Major tournaments boost demand for star performers, but top clubs don't go in blind

For die-hard football fans, the next few weeks bring a bounty of international football with two continental championships, the Euro 2016 and the Copa America Centenario.

What is the impact of these tournaments on transfer business? Is there a spending spree after World Cups and European Championships? Can transfer fees be affected by player performance in a handful of high profile games?

If we look at the transfer windows for the "Big Five" European Leagues - La Liga (Spain), Bundesliga (Germany), Ligue 1 (France), Serie A (Italy) and the Premier League (England) - since the 2008 European Championships, and contrast the major tournament years of 2010 and 2014 (World Cups) to 2008 and 2012 (European Championships) with the non-tournament years, there is actually no evidence to suggest that the tournaments result in increased spending.

In fact, spending across Europe in the 2008, 2010 and 2012 summer transfer windows fell from the previous year; and in 2014 while it was up very slightly on the previous year (€2.26 billion v €2.257 billion), it would be far below the spending one year later (€2.943 billion).

It seems major championships, like the Euro, don't drive up transfer rates but could actually slow them down. Here's a look at the overall spend for each league since 2007.

While the post-World Cup summer transfer window of 2014 saw a then-record £835 million spent by Premier League teams - £205 million more than the previous record (2013), the previous World Cup window in 2010 saw just £365 million spent by Premier League clubs, which was down from the £450 million of the year before.

Across the Big Five leagues, the 2010 summer spend was just€1.287 billion compared to €1.979 billion the year before. The last European Championship window in 2012 saw £490 million spent by Premier League clubs, but this was just £5 million up on the previous year and would be significantly below the £630 million to come in 2013. Across the rest of Europe, the expenditure actually fell from 2011 with spending in Spain and Italy dropping off.

It could lead one to question whether the major tournaments are actually an impediment to transfer activity, as Arsenal manager Arsene Wenger once suggested, since they mean that the participating players cannot be part of any discussions during the duration of the competition.

The factors in determining transfer spend, in the modern age of mega-rich owners and blockbuster TV deals, are often simply the prevailing economic climate and the appetites and directions of the largest clubs.

So huge are their budgets that in 2014, Manchester United spent what was then the largest ever gross amount of any Premier League team (now surpassed by Manchester City in 2015) as part of an attempt to rebuild and restore their status.

This year, the English Premier League is expected to beat all previous window spending records, but more because of their lucrative new £5.14 billion domestic TV deal combined with wholesale rebuilding at Man City, Man United, Liverpool and Chelsea (all with managers in their first summer window), rather than necessarily because of any effect from Euro 2016.

It has in fact paid the clubs their share of the money early this year, leading to suggestions that this was done to enable the clubs to draw on the finance to support spending around Euro 2016.

However, while the overall transfer spending may not show an increase around tournaments, individual player pricing often does surge with the sudden appeal of tournament stars. The 2014 World Cup in Brazil, for example, threw up a few cases of "before and after" pricing.

James Rodriguez was one of the stars of the tournament, leading to Real Madrid snapping the Colombian up for an estimated 80 million euros. He had joined Monaco only one year before for 45million euros, and his return of 11 goals in 34 games did not justify the transfer fee that followed. Much of it must have be attributed to his tournament exploits and being the latest "status symbol" for Real to turn into one of their Galacticos.

Not all over-payments happen after successful tournaments. They can also occur before a poor tournament.

For example, it is unlikely that Chelsea would have received the £50 million they got from Paris Saint-Germain for David Luiz in June 2014 had the transfer been conducted after Brazil's 7-1 semi-final defeat by Germany.

We can only speculate on who will be the emerging stars who earn themselves moves this year, with rumours already circulating that big name players like Paul Pogba (France), Robert Lewandowski (Poland), Zlatan Ibrahimovic (Sweden) and Eden Hazard (Belgium) may be on the move.

However, it could be the up-and-coming stars like Ante Coric (Croatia), Kingsley Coman (France), Federico Bernardeschi (Italy), Victor Kovalenko (Ukraine), Andre Gomes (Portugal) and Arkadiusz Milik (Poland) whose values could soar.

Players like Divock Origi, Matteo Darmian, Marcus Rojo, David Ospina and Enner Valencia all played themselves into moves to the Premier League after their showings in Brazil.

Today, with 24/7 coverage on television, Internet and social media, there are now very few "unknown" players breaking through at tournaments. It is highly unlikely that many players at the European Championships would not be known to the big clubs; the question is instead if any of them can increase demand through their performances.

Former Man United manager Alex Ferguson once spoke of his differing experience in dealing with the transfer window around the 2006 and 2010 World Cup Finals. In 2006, he had his eye on Owen Hargreaves, then of Bayern Munich and valued at around £8 million. However, after Hargreaves was perhaps the only England player at the 2006 World Cup to emerge with any credit, by the time Ferguson got his man one year later, the price grew to £18 million.

Having had his fingers burnt once, Ferguson was quicker on the draw in 2010 to signing Javier Hernandez in April for just £6.9 million before "Chicharito" exploded onto the stage in South Africa. Timing can be everything.

In a similar vein, the sports pages were abuzz two weeks ago with Arsenal's attempt to exploit the £20-million release clause for Jamie Vardy. The Gunners' timing was very deliberate, as they were seeking to push through a deal before the Euros, in case his stock rises further and more suitors enter the fray - just as they had done with the signing of Granit Xhaka.

Vardy's choice to postpone his decision until after the tournament is now problematic for Arsenal, who face an anxious wait of at least two weeks and possibly up to five for his response - a period during which their other targets may be snapped up by rivals.

In contrast, Bayern Munich have been the big movers ahead of Euro 2016, already poaching Mats Hummels and Renato Sanches - perhaps in part to avoid the latter's price rising in the coming weeks on the big stage.

The differing styles of football - and immigration regulations - in the respective European leagues also affect their summer priorities. For example, work permit regulations mean it has traditionally been easier to sign South American players into the Spanish, Portuguese and Italian leagues than the Premier League; which is compounded by the perception that Latin players may not adapt so well to the English game.

That said, while the Premier League prioritise the European Championship, where most of the players would be easy to import and in theory more compatible, the Copa America offers a different set of targets for La Liga in particular, and often provides better value for money.

So while the eyes of the world turn to the playing fields of France - and, to a lesser extent, the US - this summer, one can assume that the big clubs are increasingly scouting these tournaments to see another side of a player they probably have already targeted, rather than basing their recruitment policy on as little as three games.

One thing you can be sure of this year is that, despite a shortened window due to the tournaments, the impact of the Premier League windfall will send transfer shockwaves around Europe and as a result many Euro 2016 stars could start the new season with a new team.

* James Walton is a Clients & Markets Partner for Deloitte Singapore and South-east Asia, and heads the Sports Business service line.