English Premier League: The Cost of Success
Where Does All That Transfer Money Get You?
English Premier League clubs spend a lot on transfers (buying and selling players) every year. In fact, spending has reached record levels over the last few years, despite the recession. There is a firm belief that spending a lot of money on players will bring you success. Manchester City, an English club that was bought by the Abu Dhabi United Group in 2008, has spent over £300 million on transfers and have paid off £350 million of debt.
How well has it worked?
- To show a relationship, we can take transfer spending in the last five years and match it against their league rankings.
- The champions are awarded 20 points, runners-up 19, and so on, the team that finishes in the bottom gets 1.
The ★ indicates teams that are in “Top Four,” the four teams that consistently finished in the top four between 2005-2009.
- There seems to be some relationship between spending and success as seen in a general trend line taken up by the majority of the graph.
- The outliers/odd ones are Blackburn Rovers, who have done average without spending as much as anyone else. Arsenal who are have sold many of their players and continue to rely on their young players.
- Manchester City spent a lot of 2008-2009, and their league position improved considerably since. That would explain their situation.
- Players aren’t the only cause of success. Managers and staff contribute towards strategy and progress as well.
- If teams get relegated, they start in the lower league, where they could perform better.
- There could be a time lag between spending and success. It could take time for players to gel and for the manager to figure out his best team.
- Some clubs produce great players from their youth academies so that they might spend less.
- Players could have gotten sold for inflated prices, so net spending is less.
- Players on older contracts may be playing well.
- A relationship might be more clear if there was a time lag or if each year’s transfer activity was matched against the league position.
- Birmingham got relegated twice
- Sunderland got relegated once
- *Manchester City got bought in 2008, that’s why their spending is higher than it should be
- Portsmouth, Burnley, Hull City, Stoke City & Wolverhampton Wanderers and weren’t included because they spent the majority of the time (2005 – 2009) in the Championship
Source: Deloitte Money League