Premier League malaise could infect others

LONDON • The financial squeeze put on Premier League clubs by the coronavirus crisis may be felt across Europe in the coming months as the well to fund massive transfer fees runs dry.

In the past three summers, its teams have flexed their financial muscle, splurging over £1 billion (S$1.78 billion) on transfers.

The English top flight has led the way in terms of spending across European football's "Big Five" leagues for three years in a row, according to Deloitte's Sports Business Group.

They have also helped spread the wealth of TV deals worth billions of pounds, not only across Europe, but down the divisions to cash-strapped lower-tier English clubs.

But now, even the world's richest league is facing an economic meltdown. Top-flight matches have been suspended indefinitely, with no return expected before mid-June at the earliest.

Broadcasters could be due a rebate worth a reported £762 million if the season is not completed - the Daily Mail has reported that clubs are contractually obligated to complete the season by July 12.

And even if and when the games restart, they are likely to be held behind closed doors, quashing critical income from gate receipts, merchandising, food and beverage, and corporate hospitality packages.

Moreover, a number of major sponsors such as airlines and gambling companies have been just as badly hit by the Covid-19 shutdown, which is expected to lead to a curb on commercial revenue.

As a result, former Liverpool and Tottenham director of football Damien Comolli has got wind of only three clubs having the funds to make a splash when the transfer window opens.

"I don't know if this is correct but usually when agents tell you things like this, they usually get intel," he told Sky Sports.

"We might see very little transfer activity, we might see swops, we might see loans and we are going to see a massive decrease in transfer fees and transfer activity, at least transfers involving money.

"The longer this crisis goes on, more clubs are going to be in a financially difficult situation. The first thing that will be impacted will be player remuneration, the second thing will be transfer fees."

Even Manchester United, the richest English club and third overall in the Deloitte Money League, are said to be revising their transfer strategy, reported The Guardian yesterday.

Tottenham striker Harry Kane is a long standing target, but given his £200 million valuation and the uncertain financial climate, the club have reportedly been priced out, with a world-record bid for the England captain thought to be unrealistic at this time.

The Covid-19 crisis could also have a knock-on effect on transfer deals done in previous windows.

Given the vast sums involved, fees are very commonly paid over the course of a player's contract and in instalments. Based on accounts published to the end of the 2018-19 season, Premier League sides owed £1.6 billion in outstanding transfer payments, £900 million of which was to foreign clubs.

Should the outbreak worsen, leading to a club failing to meet its transfer debt, it could spark a series of defaulted payments on other deals or even worse, force clubs into insolvency, which would have enormous ramifications.

On the likelihood of a domino effect, football finance expert Kieran Maguire said: "The concern is that financial problems in one league could spread throughout the industry, just like the pandemic."

What is clear is that as European football's biggest spender, the economic earthquake being felt by English football will ripple across the continent the longer the contagion drags on.

AGENCE FRANCE-PRESSE