Premier League clubs spend more in January than other top 5 leagues together

Rohan Banerjea

On Tuesday, the January transfer deadline put an end to the recruitment for football clubs this winter. In what has been an eventful month for Premier League teams, who have spent an incredible €829,807,000, English football has spent more than Spanish, German, Italian and French clubs altogether. With seventy-three players coming into the Premier League, the second half of the season is shaping up to be an exciting one, especially with the title, European qualification and relegation all in the balance. But why has Premier League spending exceeded foreign spending by so much? And is it a good thing or a bad thing?

One reason for such high transfer spending is the wealth of Premier League owners compared to that of the other big five leagues. The mean combined net worth of Premier League owners is $37.2 billion, whereas the owner with the highest net worth elsewhere in the big 5 is Idan Ofer (owner of Atletico Madrid) with $10 billion. Consequently, investment in Premier League clubs is higher than that of other leagues. But why do Premier League teams have wealthier owners?

There are two main reasons. Firstly, revenue from Premier League clubs is higher on average than other clubs. Premier League revenue in the 2021/22 season was £2.6 billion, followed by La Liga, which generated a revenue of merely $1.5 billion. Most of this money comes from television advertising and subscriptions. Despite such high numbers, it has been historically very rare for football clubs to turn a profit. But due to more recent financial fair play (FFP) rules, football clubs have become more sustainable as businesses. The Premier League has an annual worldwide TV audience of 4.7 billion. La Liga, yet again the next competitive league, has only 2.8 billion. The popularity of Premier League football worldwide is unequivocally a factor in the investment from the wealthy.

A second reason is that owners buy football clubs (and other sports teams) to boost their profile and test themselves. Chelsea’s ex-owner, Roman Abramovich, said upon buying the club in 2003: “I was bored and wanted a new challenge”. Motivations for taking over a club aren’t entirely lucrative and usually, if the owner is hoping for the takeover to be financially worthwhile, they can end up disappointed. Tottenham Hotspurs’ ex-owner Alan Sugar described his time at the club as a “waste of 10 years of my life”.

Despite poor performances as businesses in the past, Premier League clubs are starting to become more attractive to foreign investors. But is this investment a positive thing, and what could it mean for Europe’s other leagues?

In the English game alone, the disparity between the Premier League and the EFL is so significant that the total market value of the 20 Premier Clubs is €10.16 billion, whereas the total for all 72 EFL clubs is €1.535 billion. Since the 2014/15 season, only five non-Premier League teams have made it to the FA cup's semi-finals or the EFL cup, out of sixty-eight opportunities to do so. Foreign investment has made it nearly impossible to compete with teams from the Premier League, and this disincentivizes investment at the lower levels of the game

However, the Premier League has multiple ways of reducing this disparity. Premier League teams are not allowed to register more than seventeen non-home-grown over-21 players. This encourages clubs to pay transfer fees to other English teams, who might be lower down the English pyramid. In addition, FFP rules prevent clubs from spending huge sums of money. Premier League clubs are only permitted to spend 70% of their total revenue on transfer fees and player wages. This also stops wealthy owners from injecting too much of their own money into clubs. Moreover, it means that clubs have to expand their facilities to spend more on players. For example, West Ham United’s move to the London Stadium has allowed the club to become a lot more powerful in the transfer market, due to additional revenue from ticket sales. Investment and infrastructure projects such as the construction of the Tottenham Hotspur Stadium and the upcoming Everton Stadium at Bramley-Moore Dock will also strengthen bids by the FA for an English World Cup or Euros, which could benefit all of English football.

Premier League investment has also made it difficult for European teams to compete with English clubs in UEFA’s club competitions. Since 2014/15, Premier League clubs have only failed seven times to overcome the group stage in the Champions League or Europa League. This demonstrates the Premier League’s dominance in the continent, dominance that has been aided by high spending.

After a successful transfer window for the Premier League, questions have arisen about the potential impacts of such high investment on the game as a whole. It is undoubtable that investment has made the Premier League the best in the world, but this could cause problems in other leagues, including ones in our own country.