The annual statement of football's accounts does not make good reading for fans of Nationwide clubs. Patrick Harverson looks at the numbers
Ask most fans how they think the European commission’s 1995 Bosman ruling, which allowed out-of-contract players to move clubs on free transfers, has most changed domestic football and they will talk of the hundreds of foreign players who make a living in England today.
They will point to the likes of Gianluca Vialli and Brian Laudrup, two international superstars who – thanks to Bosman – cost their employers at Chelsea absolutely nothing to acquire from their previous clubs. Generally, this is seen as a good thing. The arrival of large numbers of foreign stars in England is regularly cited as one of the factors behind football’s booming popularity. Yet, away from the glamorous spotlight of the Premiership, Bosman’s impact has been felt just as keenly lower down football’s food chain, and here the consequences for the English game have been anything but positive.
Last month, the accountancy firm Deloitte & Touche produced its latest annual review of football finance, and within the firm’s detailed report were some disturbing figures that reveal the true cost of Bosman to English football. In its section on transfer fees, Deloitte said the following: “Traditionally, the transfer market has provided a wealth redistribution mechanism for the English game and has gone a long way to support the full-time professional structure of 92 clubs.”
Today, that wealth redistribution mechanism has all but broken down, and Bosman is largely to blame. Consider the following statistics. In the 1991-92 season, English clubs spent £75 million on transfer fees, of which only £3 million left the domestic game – ie was spent on acquiring players from non-English clubs. In 1996-97 (the season analysed in the latest Deloitte report), English clubs spent £250 million on transfer fees, of which £100 million was spent on players from outside England.
In only five years, domestic clubs have gone from spending just four per cent of their transfer budgets on players from abroad to spending 40 per cent overseas. Income which used to be almost exclusively redistributed within the English game is now being redistributed more to the benefit of foreign clubs. And the losers in all this? It is the clubs which can least afford to be left behind by football’s boom.
For as long as anyone can remember, clubs in the lowest two divisions have relied on transfer fees to bridge the inevitable gap that appears each year between their incomings and outgoings. For many, selling a promising young player was the difference between surviving for another season or going bankrupt.
Bosman, however, is slowly putting paid to that. According to Deloitte figures, in the year before the Bosman ruling, Third Division clubs were able to fund 64 per cent of their annual losses by selling players to clubs in higher divisions. However, by the 1996-97 season, money from transfer fees only covered 19 per cent of Third Division clubs’ losses.
The trend will only worsen. If 1996-97 saw record spending on overseas talent by English clubs, those records have since been smashed. In the first six months of this year, 94 players were bought by English clubs in deals worth more than £500,000. Yet only 14 of the 94 deals involved clubs in the Premier League or First Division buying a player from the two lowest divisions.
Admittedly, football was not wholly unprepared for the damage Bosman would inflict on the lower reaches of the game. When the European transfer market was transformed overnight by the 1995 ruling, critics were quick to warn that it would sound the death-knell for small clubs. However, at the time the main fear was that smaller clubs would suffer because they would no longer able to command big transfer fees for their best young players. The expectation was the big clubs would simply wait for the contracts of the top youngsters to expire and then lure them away on free transfers with generous pay offers.
This fear, however, has not been fully realized. Instead, the small clubs have earned some protection against losing their home-grown young talent on free transfers by the adoption of a new transfer system that means players under 24 years old still command a transfer fee when their contracts expire.
However, this new system does not tackle the main problem facing lower division clubs – the increasing tendency for big clubs to shop abroad. There is no single reason why England’s elite clubs prefer buying from overseas, but Bosman is at the root of most of them. A combination of factors are involved: overseas players have been cheaper in recent years, because of Bosman; more of them are available on free transfers, because of Bosman; there is a much bigger pool of talent to choose from, because of Bosman (the ruling not only tackled the issue of out-of-contract transfers but also outlawed rules restricting the number of European Union players in each team).
What makes the reversal of transfer income-flows particularly worrying is that clubs at the very foot of the League need the money from player sales more now than ever before. The new Deloitte report shows that between 1995-1997 Premier League turnover rose 34 per cent, First Division turnover rose 26 per cent and Second Division turnover rose 32 per cent. Yet over the same period Third Division turnover actually fell by one per cent.
To make matters worse, because big clubs were shopping overseas, the money Third Division clubs received from player transfers was almost halved between 1995 1997, dropping from £3.2 million to £1.6 million. The result was their losses almost doubled to £6.7 million in 1997. This situation cannot last indefinitely. Unless rich local benefactors step forward with cheque books open, some Third Division clubs have a choice. They can can merge with other troubled clubs to pool their resources and talent. They can cut their costs further by going part time. They can link up with bigger clubs and adopt “feeder club” status. Or they can carry on as they do now and face eventual extinction.
As the accountants at Deloitte & Touche conclude in their 1998 report: “England cannot economically support 92 full-time professional clubs.” It is a sad fact, but an inescapable one.
From WSC 140 October 1998. What was happening this month