This Transfer Window Was Wild 💸⚽
Plus Saudi Arabia bids $20bn for Formula 1, Man City top the money league, and Juventus reaches new lows.
Welcome to Athletic Interest.
There was one club dominating the headlines during this transfer window.
Chelsea have spent more money than all of the clubs in the Bundesliga, La Liga, Serie A, and Ligue 1 combined (€179m vs €131m.)
In fact, since being taken over by an American consortium, Chelsea have dropped more than any other club in world football, and almost double the outlay of second-placed Manchester United.
While the new owners, led by billionaire Todd Boehly, were expected to invest in Chelsea, no one predicted that they would spend this much.
Many rivals, especially those that lost transfer targets to Todd Boehly’s shopping spree, have even questioned how Chelsea can remain in compliance with UEFA’s strict financial fair play rules.
Under FFP, clubs are limited in the amount they can spend on transfers and wages across a three-year period. These rules are very precise.
If a club earns €800 million across that three-year period, they can spend a maximum of €805 million.
This €5 million allowance does increase to €30 million if the owner covers 100% of the extra costs.
Over the last 12 months, Deloitte estimated that Chelsea earned around €560 million from their main revenue streams. In that same period, they spent an estimated €860 million on transfers and wages.
If that type of spending continued across the three-year period, Chelsea would find themselves hundreds of millions over the FFP cap, and in line for some serious sanctions.
Luckily (for Chelsea), they have found a loophole in the FFP regulations.
While UEFA says that FFP considers a club’s transfer spend across three years, it won’t actually account for Chelsea’s recent €460 million transfer spend as one lump sum.
In reality, each player’s total transfer fee will be split across the length of their contract.
Take the Mykhaylo Mudryk transfer as an example. On paper that is a €70 million transfer. But Mudryk signed an eight and half year contract. So, he actually costs Chelsea €8.2 million per year for eight and a half years.
Mudryk isn’t the only one to join on one of these long contracts.
🇫🇷 - Benoit Badiashile (6.5 years)
🇨🇮 - David Datro Fofana (6.5 years)
🏴 - Noni Madueke (7.5 years)
🇫🇷 - Wesley Fofana (7 years)
🇪🇸 - Marc Cucurella (6 years)
Over the next 12 months, the players mentioned will only contribute around €43 million to Chelsea’s FFP cap instead of the €300 million they are reported to have cost the club in transfer fees.
UEFA was not impressed by this. By making all incoming transfers sign extremely long contracts, Chelsea freed up millions in extra spending potential. This goes against the spirit of the FFP regulations, which are supposed to encourage sustainability by forcing teams to spend within their limits.
So, UEFA has just responded by introducing a rule that will close Chelsea’s loophole for good.
From the 2023 summer window onwards, there will be a five-year limit over which a transfer fee can be spread.
Clubs will still be able to offer longer deals under UK regulations but will not be able to stretch transfer fees beyond the first five years.
Interestingly, this rule will not apply to any contracts concluded before the 2023 summer window. This means that Chelsea’s recent signings will not be affected by the rule change.
With the loophole closed for good, Chelsea are actually at an advantage over their Premier League rivals. Liverpool and Manchester United have both paused spending in this window while they wait for potential new owners to take over. This is unlikely to happen until after the January window shuts, meaning that the new owners will not be able to copy Chelsea in taking advantage of this loophole and reducing the burden of FFP.
Chelsea meanwhile still have a few days left in the window and a new owner that is serious about splashing the cash.
Signing long and lucrative contracts isn’t the only way that athletes are monetizing their brands in 2023.
In 2022, the world’s top 50 athletes made more than $1 billion from off-the-field earnings.
Besides the traditional sponsorship deals, many athletes have started their own businesses.
This phenomenon would not have been possible a few years ago when most of the tools needed to build an online business were reserved for large corporations.
Many athletes have turned to Shopify’s easy-to-use all-in-one commerce platform to help grow their businesses. For millions of entrepreneurs in 175 countries, Shopify is reducing the barriers to business ownership to make commerce better for everyone.
So if you have a business, and want to scale and sell online on all major social platforms: check out Shopify.
💰 Going back to football club finances for a second. Deloitte has just released its yearly money league.
Man City retain their position at the top of the list with total revenue from matchday, broadcast, and commercial deals of €731M.
The rest of the top 20 is as follows:
While the overall revenue of these 20 clubs has risen 13% since the pandemic hit 2020/21 season, many clubs still haven’t made a full recovery.
Ticket sales are still below pre-pandemic levels, while the money coming from broadcasting deals has stagnated over recent years.
The only area showing significant growth is commercial income. Man City experienced the biggest overall growth in their commercial income, which increased by €65 million from the previous season.
An English team establishing itself at the top of the table is not that surprising. In fact, for the first time ever, 11 of the top 20 teams are English. Teams from the Premier League earn far more money from TV and have, on average, a greater commercial appeal than their European neighbours. If the Premier League continues to outgrow the other leagues in foreign television markets, it might not be long until an overwhelming majority of the top 20 teams are English.
🇮🇹 The eagle-eyed amongst you will have noticed that Juventus did not fare well in the latest Deloitte results. Their revenues are down 13% from 2019.
To make matters worse, the club has now been handed a 15-point deduction in the league, which makes qualification for next season’s Champions League incredibly difficult.
This deduction comes as a result of an investigation into the club’s accounting practices, a scandal that saw the club’s entire board resign a few weeks ago.
In short, things are looking pretty bleak in Turin.
Don’t just take our word for it, the club’s stock price chart paints a similarly brutal picture.
The share price more than doubled after Cristiano Ronaldo’s famous transfer to the club in 2018, before the outbreak of Covid-19 returned the price to its pre-Ronaldo level.
Continued struggles on and off the pitch slowly pulled the price further down, before this week’s 15-point deduction buried the stock price to its lowest level since early 2017.
With increased uncertainty about the future leadership of the club, and revenues unlikely to increase without Champions League football, the future of one of Europe’s biggest clubs looks incredibly challenging.
🏎 While football in general may be having a hard time, Formula 1 is experiencing a rapid renaissance.
With a growing international audience and new races in locations like Las Vegas and Miami, it’s no surprise that many investors are looking for ways to enter the sport.
This includes the Saudi Arabian Public Investment Fund.
According to Bloomberg, PIF offered F1’s owners, Liberty Media, around $20 Billion for the entire series. That’s around $5 billion more than the current estimated value of F1 and nearly 5x the $4.4 billion Liberty Media paid for F1 in 2017.
It’s not really a surprise that PIF would want to add F1 to their list of sporting assets that includes Newcastle United, and the LIV Golf League. The country is trying to wean itself off oil and is using sport to broaden its appeal and enter new markets
While Liberty Media did reject the offer, the fact that PIF offered such a large amount of money for F1 didn’t sit right with the head of the FIA.
Mohammed Ben Sulayem even took to Twitter after reports first emerged, to raise his concerns:
Perhaps Ben Sulayem is concerned that a PIF investment into F1 would see the series expanded to new locations across the globe at a much faster rate, this would make it much harder for the sport to maintain the sustainability goals it has carefully implemented over the past few years.
This could also be a subtle dig at Liberty Media’s own expansion of F1 within the U.S.
Either way, Liberty Media bosses are reportedly unimpressed that the FIA chief, who is meant to remain relatively impartial on commercial matters, has decided to speak up so publicly.
🎥 We end this week’s newsletter with some weird things we found on the internet.
Starting with this clip from a match between the women’s teams of Portuguese clubs Benfica and Sporting:
No there is nothing wrong with your screen, the referee did in fact show someone a white card.
This wasn’t a printing error or strange mix-up either, it was completely intentional.
The Portuguese leagues are currently trialing a new initiative from FIFA that hopes to acknowledge and promote fair play in football.
Under new rules, a white card will be shown to any player, coach, or support staff that carries out an act worthy of praise.
In this case, the referee was acknowledging the medical staff of both Benfica and Sporting who had gone to help someone that had fainted.
Clearly, the medical teams were not aware of the intention behind the card, going by the confused reaction of one of the doctors.
It’s not entirely clear from this test run if the card will become a major fixture of football, but it’s nice to think that referees have the power to spread love instead of just punishment.
🇫🇴 Talking of weird FIFA rules, did you know that the Faroe islands are the only place in the world where you can use your hand for a free kick
Alright, let us explain…
Because nowhere in the Faroe islands is more than 5km from the sea, matches there are often impacted by heavy winds. To prevent the ball from running away during set pieces, one player is allowed to hold onto the ball.
This rule only applies within the territory of the Faroe Islands and apparently is only used on rare occasions.
We would like to think that Diego Maradona overheard this rule back in the day and thought it applied everywhere.