Every year, the transfer window fees get bigger.
And while the hundreds of millions spent by football’s superpowers in the Premier League, Champions League and now Saudi Pro League are the deals that attract the most headlines, there are repercussions further down the pyramid. Those are increasing exponentially, too.
More often than not, the trickle-down effect of big deals is reduced to barely a drip of profits hitting the lower reaches of the EFL. But the gap between teams further up — in the Championship in particular — has never been bigger.
This summer, relegated clubs Southampton, Leicester City and Leeds United have cashed in and sold a combined 15 players for around £284million — compared to around £144million of sales made by the other 21 teams in the division. In 2022, Burnley, Watford and Norwich City made around £119million combined from sales and the season before, Fulham, West Bromwich Albion and Sheffield United banked £43million.
After a slow recovery following the Covid-19 pandemic, Championship teams are starting to do regular business with teams in the Premier League and overseas, but the highest value deals are often concentrated in the clubs who have the financial advantage of being in receipt of parachute payments following relegation. The relegated three already receive in the region of £46m, with Norwich and Watford, who went down a year earlier, getting about £40m.
In financial terms, there is now effectively a 25-team Premier League, such is the gap between the top-earning clubs and the rest of the Championship. Outside the relegated trio, some of the highest value departures for the rest of the league included Coventry City’s Viktor Gyokeres, who joined Sporting Lisbon for £20million; Bristol City’s Alex Scott, who joined Bournemouth for £25million; and Middlesbrough’s Chuba Akpom, who left for Ajax for £12million.
Comparing those fees to others paid for the likes of Romeo Lavia, £58million from Southampton to Chelsea, or Tino Livramento banking them another £40m from Newcastle United, illustrates the Premier League tax — the best way of describing the added value to a player having featured in the top flight even if only in a limited capacity — and the strengthened negotiating position for recently relegated clubs versus their league rivals. Leeds sold USMNT captain Tyler Adams to Bournemouth for more than £20million and Leicester cashed in on Harvey Barnes and James Maddison for more than £80million.
“Spending has increased by about £40m compared to last summer,” Calum Ross of Deloitte’s Sports Business Group told The Athletic regarding EFL spending. “It’s still slightly below the pre-Covid levels, but it’s getting back to that level. Player sales are part of Championship clubs’ business models. In recent years, the appetite from the global transfer market, particularly the Premier League, to spend with the Championship had dried up.
“We’re seeing this year that player sales are heading up, almost £450million. That additional spend coming to the Championship is significant, but the caveat to that is that a lot of it is concentrated on a small number of clubs, particularly those that have come down from the Premier League. Leicester, Leeds and Southampton account for about 65 per cent of the overall club transfer receipts and are responsible for half of the Championship’s transfer spend.
“That fuels further debate around the polarisation outside of the Premier League in English football. The clubs they’re competing against are obviously at a big disadvantage and it’s driving that unsustainable behaviour. It’s very difficult for clubs to break out of that division in a sustainable way. You can argue that some of the money the relegated clubs receive (via parachute payments) covers the cost of relegation from the Premier League, but undoubtedly it’s given them a significant advantage over Championship clubs to attract the best quality players, which then gives them the best possible chance to get back to the Premier League.”
Clubs like Luton Town are a fine example of how to achieve promotion from the Championship without overcommitting on spending, but financial sustainability continues to be a hot topic in the second tier. The days of spending big in the hope of pulling off promotion have long gone thanks to the hit many teams took during Covid, but increased spending is gradually on its way back.
In the three years before the pandemic (2016-2019), average spending was at £169million per summer across EFL clubs in comparison to £35million spent in 2021 and £86million in last summer’s transfer window. This year’s total spend is estimated to be around £138million, showing some recovery, although removing the spending of the five parachute payment clubs (Southampton, Leicester, Leeds, Norwich and Watford) paints a much more modest picture of the financial clout of teams in the rest of the Championship and below.
Fair Game, a group of clubs aiming to improve governance and sustainability in football, believe better support could be given to lower league teams and grassroots football by introducing a levy on transfers. They have called for a 10 per cent tax on deals between Premier League clubs and teams overseas. Their data shows that over the past five years, up to £160million could have been redistributed to the lower levels of the game if such a levy — one measure recommended in MP Tracey Crouch’s government-conducted fan-led review of football — existed. Good luck with that, Tracey and Fair Game…
As per the latest set of accounts submitted to Companies House covering the 2021-22 season, the financial picture across the leagues is still concerning and still inherently linked to the investment of owners and transfer window spending. On average, Championship clubs spent 126 per cent of their revenue on wages as clubs in the division made average losses of £2.9million. That figure was lower in League One, where clubs who submitted their accounts covering that financial year made losses on average of £2.2million, while in League Two clubs made a £0.2million average profit.
If Leicester, Southampton and Leeds go back up, it will only add to the feeling that the Championship is becoming all too predictable.
(Top photo: Lavia earned Southampton £58m in moving to Chelsea; by Darren Walsh/Chelsea FC via Getty Images)