When Arsenal signed Nicolas Pépé from Lille last season for a fee of £72m it raised plenty of eyebrows.
Firstly because the fee seemed to vastly overvalue the Ivorian, something that Fenway Sports Group noted during Liverpool’s pursuit of the forward before baulking at the asking price and deciding to take a step away.
Secondly it was because Arsenal had managed to shoehorn in such an eye-watering fee into despite only reportedly giving then manager Unai Emery a £45m budget.
Now, paying instalments on a deal isn’t exactly groundbreaking, but a deal of the size of Pépé to Arsenal was an interesting one, with the Gunners stumping up just £20m up front in their first payment, the deal spread over five years.
Football continued to go about its business normally until COVID-19 hit, the financial ramifications, which still clubs don’t know exactly how keenly they will be felt – and for how long, were enough to make owners more jittery about pulling the trigger on deals, especially when the TV market might not be as buoyant as it has been over the past decade or so moving forward post COVID-19.
For Liverpool owners FSG, their Boston Red Sox operation looks like taking a hit of between £50m and £75m as a result of the pandemic, enough to make them consider entering into a potential partnership with RedBall Acquisitions to publicly list FSG and raise some capital to invest in either the Reds or the Red Sox, be it in infrastructure or on the field.
Liverpool did some business despite the pandemic, most notably the move to land Wolves forward Diogo Jota for around £41m, a deal that looks like a snip so far.
But while the large sums may lead some to question the wisdom in such mammoth outlays at such a precarious time, the reality is that this season Liverpool will stump up just £4.1m initially, the rest spread over a lengthy period of time.
Wolves were happy with the deal, however small the initial sum into the pot may be. Jota’s value while at Liverpool will outstrip what it would have been at Wolves had he stayed there, and the Molineux side probably knew that in such a financial climate that the Portuguese was unlikely to see his value increase much beyond what Liverpool were offering. It was a deal that gave them some security, maximised the value of an asset and also ticked the box for Jota himself.
Compare the situation to Manchester United’s pursuit of Jadon Sancho.
United’s back and forth over the Borussia Dortmund and England ace has dragged on for months, the German side remaining steadfast in their stance that unless Sancho’s asking price of just in excess of £100m is met then the decision makers at Old Trafford can take a hike.
United have up to this point been unwilling to meet such demands, something that can probably be linked to their latest set of accounts, published last month, that showed a £23.2m loss for the year, a 19 per cent drop in revenue and net debt rising £270.5m to £474.1m as of June 30, 2020.
And with continued uncertainty around just when revenue streams will return to something like normal, the less sure footing of television money and question marks over Ole Gunnar Solskjaer’s future as manager, would that kind of outlay in the current climate be reckless?
“There will be teams that will always spend no matter what because they have the means to, namely Manchester City and Chelsea,” one former Premier League agent, who asked to remain anonymous, told the ECHO.
“For Manchester United there is a business aspect behind it all and they have to deliver value to shareholders, while Liverpool operate within the confines of a business model. So if the deals aren’t right for either then they likely won’t get done. Arsenal are another who fall into that bracket, as well as Spurs who still have all the debt associated with the new stadium to contend with.
“Arsenal became the first to really push through a massive deal and spread over a period of time like they did when they signed Nicolas Pépé, and that was before coronavirus was even a concern.
“They were able to sign a player for over £70m and spread that payment, their transfer spend for that particular deal being booked as £20m or so in that financial year. They were buying from a smaller club, where the player’s value was at it’s highest for that particular club. Also, when a player wants to go and there is a substantial deal, if the player wants that to happen then it will happen eventually.
“Arsenal’s big outlay on Thomas Partey was different as they paid the release clause of about £50m to Atletico Madrid, they had to stump up that cash to get the deal done.”
Arsenal, in order to get the Partey swoop over the line, had to raise some extra funds beforehand, with Emiliano Martinez’s £17m to Aston Villa, a deal that may not have been done otherwise, getting signed and sealed in order to add to the Arsenal pot for Partey.
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And what about Liverpool?
Since the start of the pandemic the Reds have added three new faces, Kostas Tsmikas (£11.25m, Olympiakos), Thiago Alcantara (£20m rising to £27m, Bayern Munich) and Jota (£41m, Wolves).
But Liverpool’s £76.75m outlay has been considerably offset by deals out of the club.
Rhian Brewster left for Sheffield United in a £23.5m deal, Ki-Jana Hoever moved to Wolves for an initial £9m fee, Dejan Lovren made the switch to Zenit St Petersburg for £10.9m while Ovi Ejaria joined Championship side Reading for £3.5m, deals that total almost £47m meaning a net spend just shy of £30m. Pretty sensible.
The former agent said: “I think in a normal climate you would have seen Wolves dig in a bit more over Jota, but I think they saw that the best deal they were likely to get any time soon was the one that Liverpool had presented, a big fee spread over time.
“Clubs are having to be more careful when structuring deals than they ever have before because their finances are more exposed because of Covid. Jota’s deal makes sense because it is a small fee initially and the rest of the deal is financed over time when, hopefully, things start to return to normal which means that club’s revenue streams improve.
“The market isn’t as strong as it was, and that was going to be inevitable. Even Barcelona and Real Madrid are being more careful.
“I think if this was a normal year and we weren’t living in the craziest times we’ve ever known then a number of big deals would have gone through. For a start I think Harry Kane would have gone and you’d be looking at £200m fees for players like that.
“That isn’t happening and there is nothing to say that the market will bounce back to those type of fees. But when you see how much clubs in the EFL and Non-League are struggling just to stay afloat you have to put it in some context.
“For Liverpool, I think they’ve done good business. The problem they have moving into 2021 is that they will likely have to spend again, or at least Jurgen Klopp will probably ask the question, because they’ve lost Virgil van Dijk. It will be interesting to see what they do.”