Global Recession + January Transfer Window = ???

By: Daryl | December 1st, 2008

It’s December 1st today, which means exactly one month until the January transfer window opens. And it’s going to be a weird one. Not just because of Man City’s recent ascent to wealthidom, but more because of the recent end of the world economic megameltdown. I believe that’s the technical term.

Last transfer window (summer ‘08) things were pretty much OK. This transfer window, they’re very much not. Will it affect what happens in January? And if so, how? Read on for some dangerously uninformed speculation…

First of all, will clubs spend at all? If football transfers are anything like car dealerships or the real estate market then clubs are going to have problems getting access to credit. And who’s to say that a freefalling economy won’t see football teams just do what everyone else is doing: tighten their belts and stuff all their money in a mattress.

Or maybe we’ll see the exact opposite, maybe certain teams with financial problems (West Ham?) will be forced to sell, thus “unfreezing” the transfer market and allowing richer clubs to pick up some bargains.

One thing we can say is that as the pound continues to fall in value against the euro, the spending power of Premier League clubs in Europe decreases accordingly. So Prem teams will find that transfer targets in Serie A, La Liga, Bundesliga, Ligue 1 etc are a little more expensive than they used to be. And vice versa is true, with an Inter Milan bid for Chelsea’s Didier Drogba getting more affordable every time the pound drops a little.

And maybe David Beckham will look at the dollar to euro exchange rate and think maybe returning to MLS isn’t such a good idea after all.

As mentioned above, all of this is uninformed speculation. And two months in this global economy (now until Jan 31st, 2009) is long enough for almost anything to happen. We could all be roaming a post-apocalyptic landscape and trying to kill each other with carefully sharpened rocks before the transfer window even opens.

But just in case we’re not, I’m thinking we should brace ourselves for what could be a very strange January transfer window.

Or I could be completely wrong. It definitely wouldn’t be the first time. So I’d be fascinated to hear how everyone thinks the economy will affect the transfer market this January, or even if you think it will be business as usual…

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ursus arctos

A timely roundup from the Independent: http://www.independent.co.uk/s...
Greg

I'm not so sure that Becks will give well-scented English poo about the present exchange rate, the given recent history of the currencies... The Euro hasn't been this weak against the USD for over two years. It's actually below the level (1.33 then vs 1.25 now) that it was when he signed for the Galaxy. The GBP on the other hand has taken a supremely sharp dive, when it trading around 2:1USD when BBE (Before Beckham Era) and is now right around 1.5:1USD in the ABE.
ursus arctos

Daryl, you aren't wrong and all of the factors you identify are pretty much certain to have some impact on the winter "mercato". What is incredibly difficult to determine, unfortunately, is how much of an effect they will have and how they will work together

In part, that is the inevitable result of the profound absence of transparency when it comes to football finances. If more clubs were subject to meaningful financial reporting requirements, it would be easier (though still very difficult) for analysts to have a better idea of what is likely to happen.

Some other factors likely to impact football finances in the near term:

1) the "credit cruch" will put significant pressure on clubs and/or owners that are seriously in debt, especially if those debts are short-term and/or with banks that are themselves in serious difficulty. Liverpool happen to have both of those issues.

2) the freeze/decline/collapse of real estate values and home prices (depending on where you are) will have a material effect on clubs whose finance plans were dependent on selling an old ground/training ground for housing and/or financing a new one in a similar fashion. My understanding is that Arsenal still haven't sold all of the condominiums that are being built on the site of Highbury and number of projects in the lower divisions have been scaled back or put on hold.

3) there will be a knock on effect for businesses that provide ancillary revenues for football clubs. Everyone from television companies to kit manufacturers to corporate suite lessees to your average match-going/kit-buying fan will be less likely to give their money to a football club than they were six months ago.

We live in interesting times.
Corey

I think its probably for the best if its quite. Player valuations have gone through the roof in the past 8 years, its mind blowing to think a guy from Portugal who likes hookers and hair gel is worth 100 million pounds? If clubs want to do business, they will have to all lower their valuations, but at the same time, I think you may see more angry players who feel they dont have to honor their contracts because they are deserving of a move. Which means more litigation since the purse strings will be tighter.
Rob

Aparently Scolari is going to have to work on a "one in one out" basis.

The trouble with the Janruary window, is the Champions League. Who are the big clubs gonna wanna buy who isn't Champions League tied?
travis

One way or the other, I'd vouch that it's going to look different than usual. Not sure if that means clubs will have to "sell cheap" or it means clubs can't buy. But it's going to have an effect, no matter what.