Footballs liquidity issue

Leading into the end of the 2021 summer transfer window, the headline fees paid for players by Premier League clubs stimulated an observation from a journalist friend of 'is football in its own bubble when the pandemic seems to have affected everyone and everything else.'

A closer look however reveals a very different picture, as transfer fees as a whole throughout the big European leagues are down considerably, with many clubs who traditionally inject capital into the market very quiet, or in the case of Barcelona - unable to re-sign Lionel Messi due to La Liga financial rules - not so quiet at all.

Debt levels have increased exponentially. No fans for over a year impacting on gate receipts and subsidiary purchases- F&B, hospitality, merchandise - plus broadcasting income delayed, commercial income by default reduced. Spanish clubs aren't spending, Italian clubs are the same, Bundesliga transfer activity is down.

In France PSG acquired players, but most were free transfers of players whose contracts had ended.

If debt levels need to be reduced for clubs to start spending again, we shouldn't think that this will be a one-window problem. Transfers could well be impacted for a number of years, which will lead to serious liquidity issues and a market that is likely to stagnate.

How long can the Premier League top clubs continue to buy big if they can't offload their surplus players into the market? A club can't continue to amass a playing staff, not recoup transfer outlay and continue to add to its salary bill. Thus their end of the spectrum dries up, and with no capital injected money doesn't circulate through the entire eco-system.

The lack of liquidity is a problem for all clubs, but the second and third tier, those who rely heavily on that capital being circulated - a couple of million here and there for one of their players - are going to load even more difficulties on themselves, especially given the pandemic will have driven their debt even higher than it was.

When liquidity issues hit the Financial markets in 2008, eventually governments filled the holes, filling the voids with freshly printed money. Football doesn't have that luxury. Without the sport as a whole taking action, recognising not only the problem but where the problem will lead for others, there are going to be further, profound repercussions.