Analysis: Saudi role in transfer market revival in pandemic

For a government in turmoil, there’s little to celebrate in the corridors of power in London. Except, perhaps, the financial heft of England’s soccer clubs and their ability to spend on players.

The news of Premier League spending over the last month reaching 295 million pounds ($400 million) was celebrated by sports minister Nigel Huddleston in the hours after clubs completed their final trades of the season.

“Good to see the Premier League recovering so strongly from the pandemic,” Huddleston tweeted, “with January transfer window spending levels at second highest ever.”

In fact, deducting the amount recouped from sales from total expenditure showed that Premier League clubs had the highest net spend of 180 million pounds since the January transfer window was introduced in 2003, according to a tally by accountancy firm Deloitte.

The ability to so significantly revamp squads in midseason has shown the resilience of the world’s richest league to weather the financial impact of the coronavirus, helped by the government ending all capacity restrictions that have continued to impede rivals in Europe.

But it’s the government’s warmth toward investment from Saudi Arabia that has also contributed to the headline figure trumpeted by Huddleston.

In the first transfer window since the takeover of Newcastle by Saudi Arabia’s sovereign wealth fund was approved by the Premier League — defying the pleas of human rights activists but reflecting Britain’s embrace of the kingdom — the northeast club accounted for 90 million pounds in player spending. And the Public Investment Fund would have splurged even more, as it pursued more than the five deals it got over the line before Monday’s transfer cutoff.

Now this is the squad Newcastle is stuck with until May in its mission to ensure its first season with the wealthiest owners in world football does not end in relegation. Escaping the drop zone means only wiping out Norwich’s single-point edge on Newcastle with 17 games remaining. To that end, manager Eddie Howe has been given three new defenders, a midfielder and a striker.

Kieran Trippier, who was part of England’s run to the 2018 World Cup semifinals and Euro 2020 final, is the recruit with the most star power.

It is only the start — delayed if Newcastle does drop into the second tier — of a commitment by the club to use its wealth to rival the superpowers for talent in the way Manchester City rose from mediocrity to win half of the last 10 Premier Leagues thanks to its Abu Dhabi bank account.

Players need little convincing now to join City, although this was a more restrained transfer window, reflecting the nine-point lead enjoyed by Pep Guardiola’s side at the top of the Premier League. After letting Ferran Torres join Barcelona for around $60 million, City spent only a third securing another young attacker with potential — the 22-year-old Argentine, Julián Álvarez — who will be played from next season.

While the most expensive single signing was the 60 million euros second-placed Liverpool committed to signing Luis Diaz from Porto, the other teams in the top five — Chelsea, Manchester United and West Ham — spent nothing.

Instead, more than half of the league’s spending was by teams in the bottom five, with an estimated outlay of 150 million pounds by them, according to Deloitte.

The desperation to avoid relegation is reflected by Everton, which is in 16th place and four points above the drop zone, spending more than 50 million pounds on players on top of the cost of replacing manager Rafa Benitez with Frank Lampard.

“This transfer window indicates that the financial pressures of COVID on Premier League clubs are easing,” said Dan Jones, head of sports at Deloitte, “with spending firmly back to pre-pandemic levels and remarkably among the highest we’ve ever seen in January.”

It reinforces England’s elevated status apart from its European rivals, underpinned by a growth in the value of international broadcast rights. The second-biggest spenders in January were Serie A clubs whose total of 175 million euros (almost $200 million) was almost half the outlay by Premier League rivals.

Next were La Liga clubs who spent 75 million euros on transfers, followed by 65 million euros across Ligue 1 in France and 60 million euros by the Bundesliga.

Calum Ross, assistant director in the Sports Business Group at Deloitte, commented: “In stark contrast to January 2021, the wider European transfer market appears buoyant. Many clubs are starting to bounce back from significant COVID-induced reductions, with rising revenues re-activating activity within the transfer market.”

While total spending across Europe’s big five leagues rose to 735 million euros from 460 million euros last January, the figure was almost 1 billion euros in 2020 before the coronavirus spread across Europe, disrupting leagues and revenue streams.

“Provided fans continue to return to stadiums and disruption to the football season ahead remains limited,” Ross said, “we should see revenues, and therefore transfer spend, continue to increase in the seasons ahead.”

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Rob Harris is at https://twitter.com/Robharris

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