For all the eyebrows raised at the headline prices in another record-breaking Premier League transfer window, some club executives were more surprised at the way certain deals were structured.
And they weren’t excited. They were shocked, and concerned.
A number have talked about proposals where the buying club would actually pay nothing this season, but meet instalments over the next few years. The prospective sellers, of course, could still account for the sale at full price.
It is just one of many illustrations of a Premier League deferring an increasing number of actual payments to the future. Multiple sources describe how the approximately £3.5bn spent this window has been built on more debt than ever before.
If the usual talk now is over who “won the window”, there’s an obvious answer here: the credit companies financing these deals.
And this has a lot of people worried.
On one side, there’s constant talk of how liquidity is a massive problem for English football. The Independent Football Regulator is currently preparing its landmark “State of the Game” report and the expectation is that it will point to exactly this issue. There’s a lack of liquidity up and down the sport.
The other side is that it arrives at a moment where private credit itself is coming under increasing pressure, from perception of an AI bubble to the hugely concerning rise in global bond yields. The latter formed deadline day headlines that were probably far more relevant to football than many of the completed deals.
“A credit challenge is coming,” one club figure says. “The game should be worried.”
That’s why there isn’t just surprise at “crazy prices” where “value has gone out the window” – pun unintended by the many saying this – but also at the very transfer behaviour.
In other words, this might end up proving precisely the wrong transfer market in which to be so bullish.
The surprisingly old-fashioned nature of a lot of “slapdash” business by clubs, who should know better, is seen by many insiders as symptomatic of a wider irrationality.
Aside from describing it all as “utter madness” and a “market out of control”, as one source put it, however, seasoned executives are also comparing it to the sub-prime mortgage disaster. There’s even the parallel of conservative funds like insurance and pensions being used to invest in a volatile industry like football
So, yes, “The Big Short”, and maybe a genuine football version. It could similarly take a while, but the risks are visible.
Many people might be perplexed by this given how flush the Premier League appears. There’s the perceived capacity to pay those very transfer fees and wages, for so long linked to the billions coming in from international broadcasting deals, as English clubs dominate Deloitte’s Football Money List.
And this is the greater irrationality. As long argued in these pages, football’s immense global popularity should ensure it is entirely self-sustainable, especially in England.
And yet that is what is under threat.
As ever, rather than the game being self-sufficient, it has unnecessarily allowed itself to be shaped by greater forces so as to also serve its customary canary-in-the-mine role in reflecting wider society.
The influence of “institutional money,” especially from the United States, has grown immensely over the last seven years, particularly in the Premier League.
Last week’s Inside Football newsletter even spoke of how we might be reaching “late-stage Premier League”, to mirror “late-stage capitalism”.
The increase of such investors has also introduced entirely new practices for the sport, many of which have gone against football’s traditional norms.
You can go as high as selling women’s teams to related companies or as basic as even doing transfer business with direct rivals.
Many executives believe this has been further accentuated – and arguably even driven – by the Premier League’s Squad Cost Ratio rules. The constant movement of money through transfers allows the regulations to be adhered to as debt grows.
A lot of football executives are currently sharing an attention-grabbing piece by sports business figure and former SPL chief Roger Mitchell who talks of “how clubs deeply in loss and debt can still spend hundreds of millions for one player”.
This window has only fostered a sense that clubs increasingly just feel like “opaque pools of money”.
Directors within the Premier League complain that the competition has had years to work with Uefa on this, but there’s been little progress.
A view pervades that while this very window only emphasises the long need for cost control, there isn’t enough effect on actual sustainability within the regulations. As one chief executive argues, “football needs constraints as found in the EFL and Formula 1”. It has got to the point that European Football Clubs, the influential lobbying group, are setting up a task force.
There is that much concern.
There should arguably be more.
Global unease over the markets has led more investors – and investors of the greatest scale, in Jeff Bezos – to buy their way into football. The common explanation is that sport is an asset class uncorrelated to wider fluctuations, and clubs, “real brands” with a “scarcity value”, are a good place to put that money.
Consequently, valuations continue to expand.
Actual executives nevertheless caution against investing in these “scarce brands” if they just keep absorbing cash in player acquisition and related fees that are going out of control. There’s even the argument that the investments themselves have fuelled this transfer activity, on the very basis that there’ll be another buyer along.
So many seem to be thinking in the short term, creating a cycle spinning faster and faster.
All of this talk of insulation is also to overlook what Mitchell describes as “asymmetric risks” from the market. And now, that market is seeing a much broader debate over AI, and how much investment there is in software assets now existentially threatened by AI, as heavy lending into an AI infrastructure boom continues.
A wider bubble may be growing.
Way beyond that, though, there’s the most pressing development in all of this: the cost is going up on government debts across the West.
Look at some of the headlines today, as Sky News points to how “the single most important barometer in the global economy is going in the wrong direction”.
If a market correction happens, the credit lines will change and clubs banking on this ongoing movement of money will suddenly find a very different landscape.
The bubble will have burst. The debts will be called in. Typically, it will be clubs lower in the pyramid that most feel the wider effects.
Football, as ever, is a tangential subplot to all of that and the same story.
As one source cautions, the warning signs are already there with what happened with 777, who failed to buy Everton last year. Restraint in this window might end up a virtue.
The key point is perhaps that the transfer market is significantly exposed to change in the credit market, and there’s considerable doubt over whether clubs are planning appropriately.
“And yet the bubble keeps going, fuelled by greed,” one source cautions.
Another senior source is even more fatalistic: “This will all come crashing down. And when it does…”
