Premier League clubs have shattered the summer spending record, and the numbers have plenty of observers worried. Credit-based investment is fuelling a bubble, and if it bursts, the less wealthy clubs will pay the price.
Is the world's richest and most powerful league heading towards the abyss?
Since the window closed last Tuesday, the staggering 4 billion euros spent by English clubs has drawn admiration and serious concern in equal measure. That's according to French network"Radio Monte Carlo".
Several major outlets, "The Independent" among them, are forecasting "a nasty surprise in the near future". The reasons? No financial oversight of these deals, and a shortage of liquidity at the clubs.
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Credit-based signings
Of the Premier League's twenty clubs, 16 broke the 100 million euro barrier in investment. The league also equalled its record for the biggest single deal when Enzo Fernandez moved from Chelsea to Manchester City for 145 million euros.
How many of those deals are structured, though, is what stokes the worst fears. Think "unprecedented indebtedness" and payments spread over several years through credit companies, described as "the big winners of this transfer window".
Credit is a sector under constant pressure right now. An official at one of the clubs told the British newspaper: "A credit crisis is looming. The world of football has plenty to worry about." Football has clung to outdated methods, such as instalment payments, which make no sense in a volatile economy. Officials are now comparing the situation to the "subprime mortgage crisis", the catastrophe that triggered the global financial crash of 2007-2008.
"The bubble will burst"
Why the fear, when the English league is bankrolled by lucrative television rights and stands as the richest on the planet? Because for several years the financial independence it is supposed to operate under has been undermined by foreign capital, American money in particular.
That influx has introduced "practices unprecedented in this sport, many of which conflict with football's traditional standards", "The Independent" adds, before continuing: "The constant circulation of money through transfers allows compliance with the regulations, while letting debt accumulate."
One more factor deepens the dread. Across Western countries, the rising cost of public debt could ramp up the pressure on clubs to repay the credit they have taken on.
"The Independent" predicts: "The bubble will burst. The debts will be called in. And it is usually the lower-placed clubs that are hardest hit."
An anonymous senior figure, quoted by the newspaper, signs off with a bleak warning: "All of this will collapse. And when that happens...".
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