The 2016/17 Premier League season begins today. Most Premier League clubs are still actively searching for new players to add to their squads for the forthcoming season. Last week, Italian champions Juventus acquired the services of Gonzalo Higuaín from rivals Napoli for £75.3 million, the third highest transfer fee of all time. This transfer was facilitated by the world record transfer of Paul Pogba from Juventus to Manchester United. These figures have been labelled ‘crazy’ by Chelsea manager Antonio Conte while the Guardian’s Rob Smyth has claimed here that the “transfer fee of Gonzalo Higuaín leads us into theatre of the absurd”.
The rhetoric that transfer fees have gone insane has been present for many years. Pogba’s world record transfer back to Manchester United provides suitable grounds for further investigation. The table below provides information on Manchester United’s transfer activities from 2008-2016 including total transfer spending, the name of their marquee i.e. most expensive signing and the transfer fee spent on that player.
However, closer examination suggests transfer spending may not be yet be gone out of control. Although, Manchester United plan to break the world record with their approach for Pogba, the total transfer spend relative to revenues is still lower than that of Louis Van Gaal in 2014 when he took control of the team. Similarly, Pogba’s fee may not be as excessive as first appears, at least in relative terms. Pogba’s world record fee represents around 22.65% of United’s revenues which is the largest share of all marquee signings during the period. However, previous signings such as Angel Di Maria (19.55%) and even Berbatov (16.20%) represent significant investment relative to total revenue.
Given that football managers are likely to invest heavily in their earlier years to rebrand the team in their own image it is unsurprising that Manchester United are investing heavily in their squad. Furthermore, a key factor in the clubs ability to increase transfer spending power has been the increases in revenues. During the period, average annual increases in revenues were 8% per annum, increasing from £199.36 million in 2008 to £441 million in 2016. These revenues make Manchester United the third richest club in the world according to Forbes with their objective of achieving £500 million in revenue well in sight. Transfer spending at Manchester United has certainly increased over time. However, given the changes in management, underperformance of the team and significant increases in revenues these changes are not surprising and most certainly should not lead football into the ‘theatre of the absurd’.
Stephen Brosnan is a PhD candidate in the Department of Economics, University College Cork