September 3, 2013 / 12:24 PM / 6 years ago

Cash from TV deals drives record European soccer transfer spree

LONDON (Reuters) - European soccer clubs have reinvested cash from television deals to go on a record-breaking summer spending spree led by teams from the English Premier League and Spanish giants Real Madrid and Barcelona.

Gareth Bale of Wales kicks a ball to fans at the Santiago Bernabeu stadium in Madrid, September 2, 2013. REUTERS/Sergio Perez

Clubs in the English top flight had spent 630 million pounds by the player transfer deadline on Monday night. Teams in the big European leagues must now wait until January before they can hire new players.

The spending by English clubs broke the 2008 record of 500 million pounds, according to figures compiled by business services group Deloitte, and underlined the Premier League’s status as the world’s richest national competition.

“As the financial rewards for participation and success in the Premier League increase, so it follows that clubs are investing on the pitch to ensure they continue to benefit from the remarkable Premier League growth story,” Deloitte’s Dan Jones said.

Champions Manchester United and the other 19 Premier League teams are expected to share revenues of about 1.6 billion pounds this season thanks to enhanced television deals with BSkyB and BT in Britain, and broadcasters around the globe that began last month.

It was not all one-way traffic as the Premier League lost one of its biggest names when Real Madrid bought Welshman Gareth Bale from Tottenham Hotspur for a world record 100 million euros.

Not to be outdone, Real’s perennial rivals Barcelona spent $75 million to buy Brazil forward Neymar from Brazilian top division club Santos.


Spending such sums might appear to defy logic given Spain’s economic problems but Real and Barcelona enjoy the luxury of doing their own TV deals rather than pooling revenues as happens in England and other major leagues.

That has made the two clubs the world’s richest in terms of revenues and allowed them to remain buyers when many of their Spanish rivals are forced to sell their best players.

Real and Barcelona have TV deals with Spanish production and distribution company Mediapro. They both also have lucrative new main sponsorship deals this season - Barcelona with Qatar Airways and Real with the Emirates airline names on their kit.

Overall spending levels may also raise eyebrows when loss-making clubs are supposed to be complying with new Financial Fair Play rules introduced by UEFA, European soccer’s governing body, to put soccer on a more stable footing.

“A lot of English clubs have gone on a spending spree but they haven’t breached the Financial Fair Play rules as they are only spending what they have earned,” said Simon Chadwick, a professor of sports business at England’s Coventry University.

Clubs also have the advantage of spreading the cost of a player’s transfer over the duration of his contract in their accounts, lessening the impact on the bottom line.

Many clubs also offload players to help fund spending.

Real Madrid are a case in point - recouping half of what they paid for Bale by selling German international Mesut Ozil to Premier League Arsenal.

Indeed, the total invested by Premier League clubs comes down to 400 million pounds when proceeds from sales such as that of Bale are factored in.

Spanish clubs actually generated a surplus of 95 million pounds from player trading this summer, according to Deloitte, while clubs from Italy’s cash-strapped Serie A also posted a small profit. (Editing by Louise Ireland)

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