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Deloitte & Touche LLP
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Transfer spending by English clubs has exceeded £500m this summer, around two thirds higher than the previous record of £300m spent in summer 2006, according to analysis by the business advisory firm, Deloitte.

New owners at Premier League clubs combined with the increase in broadcast payments to clubs for the 2007/08 season, are key drivers of the unprecedented rise in spending.

Paul Rawnsley, director in Deloitte’s Sports Business Group, commented: “This summer’s transfer spending by English clubs has beaten all previous records, but as Premier League clubs will receive around £300m of extra broadcast payments during the 2007/08 season the increase in transfer spending is not a surprise.

On a net transfer basis Premier League clubs spent around £140m more in 2007 than 2006, well below the increase in broadcast payments they will receive this season. We expect total player wages to also increase but by a much lower proportion than the c.80% rise in gross transfer spending this summer.”

Clubs in the top four English divisions spent more than £500m on transfers during summer 2007, up by around two thirds from around £300m in summer 2006. Total spending on transfers by Premier League clubs in 2007 (January and summer windows) exceeded £530m, up by around 60% on 2006 (£333m).

The increase in transfer payments is a result of both higher average transfer fees  and an increased number of transfers. The average transfer fee paid by Premier League clubs increased from around £3.5m in summer 2006 to £4m in summer 2007, whilst the number of transfers for a fee exceeded 100 for the first time in a transfer window (up from around 80 in summer 2006) .

The English clubs which invested the most in new players in 2007 were Manchester United (£51m), Liverpool (£50m), Tottenham Hotspur (£40m) and newly promoted Sunderland (£35m).

Twelve Premier League clubs spent more than £20m on transfers in summer 2007, up from three (Chelsea, Liverpool and Tottenham Hotspur) in summer 2006. This may point towards greater competitive balance within the Premier League as a result of the rise in broadcast payments to all clubs in 2007/08.

Net transfer spending by Premier League clubs increased to around £420m in 2007, up £140m from around £280m in 2006.

Football League clubs received around £110m in transfer receipts from Premier League clubs in 2007, almost double the previous high of around £60m in 2006.

Three former Premier League clubs (Charlton Athletic, Southampton and West Bromwich Albion) each received more than £15m in 2007, with 14 Football League clubs benefiting by over £2m each (up from nine clubs in 2006).

Foreign spend
Overseas clubs continue to benefit most from Premier League clubs’ transfer spending, with around half of disclosed transfer spending (£250m) in Summer 2007 going to clubs outside England.

In Europe, we have also seen high levels of transfer spending, particularly in Spain. Real Madrid were Europe’s top spenders with around £80m invested on new players in summer 2007, including the acquisition of Heinze and Robben from Manchester United and Chelsea respectively.

Thierry Henry’s transfer from Arsenal helped push Barcelona’s transfer spending up towards £50m, with Athletico Madrid also spending around £50m. Outside England, Spain’s Primera Liga was the next highest spending league in summer 2007, with total transfer spending around half that spent by Premier League clubs.

Clubs in the Big 5 European Leagues spent around £1 billion on transfers in summer 2007.

Alan Switzer, director in the Sports Business Group at Deloitte, comments “Looking further afield, it comes as no surprise to see Real Madrid and Barcelona spending at least as much as their English rivals on transfers, given that they have the highest revenues in world football in 2005/06.

Broadcast revenues are again the key to explaining the high transfer spending by the two giants of Spanish football, who unlike their Premier League counterparts can sell their own broadcast rights.

“Both clubs have signed new deals which will generate significant increases in broadcast revenues for each club, to around £100m per season from 2008/09 - around twice the highest amount that a Premier League club is likely to receive.”

Last Five years

Chart 1: Gross transfer spending by Premier League clubs – 2003 to 2007

Note: the figures represent the aggregate of disclosed transfer fees committed in respect of player registrations in the January and summer transfer windows by Premier League clubs. ‘Overseas’ includes all fees paid to non English clubs.

In the five year period from 2003 to 2007, gross transfer spending by Premier League clubs has more than doubled from £248m to over £530m. Overseas clubs have received the single largest share of transfer receipts from Premier League clubs throughout the five year period, accounting for between 49% (2005) and 59% (2004) of the total.

Intra-Premier League transfer spending was significantly higher in 2007 than in any of the previous four years. Two clubs with new managers and new foreign owners, Aston Villa and West Ham United, accounted for around £60m of the total of £156m, choosing to primarily invest in proven Premier League players.

Other Premier League clubs which spent more than £10m on players from other clubs in the division in 2007 were Everton, Middlesbrough, Fulham and Newcastle United.

Football League clubs received around three times as much in gross transfer receipts from Premier League clubs in 2007 (£110m) compared to 2003 (£40m).Since the transfer window system was introduced, the proportion of Premier League transfer spending that has flowed to Football League clubs has increased from 16% (£40m) in 2003 to 21% (£110m) in 2007.

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Note to editors

About the Sports Business Group at Deloitte
Over the last 15 years Deloitte has developed a unique focus on the business of sport. Our specialist Sports Business Group offers a multi-disciplined expert service with dedicated people and skills capable of adding significant value to the business of sport. Whether it is benchmarking or strategic business reviews, operational turnarounds, revenue enhancement strategies or stadium/venue development plans, business planning, market and demand analysis, acquisitions, due diligence, expert witness, audits or tax planning; we have worked with more clubs, leagues, governing bodies, stadia developers, event organisers, commercial partners, financiers and investors than any other adviser.

For further information on our services you can access our website at www.deloitte.co.uk/sportsconsulting

About Deloitte

In this press release references to Deloitte are references to Deloitte & Touche LLP, which is among the country’s leading professional services firms.  Deloitte & Touche LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu (‘DTT’), a Swiss Verein whose member firms are separate and independent legal entities. Neither DTT nor any of its member firms has any liability for each other’s acts or omissions. Services are provided by member firms or their subsidiaries and not by DTT. Deloitte & Touche LLP is authorised and regulated by the Financial Services Authority. The information contained in this press release is correct at the time of going to press. For further information, visit our website at www.deloitte.co.uk