“Imagine there were no transfer fees, it isn’t hard to do, only free transfers, and a couple of loans too”

It may not have made John Lennon’s final draft but as an existential questions for football clubs go it is an important one.

The 21/22 summer transfer market gave us a preview of what that might look like.

As the impact of COVID-19 on football club incomes became clear clubs simply did not have the income to spend.

In the last summer window before the pandemic Championship clubs spent a collective £200m+ on new players, financed in part with £360m received mainly from Premier League clubs.

Whilst summer 2020 also saw over £300m of incoming transfer fees received by clubs, outgoing fees dropped to £70m.

And in 2021 incoming fees dropped to a under a third of their previous high, to just over £100m, with just £30m spend in total by 24 clubs (of which £12m was on one player).

To put these figures further into perspective:

From a high of 69 transfers over £500k in 19/20 to just 17 transfers in that price range 2 years later.

Now perhaps this is a long awaited period of clubs “living within their means”.

The problem in any market is when everyone lives within their means the market slows dramatically. Without new money circulating around very different decisions are made. In a growing market people invest expecting a return on that investment. At a club this might involve buying younger players you can sell on, or putting more money into the academy. However those require investment. If there are not going to be buyers for those players then you hold on to the cash you may otherwise invest. Maybe get a few 28 year olds who are ready to play now instead.

It is an example of a negative demand shock. Nobody wanted to spend last summer as the situation was unclear on the pandemic. If there is no prospect of a decent return on investment you hold on to the cash and certainly don’t go signing new long contracts at wages that won’t be sustainable without crowds.

As much as we fans want our clubs to buy low and sell high not every club can. Net spend across football clubs must balance to zero.

For every club running a positive trading balance there must be one running a negative. And in reality it is usually the case that one Premier League club may run a large enough negative balance to sustain many lower league clubs as the money filters down through the leagues.

The Maupay money Brentford received from Brighton allowed Brentford to sign Toney from Peterborough, who signed Clarke-Harris from Bristol Rovers, who signed Hanlan from Gillingham who signed etc etc

Impact on strategy

For this sudden reduction in such moves we need to decide if this is a blip or a “new normal”.

With TV money and gate receipts back Premier League club finances will look a lot more healthy. The best Championship players will always be wanted which should see more money flowing back into the league.

The finance gap between the Premier League and the EFL is so large that those clubs who can practically touch the guaranteed £100m+ a season in the league is worth will always gamble, and when they do gamble the markets they can shop in are much more restricted.

The GBE work permit system has effectively killed off recruitment in foreign leagues for most clubs below the Premier League. No more shopping for players who have an EU passport. Instead you can only sign regular players in top leagues, yes there will still be foreign transfers into the league but they’ll either be expensive players or unusual ones (smaller Band 2 league players and reserve players from Champions League squads).

Less foreign shopping means more of a focus on domestic talent so when the cash flow from the Premier League does return we should also see the money flowing through EFL clubs again.

So in summary, it is certainly true that liquidity has collapsed, this summer the only players with value were those capable of playing in the Premier League immediately. However with the larger EFL will be restricted to only shopping in a small range of markets so the better League One and League Two players will be fought over. When demand is high and supply low prices go up.

Therefore clubs with a trading strategy reliant on selling players for profit should not panic into selling at low prices and wait for demand to return to the market in summer 2022.


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