The Premier League returned this weekend with the most expensive and richest collection of players in its glittering 25-year history.
Ahead of the new season, England’s top tier had collectively spent more than £1bn on players this summer. Ten clubs have already broken their transfer record, some of them more than twice over.
Meanwhile in France, Paris Saint-Germain obliterated the world transfer record by spending £200m on Neymar.
Such largesse has led some fans to ask just what ever happened to financial fair play (FFP) measures that were expected to quell the spending of such eye-popping sums.
FFP rules were introduced by European governing body Uefa seven years ago and impose a limit on the amount clubs can lose over a rolling three-year period, notwithstanding various deductible exceptions.
That figure was initially set at €45m and, as planned, has since been reduced to €30m.
When €30m has become the price of a second-choice full-back at some clubs and the likes of Manchester City fork out more than £200m in a single window, fans might struggle to square the circle.
Yet a club’s accounting practices are not quite as simple as tallying the ins and outs of a transfer window and working out the difference.
“It’s very difficult for anyone to have full information about FFP compliance because there are lots of variables throughout the process,” Daniel Geey, partner in the sports group at law firm Sheridans, told City A.M.
“Large transfer fees will be amortised over the length of a player’s contract rather than a one-off payment.
“If we take [Manchester City’s Bernardo] Silva who was signed for a reported €45m on a five-year deal: that will be amortised at €9m per season. So for each of the three season in Uefa’s monitoring period, Man City wouldn’t be allocating €45m in their FFP cost base, they’d be allocating €9m.”
It is for that reason that Uefa’s FFP head Andrea Traverso could only respond to questions about PSG’s compliance following the Neymar deal by saying: “It’s very difficult to judge this operation in advance, I don’t know their plans. I think they have done their sums well.”
As long as they don’t lead to a negative bank balance, transfer fees are not FFP’s concern.
Uefa has justifiable cause to feel confident that former president Michel Platini’s flagship sustainability policy will not follow its architect’s fate and be shunned by the football community.
Premier League clubs are not spending money to shore up a house built on sand. In fact, despite their ever-increasingly outlays and largely thanks to television revenues, they have never been healthier.
FFP rules have halted risky speculation throughout the division, as even those not currently in Uefa competition must abide by the rules if they have any ambition of qualifying for Europe. Spending out of your means to reach the promised land of the Champions League is not an option.
According to analysis from Deloitte, Premier League clubs’ most recently-published accounts revealed that their collective loss in the 2015-16 season was their first in three consecutive years of profitability, a result put down in part to a number of one-off exceptional costs.
“I did a calculation of Premier League clubs’ EBITDA profit and it came to just under £600m, of which around 85 per cent was for the big six,” Kieran Maguire, football finance expert at Liverpool University, told City A.M.
“So there’s been a big turnaround compared to five years ago. Only three or four clubs were making a profit in 2011-12. Last season I’d expect around 18 out of 20 would be making a profit.”
The story is similar throughout the continent. Uefa’s latest research found that in the last two years combined profits in Europe hit €1.5bn, compared to a combined loss of €700m in the two years after FFP was introduced.
“I think that demonstrated a positive trend towards clubs living within their means, concentrating on driving revenues, keeping costs within acceptable boundaries,” says Geey.
“And that’s led to a new wave of transactions happening because people in other industries, who maybe in the past were less enamoured with a football industry that suffered from endemic losses year after year, they now see the European footballing environment governed by Uefa as an attractive investment proposition.”
Yet it is not just Uefa which has enabled Premier League clubs to spend from a position of security; clubs must also abide by the division’s collectively agreed short-term cost control rules which, broadly speaking, restrict teams from raising wage bill by more than £7m from year to year.
“That’s specifically aimed at preventing what [then Tottenham chairman] Alan Sugar used to refer to as the prune juice effect, whereby any increase in TV revenue went straight through to players’ wages,” says Maguire.
So, with sustainability on the rise and club’s bank balances growing, do not expect to see transfer spending slowing down any time soon either.