Premier League spending drops as clubs tighten belts

Premier League clubs’ spending on new players dropped by 10 percent to 450 million pounds (511 million pounds) during the close-season transfer window which shut on Tuesday.

Even Manchester City’s 120 million pounds (136 million euros) spree failed to see the top flight match the record sum of 500 million pounds (568 million euros) spent a year ago.

Football finance experts believe the high rate of the euro and 50 percent tax rate for the very high-earners has contributed to the drop, particularly in terms of players coming from the continent.

Paul Rawnsley, director of Deloitte’s Sports Business Group, said the figures were no surprise – and net spending has dropped from 200 million pounds (227 million euros) to 80 million pounds (90 million euros) as clubs such as Manchester United, Arsenal and Liverpool resisted spending all their earnings from transfer income from Cristiano Ronaldo, Emmanuel Adebayor and Xabi Alonso.

Rawnsley said: “Despite the significant spending by Manchester City, Premier League clubs’ transfer spending has dropped.

“There are a number of contributory factors – the exchange rate, the tax regime in Spain being more favourable to players and clubs, and perhaps clubs thinking there is less of a risk in buying established Premier League players than from overseas.”

Rawnsley does not expect the picture to alter next year either even if, as expected, the top flight benefits from a big rise in the value of overseas TV rights.

He added: “Economic conditions may improve in 2010 and the Premier League is expected to secure enhanced values for international media rights generating higher revenue for Premier League clubs.

“However, without further significant capital injections from owners, transfer spending is unlikely to exceed the record level achieved in 2008.”

Deloitte’s analysis shows Manchester City’s spending has been around 120 million pounds (136 million euros) representing 27 percent of the total spent, while Aston Villa, Liverpool, Sunderland and Tottenham have each spent more than 25 million pounds (28 million euros) on new players.

Rawnsley said the necessity of the owners of Manchester United and Liverpool to make big interest payments on loans taken out to buy the club have also had an impact.

He said: “Having to pay interest can have a bearing on transfer budgets but that is not necessarily why United have spent more of the Ronaldo money.

“Some clubs may well have felt that thanks to the spending of Real Madrid and others such as Manchester City the transfer market has been too inflated.”