Ronaldo or Messi will be flops at their new clubs, but there is a high risk factor involved. No matter how fit and agile they may be, age has a habit of creeping up on a player. A bad injury could derail the project, and in their mid-30s, recovery times can be prolonged. 

The way heaven and earth has been moved to make these transfers work is a little demeaning for the clubs involved. Would in their pomp Manchester United have gone all out to sign a 36 year-old? PSG is slightly different given they are a club in a weaker league with a burning desire to create credibility and power for themselves. Not everyone agrees, however. La Liga’s president, Javier Tebas, unimpressed by the club’s soft power plays, has called PSG the “enemy” and “as dangerous as the super league”. 

The media and fans want to see Ronaldo and Messi continue for as long as possible. As well as being good copy for journalists, they are the digital age’s first superstars, two giant brands that people identify with. Life without them will seem strange, but new stars will come along. To expect their effectiveness to continue is unreasonable, though, and especially in the case of Cristiano Ronaldo, he’s playing in a tougher league in his autumn years. It will be a challenge for both player and employer. Juventus, meanwhile, after spending well over € 250 million on the CR7 saga, will probably welcome the relief on their balance sheet.

US$ 50 billion spent in a decade – the transfer market may have peaked

FIFA has published a review of the global transfer market over the 10-year period between 2011 and 2020, revealing that US$ 48.5 billion was spent on transfer fees over the course of that particular decade. 

In a week in which the biggest transfer news has involved a 36 year-old moving from one elite club to another, there’s a reminder that only 0.9% of all transfers involving fees in 10 years have included players over 35 years of age. Some 35% of fees are actually spent on players half the age of Manchester United’s Cristiano Ronaldo.

There were 133,000 transfers over the 10-year timeframe, with 15,128 involving Brazilian players and almost 7,500 linked to Argentinians. A total of US$ 7.1 billion was spent on Brazilian players. The highest numbers outside of Europe and South America are the 3,793 from Nigeria and 2,848 from Ghana. 

The biggest individual fees have been the deals for Neymar, Eden Hazard, Philippe Coutinho and Ousmane Dembele. Barcelona, one of the biggest spenders, were involved in three of those transactions. 

FIFA name Manchester City as the top spender with 130 incoming players, Chelsea come in second with 95. According to Transfermarkt, City spent £ 1.38 billion between 2010-11 and 2019-20, one of seven clubs to spend over a billion. 

The top 30 transactions have involved Europe’s biggest clubs, led by Barcelona and Manchester United, who have been instrumental in six apiece, either as buyer or seller.

Given the number of players transferred from Brazil, it is no surprise the biggest trade route is Brazil to Portugal, which has included 1,556 transfers. Portuguese clubs have long been experts at player trading and the Lisbon duo, Benfica and Sporting, led the way in transfer income over the 10 years. Furthermore, Porto are not far behind. These three clubs, along with Ajax Amsterdam, were the top clubs when it comes to generating a positive net balance from transfer activity. Benfica, Sporting and Porto were also among the top clubs in the lending market, along with Manchester City and Chelsea. 

England, predictably, was the biggest spender in FIFA’s report, a total of US$ 12.4 billion, which is almost double Spain’s US$ 6.7 billion and nearly treble Germany’s US$ 4.4 billion. Consider that in 2011, England’s total spend was US$ 0.52 billion, while in 2020 it was US$ 1.63 billion, a growth rate of 313%. Although the figures are substantially lower elsewhere, Germany and France have seen their expenditure go up by more than 300%.

England had the highest negative result from transfer income and expenditure, some US$ 7.3 billion. The country with the biggest positive was Portugal at US$ 2.9 billion, followed by Brazil (US$ 2 billion) and Netherlands (US$ 1.3 billion). 

Unsurprisingly, England paid more out in intermediary commission than any other country. Almost a billion dollars was spent on total agent fees, an astonishing figure. Italy paid US$ 762 million and Germany US$ 375 million. 

Considerable time is devoted to players and their contracts but the number of expired contracts that prompt a transfer, at 39%, seems rather high. Conversely, only 44% of transfers have sell-on fees included, which is perhaps low given almost 35% of transfers involve very young players that could go on to greater things.

The signs are the pandemic has acted as a break on the transfer market. In 2020, transfer fees declined by around 25% to US$ 5.63 billion. With the economic impact likely to continue for the next season, the transfer market may be less vibrant than it has been over the past decade. While this is not necessarily a bad thing, the clubs that rely on player trading will almost certainly feel the squeeze. At some point, the market will peak, it might just be now.