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Grant Tornton UK - Football transfer tracker 2012


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January 2011 saw exceptional levels of investment in the playing staff of Premier League teams. Expenditure during the January 2012 transfer window returned to more frugal levels following the spike of last year. In this edition of our football transfer tracker we consider whether the UEFA’s Financial Fair Play Regulations may have contributed to the drop in transfer activity and the consequences for the transfer market as a whole.

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Grant Tornton UK - Football transfer tracker 2012

  1. 1. Football transfer trackerJanuary 2012Welcome to the latest edition ofGrant Thornton’s football transfer tracker.This report considers expenditure and given the economic climate and inincome from the purchase and sale of particular, the continued uncertaintyplayer registrations during the January in the face of the Eurozone crisis.2012 transfer window, analysing In this edition of our footballdata from transfers involving all transfer tracker we consider whetherclubs in the top three tiers of English the UEFA’s Financial Fair Playfootball,* as gathered by our Sports Regulations may have contributed toAdvisory Group. the drop in transfer activity and the January 2011 saw exceptional consequences for the transfer marketlevels of investment in the playing as a whole.staff of Premier League teams.Expenditure during the January 2012transfer window returned to morefrugal levels following the spike oflast year. Perhaps this is unsurprising* Barclays Premier League, nPower Championship and nPower League 1
  2. 2. Football transfer trackerOverview of January 2012transfer activity Has austerity finally caught up with English football? Figure 1 compares income and expenditure from player transfers during the 2011 and 2012 January transfer windows. Gross expenditure by teams in the top three divisions reduced by 69% from January 2011. This is partly due to the massive circulation of fundsFigure 1: Gross income and expenditure which occurred in January 2011 with Fernando Torres moving from January 2012 transfer window January 2011 transfer window Paid Received Net Paid Received Net Liverpool to Chelsea for £50million £m £m £m £m £m £m allowing Liverpool to splash £35million Premiership 58.7 (35.9) 22.8 214.7 (128.3) 86.4 on Andy Carroll from Newcastle. Championship 8.2 (15.2) (7.0) 7.7 (8.6) (0.9) However, of perhaps greater League 1 1.3 0.0 1.3 1.0 (3.4) (2.4) significance, is that net expenditure, after 68.2 (51.1) 17.1 223.4 (140.3) 83.1 deducting revenues from player sales, reduced by 79%. From Figure 1 it can be seen that this is primarily driven by aFigure 2: Gross transfer fees paid and recieved by Premier League teams contraction of Premier League transferduring January transfer windows. activity. Beyond the Premier League,£250m January 2012 transfer activity was broadly 215 similar to January 2011.£200m 190 A conservative January transfer£150m 143 window is not unprecedented. As 128 135 Figure 2 illustrates, January 2010 saw£100m 78 even lower levels of both income and 60 59 £50m 34 36 expenditure than the most recent 33 23 transfer window. 0 The conservative approach adopted 2007 2008 2009 2010 2011 2012 in January 2010 was short-lived. Transfer Gross expenditure Gross sale proceeds fees paid by Premier League clubs during January 2011 smashed through the £200m barrier for the first time in a January transfer window.
  3. 3. Football transfer trackerWill January 2012 prove to be another Figure 3: Net expenditure of the Premiertemporary dip (similar to January 2010) Leagues top six clubswith investment in players bouncing Net (income)/Expenditureback in January 2013? January 2012 2011 There is now another force at £m £mwork which might see the exceptional Manchester City (2.5) 27.0expenditure of January 2011 being Manchester (4.2) 3.2consigned to the history books. United Tottenham (7.5) 4.7Financial Fair Play Regulations Hotspurstart to bite Arsenal 0.4 (0.8)UEFA’s Financial Fair Play Regulations Chelsea 11.0 71.3are effective for the financial year Liverpool 0.1 1.9ending in the 2012 calendar year. Total (2.7) 107.3That means income and expenditureduring the January 2012 transferwindow will contribute directly to aclub’s compliance, or breach, of the In January 2011 Manchester City Whilst the regulations applyregulations. It would seem that clubs spent £27m acquiring Edin Dzeko from directly to clubs trying to get intowith ambitions of playing in Europe in Wolfsburg to bolster their attack. They European competition, it seems likelythe near future are taking this seriously. could have invested again this year in a that they will influence the transfer Figure 3 shows the net expenditure bid to strengthen their title challenge. system as a whole. In the recent pastof the Premier League’s top six clubs (as However, they elected to make no new transfers in excess of £20m have notper the Premier League table at the start permanent signings. Financial Fair Play been uncommon. This has probablyof 2012) for the 2012 and 2011 January Regulations were perhaps an influential inflated prices further down the transfertransfer windows. factor in this decision. Similarly, Chelsea spectrum either by reinvestment of Of the top six teams as of 31 cut their expenditure by £60m despite the monies received from the bigDecember 2011, only Arsenal increased being at risk of missing out on a top deals or inflated player valuations bytheir net spend when compared to last four finish and a place in the lucrative comparison. Whilst a general reductionyear’s January transfer window, and Champions League; in fact two top in expenditure and player valuationsthe respective amounts were small. earners, Alex and Anelka, were moved on. theoretically puts teams on a more levelManchester United, Manchester City Assuming Financial Fair Play’s playing field, financially, it could pose aand Tottenham Hotspur, who each look influence remains effective, it seems threat to some clubs who rely on playerwell-placed to qualify for next season’s unlikely that expenditure on new players sales to balance the books.Champions League, all returned net will bounce back like it did after Januarygains from transfer activity during 2010’s comparatively meagre outlay.January 2012.
  4. 4. Football transfer trackerAbout us Contact us For further information please contact:Grant Thornton UK LLPis a leading business andfinancial adviser with officesin 27 locations nationwide.We are a member firm within Grant Thornton International Ltd, one of theworld’s leading international organisations of independently owned and managedaccounting and consulting firms. Clients of member and correspondent firmscan access the knowledge and experience of 2,600 partners and 30,000 employees Geoff Mesherin over 100 countries and consistently receive a distinctive, high quality and Partnerpersonalised service wherever they choose to do business. T 029 2034 7547 E and Investigation ServicesOur Forensic and Investigation Services team provides a full suite of investigation,forensic accounting and dispute resolution services. It combines forensicaccounting and business expertise with insights into the workings, perceptionsand needs of clients, their advisers and enforcement agencies. Known for itsindependent and objective advice it is the fourth largest dedicated forensic teamin the UK with a national team comprising 13 partners and directors and over 100highly skilled staff. The UK team is supported by more than 30 accredited forensicteams worldwide through the GTI member firms network.Sports Advisory GroupGrant Thornton’s Sports Advisory Group is a national, multi-disciplinary teamproviding both core accountancy and advisory services to sports clubs andsports governing bodies across the UK. Our experience covers a broad spectrumof sports including Football, Rugby, Cricket, Tennis, Golf and Motorsport. David PatonWe work with our clients by delivering specialist advice in Corporate Finance, Sports Advisory GroupPrivate Equity, Restructuring and Forensic Services as well as the more T 020 7728 2757traditional Audit and Tax services. E© 2012 Grant Thornton UK LLP. All rights reserved. ‘Grant Thornton’ means Grant Thornton UK LLP, a limited liability partnership. Grant Thornton UK LLP is a member firm within Grant Thornton InternationalLtd (‘Grant Thornton International’). Grant Thornton International and the member firms are not a worldwide partnership. Services are delivered by the member firms independently. This publication has beenprepared only as a guide. No responsibility can be accepted by us for loss occasioned to any person acting or refraining from acting as a result of any material in this