Emirates Stadium

Economy and the transfer window

Jonathan Sager on how economics play a part in football.

I had a realization the other day as I thought about an article in the Economist.  As humans we put our hands in other humans’ hands for just about everything.

If you think about it, we have so much faith in our fellow man.  We lean on others for support.  We go to a doctor who looks after many, many other humans and we hope that whatever decisions that doctor makes, they do it with their best wits about them.

On a plane we depend on our fellow man to guide the plane in the right direction, don't fly in the wrong area and keep it in the air.

Over the years we've depended on others for our freedom and security.  Police and fire officials put their health and safety on the line daily for the lives of people that maybe they've never even met, much less known. 

As I've read the Economist and learned about the world over the years, I have thought about how much the world revolves around money.  That money has value depending on what markets think it should be worth. 

Money came out of the need to have a form of trade or payment for goods and services.  It is something that everyone could agree on and something driven and backed by the government.

And sometimes it is a measure of power and strength in a global market.  It is a symbol of solidarity and pride.

When some currencies are weak, governments tend to adopt a currency that is stronger.

But it is humans who ultimately determine what currency is worth.  So in essence, markets are run by people and we don’t realize how much economists change our lives on a daily basis.  It is up to them to make sure that our economies don’t fall.

All of this led me to think about football as I read a story about the Greek financial crises. 

With the amount of money that footballers make, how does that play into a footballers' decision to play in Greece?

If you are a world class player are you willing to go somewhere that is experiencing a huge financial meltdown for a paycheck that may never come?

With the issues in the Greek economy, it must be difficult for the teams to continue to bring in fans that may not have any hope for a job in the near future.

Does Kevin Mirallas’ £6 million transfer from Olympiakos to Everton show signs of this monetary concern in Greece football?

The lack of attendance has to play a role in how much money can be spent per week on payroll.

The talk about the Euro is that there are some options when it comes to Greece.  Some say there should be a complete bailout or the Euro should push Greece out altogether. 

Sure there are options but I'm not the person to decide.

But it's not only Greece.  Spain is also feeling the pressure.

According to the August 11, 2012 edition of the Economist a quarter of the workforce in Spain is unemployed.

No doubt this is pushing Spanish clubs to sell in order to balance their books.

Young play-maker Santi Carzola’s £15 million move from Malaga to Arsenal was inspired by the Spanish club’s dire financial straits. 

Malaga also sold young forward Jose Salomon Rondo for £7.9 million to Rubin Kazan of the Russian Premier League this summer.

Atletico Madrid sold players Eduardo Salvio for £9.68 million and Alvaro Dominguez for £ 6.16 million to foreign clubs.

Mallorca sold Ivan Ramis to Wigan for £5.2 million.

Levante sold Arouna Kone to Wigan for £5 million.

It seems that the largest club of La Liga is in the mood to buy, obviously not affected by the same pressures of the smaller clubs.  So far they have spent £33 million on Jordi Alba and Alex Song. 

The second big name club, Real Madrid, has been selling.  Three players, Sergio Canales, Fernando Gago and Hamit Altintop were sold for over £12 million. 

But in the huge European market of footballers, there has been one club that has invested over £100 million in funds in players in the summer transfer market, Paris St-Germain.

Owned by the Qatar Investment Authority, PSG bought Zlatan Ibrahimovic and Thiago Silva from AC Milan for more than £54 million. 

They spent £35 million for 19-year-old wonderkid Brazilian attacking midfielder Lucas Moura from Campeonato Brasiliero Serie A’s Sao Paulo FC.

Ezequiel Lavezzi came over from Italian Serie A club Napoli for £22.8 million and £9.6 million was spent on 19 year old Italian Marco Verratti from Pescara.

It seems to be the story of a rich ownership group investing tons of money in a club for a chance to win in the Champions League.

According to Eurostat, France is projected to have a 1.3% growth in real GDP next year which means that economists believe that production will increase throughout this year into next. 

And while that may not look like much, in a region where markets are collapsing around you, it is very promising to have growth.

Meanwhile, there has been much movement in the Premier League, but in July the BBC said that the economy of the United Kingdom was falling deeper into recession due to a major decline in the construction sector. 

It will be interesting to see how this data changes after the data from the Olympics has been processed. 

But still according to August 19th’s Telegraph, Premier League teams have spent £240 million in this transfer window, drastically down from the £480 million spent during last Summer’s transfer window. 

There is no doubt that the financial situation of a country plays a huge part in the amount of money that a club can spend on players. 

Some may argue that UEFA Fair Play regulations come into play as well.  Either way you slice it, teams have to rely on banks, markets and their ability to balance their books in order to finance the purchase of star players.  

Jonathan Sager
