Are Premier League Clubs Overspending On Their Players?

A major conflict has been occurring in the football world over the past few years, and this is related to how much football clubs are spending on their players, in particular in the Premier League. The Premier League is possibly the most prestigious football league in the world, due to its unpredictability and competitiveness. However, with some of the world’s biggest teams such as Manchester City and Chelsea spending millions of pounds on players each year, not including their player’s wages, it’s no surprise that people are querying whether or not this is classified as overspending. Here, we’re taking a closer look at whether or not the Premier League is indeed overspending on their players.

We’re So Rich It’s Unbelievable

A report produced by financial analysts Vysyble documents all of the accounts from Premier League clubs between the 2008/09 season all the way through to the 2015/16 season. This particular report indicates that not only are Premier League clubs overspending on their players, but they’re also facing bankruptcy, and that these long-term losses are resulting in the ever-growing gap between the top teams in the Premier League and the mid- to low-table clubs. It is this growing gap which is driving numerous betting sites to offer free bets on some of the easiest games to predict, as even though there are a few dark horses which tackle the status quo, generally the big teams will dramatically outclass the lower-table teams.

Not only are players increasingly becoming expensive to buy (we’ll take a look at that later on), but the money that TV is bringing in on an annual basis isn’t enough to cover other financial aspects such as the amount players are demanding as part of their contracts. Negotiations and agent fees are also increasing dramatically, and even with some restrictions being put in place after Portsmouth’s financial collapse in 2012 which was caused by excessive overspending, this doesn’t appear to be making much of an impact. The report suggests that in 2015/16 only five clubs out of the entire Premier League actually made a profit, showing just how much of an impact this is having.

Purchasing Players

Since Chelsea’s purchase of out-of-form Fernando Torres from Liverpool for £50 million, the price of players has skyrocketed. There have been a number of reasons for this, and now players are worth over £100 million, with clubs no longer batting an eyelid at these extortionate prices. Due to investment from overseas, particularly for the big clubs, even if the clubs aren’t making profits, they’re still able to overspend on the players that they want in order to enjoy Premier League success, and success in other cups too. A key example of overspending on players is Manchester United. So far this season, the club has spent £147.96 million on just three players: Romelu Lukaku, Nemanja Matic and Victor Lindelof. The season before, Manchester United spent £166.50 million on again, just three players: Paul Pogba (a record-breaking transfer), Henrikh Mkyhitaryan and Eric Bailly. This means, in total, in just two season the club has spent a whopping £314.46 million! Interestingly, the players themselves don’t actually think this is enough to help them win the league, with new signing Lukaku suggesting the club actually needs to spend more – it’s safe to say we wouldn’t suggest that this player should have a career-change in accounting.

Player Wages

In 2012, a thinktank reported that football player wages have increased by a whopping 1,500% over the past 20 years, which is a huge increase. Unfortunately, it isn’t always the clubs that are having to pay for these wages, and instead, the fans are having to make up this shortfall within ticket prices, as the tickets for the top games have increased dramatically also, with some prices increasing by over 1000%. One of the main problems regarding player wages is that, in more recent times, player wages are kept very secret, and in some cases their transfer fees and prices are also undisclosed. Generally, the cost of obtaining and keeping a world-class player is exceptionally unsustainable, and for a normal business the amount of economic debt these clubs find themselves in just to keep a top player in the squad is phenomenal. While player wages have increased by this amount, over the same amount of time average UK wages have increased by just 186%.

Financial Fair Play Rules

As previously mentioned, the gap between the bigger teams in the Premier League and the smaller teams is continuing to grow, meaning the results of Premier League games are easier to predict than ever before. In order to attempt to tackle this, UEFA put in place a number of financial fair play regulations, which came into play in the 2011-12. In order to ensure that clubs took this seriously, a number of severe sanctions were introduced, with the threat of being disqualified from European competitions. The aim of these financial fair play regulations was to stop the downward spiral of clubs losing money and who haven’t paid their debts. Essentially, financial fair play regulations were designed to ensure that football clubs were beginning to ‘live within their means’.

Atletico Madrid were one of the big teams which actually fell afoul of the financial fair play rules, as a result of the debt that the club had built up with Spain’s treasury. As this was bought to light, another issue was unearthed, as the club was unable to keep up with the instalments on Falcao’s transfer fee when he moved to the club in 2011. While these financial fair play rules have been put in place, many people are querying the legitimacy of these regulations, as PSG were able to purchase Neymar for €222 million.

As you can see, there are a huge number of ways that clubs are overspending on their players, but one key question remains; when is enough, enough? It appears that while the financial fair play rules have put some restrictions for clubs, particularly in La Liga, there are clubs around the world that still appear to spending much more than their profits should allow. With prices for tickets, memorabilia and shirts increasing dramatically, it’s likely that the fans will be impacted by this overspending and not the clubs themselves.