The Cost of a Premier League Title
The commercialisation of elite football has given rise to a dramatic shift in how clubs choose to invest money and the resulting success expected in return. There is an increasingly popular assumption that the more funds pumped into strengthening a playing squad, the more capable a club will be of adding silverware to its trophy cabinet.
Following a 3–1 defeat to Manchester United at Old Trafford in December 2012, a despondent Sam Allardyce used his press conference to put forward a black-and-white assessment of how the presence of money affects competitiveness in the Premier League.
The manager of then relegation-threatened West Ham United said:
“Where you actually finish in the League depends on the money you’ve spent; it’s a statistical fact, that.”
Has money alone really transformed the beautiful game into nothing more than financial warfare?
To test this bold concept in its simplest form, the table below juxtaposes the 2013–14 Premier League final ladder with how it would have finished according to Allardyce’s theory.
The modified standings provide a basic indication of how net transfer expenditure can influence the Premier League table. Manchester City remains at the summit, but the three clubs relegated to the Championship, Fulham, Crystal Palace and Norwich City, all finished in the top half. Given the contradictory findings, a more in-depth analysis is required to produce an accurate assessment of the influence money wields in the English top-flight.
Since the 2005–06 season, the trophy has gone to the highest-spending club in terms of net transfer expenditure on just two occasions: Chelsea in 2005–06 and Manchester City in 2013–14. What’s more, only two sides recorded a lower deficit than the Londoners as they clinched the 2014–15 title last season.
Although clubs do not necessarily have to outspend all their rivals to win the Premier League, recent history indicates they should be prepared to pay more money than they receive in the transfer market over the course of a season.
Since the inception of the Premier League in 1992, only two sides have lifted the title while making a net profit on signings. Manchester United was the first club to break-even with a £13.6 million gain in the 1995–96 campaign, the highest ever recorded by a championship-winning side.
Chelsea, the reigning league champions, earned £5.95 million from player transfers during the 2014–15 campaign, managing to balance the books for the first time since 2008–09.
Conversely, the average net transfer expenditure by each champion stands at –£22.57 million.
Despite adopting a more conservative recruitment policy in recent years, Chelsea holds the record for the highest net transfer loss by a title-winning club during the Premier League era. The Blues splashed an astonishing £111.02 million on signings during the 2004–05 season to win their first league title in half a century.
Is one season of lavish transfer activity a shortcut to conquering the English top-flight, though?
Over the last decade, Manchester City has plunged more cash into acquiring new players than any other club in the Premier League. Having made a –£715.17 million loss in the transfer market between 2004 and 2014, its heaviest net deficit occurred during the 2010–11 campaign after spending £144.84 million to fund the signings of Edin Dzeko, Yaya Touré and David Silva among others.
In contrast, Manchester United has enjoyed the best return on investment in the transfer market during the same period. The Red Devils have pumped £377.06 million into new signings since the 2005–06 season, equating to an average outlay of £37.71 million per year. With five Premier League crowns going to the Old Trafford trophy cabinet during that time frame, each title has cost United £75.41 million.
Veiled by the grandiose spending of the leading title contenders, a significant gulf in financial power exists between the top and bottom halves of England’s top division.
Broadcast and commercial revenue is equally shared among the 20 Premier League teams, but the strongest and most marketable clubs are able to rake in millions extra through other income streams.
In addition to owner investment, sponsorship deals and merchandise sales, the widest gap in earnings derives from the ‘merit money’ handed to clubs depending on where they finish in the league table.
According to Premier League payments to clubs for the 2014–15 campaign, each position in the end of season standings is worth £1,244,898. This means the champions collect in excess of £23 million more than the bottom-placed club based on performance alone, paving the way for other monetary inconsistencies.
During the 2013–14 season, the average weekly wage bills for teams that finished in the top half of the table was £58,636, more than double that of their bottom-half counterparts (£27,109).
Annual wage bills during the same time frame amplify the financial disparity between each half of the ladder. Clubs that placed 10th or above accounted for more than two-thirds of all wages throughout the entire division. The top half splurged an average of £124.3 million per year, whereas the bottom 10 sides forked out a comparatively meagre £59.6 million.
This disparity mainly comes from a chasmic difference in annual turnover. The top half generated an astonishing £2.3 billion during the 2013–14 campaign, £1.33 billion more than the bottom half sides (£963 million).
However, as distinct from wage bills and annual turnover, the difference between the two echelons in terms of average net transfer expenditure is far less profound. The top half average of £20.69 million was barely £4.5 million more than the bottom half, which spent £16.15 million.
The unbalanced distribution of wealth in the Premier League poses an arduous challenge for less affluent clubs to challenge at the pinnacle of the table. The top sides generate sufficient revenue to recover financially from spending tens of millions into the red on new players, staff and facilities. On the other hand, the likes of Aston Villa or Stoke City would probably go into administration if they were to try and match the transfer expenditure of Chelsea and the Manchester clubs season after season.
Although the ultimate prize has seemingly been reserved for a select few of the richest clubs in the country during the past decade, there is no hard and fast rule to determine which side will claim the championship. History suggests it is extremely difficult to lift the Premier League trophy without making a loss in the transfer market, but, as a testament to the competitiveness of the division, the biggest spender does not always triumph.