Transfer market: An increased financial concentration against a background of limited growth

When it was set up a hundred years ago, the football transfer system was intended to protect teams from the risk of their best players leaving their ranks, without compensation, to wealthier clubs. For a long time, this protection came at the expense of the players' freedom of movement. In 1995, the Bosman ruling [1] changed all that. "Since then, when their contract expires, players are free to leave for another club. In this context, teams have signed the most prominent members of their squad to longer contracts with a significant increase in salary. This change has caused a drastic increase in the cost of running clubs." [2] Transfer fees have also exploded in an increasingly speculative system.

After several decades of almost continuous growth, the crisis due to Covid-19 has shaken up this economy. As such, for the 2021 summer mercato, FIFA reports a total sum of transfers amounting to 3.1 billion euros covering 1199 paid transfers, against 4.9 billion euros for 1624 paid transfers in 2019. This crisis has not spared the European clubs which are often the most active on this market. “After having more than tripled between 2012 and 2019, the investments in transfer fees of teams of the five major European leagues have dropped considerably: -28% in the 2020 calendar year with respect to 2019 and a further -20% in 2021. However, for summer only, the 40% drop registered between the last pre-COVID (2019) transfer window and the first after-COVID (2020) one was followed by a slight increase between 2020 and 2021: +1%.” [3]

The European "Big 5" - the richest elite leagues, England, Spain, Germany, Italy and France - spending in 2021 is 42% lower than in 2019. However, the impact of the crisis appears to be less strong for the English Premier League than for other leagues. According to KPMG [3], seven of the ten most expensive summer transfers were made there: Jack Grealish recruited by Manchester City (118 million euros), Romelu Lukaku by Chelsea (115 million euros), and Jadon Sancho by Manchester United (85 million euros). “The analysis of teams having benefited from transfer fees committed by big-5 league clubs over the past ten years shows that most of the money stays within the five major championships: 65% of the total. The percentage measured for 2021 is even greater than that recorded for the last decade: 67%. The high level of these percentages reflects the fact that the most expensive transfers generally occur between clubs of the five biggest leagues.” [4]

The pandemic has reinforced the domination of Premier League clubs on the transfer market: English clubs accounted for 43% of total spending in the five major leagues in 2021. With broadcasting rights and commercial revenues remaining high, English clubs continue to finance a deficit recruitment policy: Their cumulative transfer balance shows a debit of 2 billion euros since the beginning of the epidemic. “Further evidence of English dominance is given by the fact that EPL's transfer expenses have now reached 45% of total Big 5 player expenditure, significantly higher than the 34% 5-year average pre-pandemic. It is also notable that the German Bundesliga not only increased its overall gross spending, but succeeded in making a positive transfer balance at league level, largely thanks to some high-value departures (among others, Jadon Sancho, Ibrahima Konaté and Leon Bailey) to the English Premier League.” [4]

In the other leagues, austerity is the rule. Some big teams are not spared, such as Barcelona and Juventus Turin, penalized by expensive recruitments and recurrent failures in the Champions League. One had to part with Lionel Messi, whose salary had become unsustainable, the other with Cristiano Ronaldo, who returned to Manchester United.

French Ligue 1 (excluding PSG), which is highly dependent on the sale of locally trained or valued players, is threatened by the market contraction. Having a business model based on training players, the survival of most of the French clubs is linked to the realization of capital gains by transfer trading, a situation that is financially dangerous and can negatively affect clubs’ results.

In Ligue 1, Paris-Saint-Germain remains an exception: The club is in eighth place in the most negative transfer balance since the beginning of the crisis (- €133 million), behind six English clubs and a single Italian one (Juventus). By recruiting mainly free players this summer, including Lionel Messi, Gianluigi Donnarumma, Georginio Wijnaldum, and Sergio Ramos, PSG efforts have been more focused on salaries than on transfer fees.

More generally, the clubs of the European big 5 remain the best equipped to emerge from the crisis on top. With the relaxation of the constraints of financial fair play (UEFA's revenue-expenditure regulation system) the best managed clubs and those whose owners have intact resources have seized the opportunity to invest massively.

According to the CIES monthly report n°67, all indicators reflect the trend towards a concentration of spending by the richest clubs: Paris and the two Manchester clubs are the perfect illustrations in this respect: For the period 2012-2021, their balance of purchases and sales of players is negative by 1 billion euros each, far ahead of their rivals. “It has been said that the crisis and the failure of the Super League project should be used to impose stricter rules, but this seems to have already disappeared. However, without regulatory measures, the differences can only increase. The crisis has not been violent enough to bring down and rebuild the system, but it has been violent enough to put the weakest clubs in difficulty and strengthen the position of the dominant ones.” [4]

The big beneficiaries of the post-Covid-19 era could be the "top players", whose market value does not decrease: At the end of their contract, they can leave their employer without transfer fees and choose their destination by negotiating signing bonuses and exceptional salaries. These top players, such as Messi who left Barcelona for free, have become global brands, managing their own business and wanting to capture the maximum of the value they produce, to the detriment of the clubs that speculate on their transfer fees.


[1] The Bosman ruling is a 1995 ruling of the European Court of Justice, which has banned restrictions on foreign EU players within national leagues and allowed players in the EU to move to another club at the end of a contract without a transfer fee being paid.

[2] KPMG Football Benchmark. (2021, September 6). Summer transfer window: Lingering decline with cautious optimism.

[3] Poli. R, Ravenel. L, Besson, R., (2016). Slow Football. CIES.

[4] CIES Football Observatory Monthly Report. (2021, September 2). The economics of big-5 league transfers: past decade and post-pandemic.