Is a summer spending spree just around the corner?

The Premier League has recently agreed a new deal for the sale of its overseas TV rights. Whilst it refuses to announce the exact figure, the amount is estimated to have doubled from £625 million for the previous deal to a staggering £1.2 billion over the next three years. The Premier League will therefore distribute record TV money during the 2011/12 season with even the bottom club guaranteed at least £37 million in rights alone. And, surely fans across the country are rubbing their hands in anticipation as they hope to see the money invested in big-name signings and wages to match.

Whilst the average £5 million increase in income per club is unlikely to make or break Chelsea or Manchester City’s season, for the likes of Stoke City and West Brom the money could make a huge difference as they look to establish themselves as Premiership sides. Likewise, more established clubs such as Aston Villa and Blackburn Rovers have slipped down the table this season and, if invested wisely, the money could bring about a U-turn in their fortunes.

But, football’s finances are still far from secure and don’t expect to see a huge spending spree quite yet. Whilst the likes of Chelsea and City have introduced huge amounts of wealth into the game which has been redistributed through transfer fees, many clubs are still stuck with bulging wage bills. For example, whilst the Premier League received £1.9 billion in income during the 2009 season, £1.3 billion of this was spent on wages. Likewise, most clubs have announced season ticket increases for next year. The most notable of these has been Manchester United who, last week, revealed they would be charging an extra £1 a game across the board.

More worryingly for the top end of the table of UEFA’s incumbent Financial Fair Play laws are set to come fully into effect by 2014. This is where the extra £5 million will be appreciated by Chelsea and Manchester City as they look to balance their books rather than face expulsion from European competitions.

Financial conservatism has clearly been adopted by the Premier League clubs in recent transfer windows. In the most recent January window, the big spenders by some margin were Chelsea and Manchester City. With the exception of Aston Villa, the other big investor was Liverpool. However, this was mostly funded not by new owners, but by the reinvestment of the £50 million received for the sale of Fernando Torres. With news of the increased TV income now public, some clubs will be forced to spend money as they look to keep both managers and fans happy. But, expect next month’s annual Football Finances Review by Deloitte to prove interesting reading about the real financial health of the game.

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Article title: Is a summer spending spree just around the corner?

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