The Inflationary World Of UK Premiership football bubbles on

If we look at ordinary life in the UK we see that there are quite a few disinflationary pressures right now. Many of these have been driven by the fall in the oil price represented by the fact that even after this morning’s bounce the price of a barrel of Brent Crude Oil at US $44.39 is down some 56% on a year ago. This has led us to a situation where consumer inflation is described thus by our official statisticians.

The prices households pay for the goods and services they buy remain largely unchanged on a year ago. The Consumer Prices Index (CPI) – which measures these changes – shows that prices increased by 0.1% (or 10p on a £100 shop) in the year to July 2015. Annual inflation (the overall rate at which prices have increased over the last year) has been at or around 0% for the last 6 months.

Perhaps “noflation” would be the bets description of our official consumer inflation experience although of course other measures (RPI and RPIJ) do record low inflation.

The world of UK football transfers

A completely different situation emerges however if we now look at the world of Premiership football where the numbers are rising with dizzying speed! If we go back to July then the lights were flashing amber if not red. From the Guardian.

Raheem Sterling will undertake a medical at Manchester City on Monday after the deposed Premier League champions finally agreed a fee with Liverpool that could potentially rise as high as £49m for the England forward….Agreement was eventually struck on Sunday afternoon on a deal which will cost City an initial £44m, with a further £5m due in add-ons.

This represented quite a rise on the £600,000 that Liverpool paid for him back in 2010 as we mull how much he has improved as a player, although an add-on clause will have raised that towards £10 million now. It is also true that British players tend to be more expensive than foreign ones which is one of the reasons why premiership football has so many foreign players in it.

But we found ourselves reviewing the most expensive player under-21 and also the most expensive English player ever.

How did we get here?

Back on the 4th of June I suggested that we could see this.

A spending splurge this summer?


So a lack of world-class players has led to a Champions League slump for premiership clubs. The same clubs are now in this situation of having ever more money and a stronger currency meaning that Pink Floyd may be playing.


Money, it’s a gas
Grab that cash with both hands and make a stash
New car, caviar, four star daydream,
Think I’ll buy me a football team.

Let us be clear that the boom in terms of money for premiership football goes on and on and on.

England’s top division has passed the £3 billion revenue mark for the first time and widened the gap to its nearest rival, the Bundesliga, to over £1 billion. The Premier League now generates more revenue than La Liga and Serie A combined.

Not only has it surged but it is about to again.

The next deals will commence in the 2016/17 season, with the value of the live domestic element already confirmed to be 70% higher than the current deal.

What happened next?

If we progress in Question of Sport style we have already noted the Raheem Sterling transfer but that was gazumped by the same club last night as reports began to filter out of this. From the Guardian.

Manchester City are confident they have finally agreed a deal to sign Kevin De Bruyne from Wolfsburg for an initial €74m (£54m)……which could eventually be worth more than €80m (£58.5m) with performance-related bonuses, goes through.

There is still the question of the medical and a supposed matching bid from Paris St.Germain but we do have some numbers to mull. This is because De Bruyne was bought by Chelsea for £7 million (January 2012) and then sold to Wolfsburg (January 2014) for £18 million in what seemed to be a really good piece of business. Indeed I note some 20/20 hindsight trading going on as some bemoan the lack of a sell-on clause!

I am not the only person considering the issue of inflation here as I note these comments on Twitter from Paul Hayward.

Kevin De Bruyne’s price rose faster than a cup of coffee in the Weimar Republic.

Kevin De Bruyne left England in 2014 for £18m and is coming back in 2015 for £54m. He’s hyperinflation on legs.

Of course even the £54 million will probably be too low but it is treble the £18 million Wolfsburg paid as we mull quite an inflationary burst. I think I am being generous in saying that the £11 million profit they gave Chelsea was due to a skill improvement although I am sure that readers will have their own thoughts. Measuring output and quality is somewhat intangible.

What we can say is that Wolfsburg are certainly not distress sellers as they are owned by Volkswagen but it would appear that even they could not turn down such a sum of money which in the normal world of pretty much zero inflation you could buy quite a lot with.

The ever inflating Stones

As we review the issue of the quality and output of a young man who has played for England then a wry smile passed my lips as BBC Radio 5 live reported this last night.

Stones, back at his first club, was not his usual composed self and made an error of judgement when Winnall gave the home side the lead, inexplicably stepping over his goalbound shot.

Actually this is more favourable than the radio broadcast which blamed him for two goals. Let us make an allowance for what Hard Fi described below and move on.

Pressure, pressure, pressure pressure pressure
Feel the pressure
Pressure, pressure, pressure pressure pressure

Living for the weekend [x8]

However I note that the opening bid of £20 million was more than the £18 million paid by Leeds United for Rio Ferdinand some years ago and of course it has been replaced by £26 million and then £30 million. On the other side of the coin it did appear that around £34/5 million would be sufficient but that now seems to have been replaced by £40 million. In fact even that may be old hat as I listened to Danny Mills on BBC Radio 5 Live last night going £42,3,4 million.

If we believe the hype then there may be another launch forwards. From the Daily Star.

Chelsea are in talks with Juventus about signing Paul Pogba and are prepared to make a £73m bid for the midfielder.

What about the wages?

In the normal world there was some welcome news today especially for employees of Sainsburys. From the BBC.

Sainsbury’s has given its shop workers a 4% pay rise, the highest increase in more than a decade, to take staff wages to just above average for the sector.

It says 137,000 of its workers will see their pay rise from £7.08 an hour to £7.36 from the end of this month.

Putting it another way if Raheem Sterling is getting £200,000 a week then if all 137,000 worked for an hour they could pay him for five weeks and if Kevin De Bruyne is getting £250,000 per week then they could pay him for four weeks or so.


For those who are not football fans I guess the way that it hits the headlines at this time of year has them singing along with Green Day.

Summer has come and passed
The innocent can never last
Wake me up when September ends

For the rest of us we see a world where there is clear disinflation in commodities and oil and fears of deflation as the Chinese bubble bursts. However as soon as we try to apply any quality and output measure we see that there is an extraordinary bubble going on particularly in Premiership football. Ironically it will mostly be recorded as economic growth as I doubt there is a football deflator which will do the job. So just like any other economic bubble really, what could go wrong? Not even membership of the House of Lords is growing this fast.







21 thoughts on “The Inflationary World Of UK Premiership football bubbles on

  1. HI Shaun

    Great article as always

    I always think the football league is underwritten by the government in a form of bread and circus’s. Benefits pay for the sky football subscription. Even during the worst recession ever, sky viewer numbers continued to increase. And now we have competition from BT to drum up more cash.

    There’s also a never-ending supply of laundered money from abroad. When Africa becomes the next growth economy in the next ten or twenty years. I’m expecting another wall of cash to hit football clubs and property in london 😉

    • Hi Anteos and thank you

      As to Africa it is hard to judge. For quite some time we were told that it was “boom,boom,boom” in many places by the mainstream media. Now as part of my own research on here (Ghana) and a falling oil price (Nigeria) we know that some of that was a facade. Also we have all migrant crisis across the Meditterranean which implies there are still plenty of problems in Africa. So I fear it is another story of some doing well but many struggling which of course is a constant theme these days.

  2. IME most industries have a small well rewarded talent pool which that industry relies on for making large amounts of money. In Premiership football that will be in the order of 1000 people for a £3bn industry.

    The applies particularly to entertainment, with Hollywood a good example, as many people will spend large amounts on their own self-gratification which they could not rationally justify for normal living expenses. The same applies to the amount spent by some people on their hobbies.

      • Without this talent pool driving advances you would not have the human progress we make, which means each generation are richer, healthier and live longer.

        Can’t see how that is a moral problem

        • That’s utter, utter pish.
          Human advancement comes from individual inspiration, without any financial motivation, and has done for millennia. Even to the point of persecution.
          To bracket genius with footballers, wide-boy spivs and luvvies is a grotesque misrepresentation of genius, with a complete lack of comprehension of what drives advancement.
          We, in general, have steadily been getting poorer since 1980, the date at which top-end personal reward began to soar out of control.

          • All my career has been in R&D, pushing the envelope. What I’ve described; I’ve seen it, experienced it, done it, have you?

        • “…which means each generation are richer, healthier and live longer…”

          well the top 0.1% are, as Buzzin states

          and no, they can’t see that as a moral problem either !

          music link

          The Brains – Money Changes Everything


        • Rods2.
          You certainly don’t suffer from inferiority complex.
          May I humbly thank you on behalf of humanity for such progress.
          So what did your talent pool develop, which justifies your indecent share of World resources, and how is it relevant vis-à-vis the matter at hand, namely EPL remuneration?

          • Resources are infinite, as the elements and compounds we use to create things, when we have finished with them don’t cease to exist. Only problem in the future might be our dispersal of high concentrations that we can cost effectively harvest and use and being able turn complex compounds back into their elements for reuse. Energy is finite, entropy is going to win. If the current model of an ever expanding universe is correct it will be dark in about 13 billions year and at about absolute zero. Our sun runs out in about 4 billion years, so we had better have moved to a different solar system by then. Until then, once we stop using past sun energy, wood, coal, oil, gas etc to harvesting and energy effectively storage until needed for use current sun energy, this can be considered infinite as well.

            Once you have thought through these things, you realise how incredibly stupid some people’s arguments are!

            We are going to have to get better at harvesting and storing current sun energy and recycling, nothing I don’t think we don’t know and are beginning to do!

            Coming back to footballers, talent is talent and in-demand talent will get rewarded. If it isn’t, then like under communist systems, human progress largely stagnates! Wealth has always been a driver of humans and progress as we all want better more comfortable lives.

        • Rods2.
          I think you are confusing “reward”, with the ability to commandeer disproportionate remuneration due to the capitalist system.
          I cannot think of ONE real human development fuelled by that ability.
          Also the contrary is true in capitalism, research which would benefit mankind is RESTRICTED by corporate profitism.

  3. English, not UK.
    Only, the EPL isn’t really an English league any more.
    It isn’t anyone’s other than SKY TV’s.
    Totally divorced from the fans, and English players, because of the hideous media rights, you can pretend to support your team, but you don’t; SKY TV supports them all, and they don’t give a monkey’s for your season ticket money.
    Ask any Chelsea, MU, MC, NEWCASTLE fan, (Rangers fans got shot of Ashley, Toon Army are stuck with the bastard) if you can find a real one.
    Bournemouth FC will make a £100m this season. No disrespect, but that is ridiculous.
    The Cherries have an 11,500 ground, which was seldom filled prior to season-before-last.

    I wouldn’t mind you having this instead of a national league, but it has strongly negative repercussions for the leagues it borders.

    • Hi therrawbuzzin

      Good point as I should have made the English bit clearer. As to the league itself the main English bit is the location at least at the main clubs. However they like to have some English representation which is one of the factors which drove up the sale price of Raheem Sterling and is driving up the (possible/probable) price of John Stones.

    • I’d agree with this. The fans are there as part of the product for the global audience. There seems to be more shots of the fans in TV coverage now as Sky push this side of the brand now that it’s clear the quality is lacking.

  4. Interesting article. Shaun.

    EPL does seem to be breaking new ground versus other leagues right now. How sustainable is it though? BT and Sky are edging everything upwards but at what cost? BT has taken cricket rights to Australian ashes and a number of other sports are changing owners too.

    Will viewers continue to subsidise these deals? Who knows? We saw what happened with Ondigital, ITV digital and Setanta. One could argue that Sky’s most scalable brand right now is Sky Atlantic not Sports. Can BT Sport succeed where so many others have failed? If not what are the implications for the EPL clubs?

    Real fans go to matches. Foreign fans follow the best players not the richest ones. Today the most successful players are not in the EPL.

    • Hi HarryA and welcome

      The EPL has strengths one of which is the relatively even spread of the TV money which makes the majority of games competitive in a way that other leagues rarely match. However as you point out there is a shortage of five star players in it right now although I expect the cash to be splashed on that front in this and subsequent transfer windows.

      As to BT I agree that it is simultaneously in a successful and dangerous position.

    • BT will just ramp up the cost of land lines and tell everyone it’s upgrading something or other. They have a monopoly.

  5. The UK premiership is like the London property market. A few rich foreigners are pouring money in that is far above club income which renders all but the top clubs as also rans. The also rans are in a nether world, trying to stay up (avoid homelessness) but forever unable to compete for the top honours (gain financial independence).

    And if the top owners leave the whole thing comes tumbling down (London property and the Russians).

    Oh and all the overt money laundering.

  6. Reminded tonight by a wonderful swing prom from the Albert Hall courtesy of BBC4. Minnie the Moocher;

    She had a dream about the King of Sweden
    He gave her things that she was needin’
    He gave her a home built of gold and steel
    A diamond car with platinum wheels
    Hidee hidee hidee hidee hidee hidee hi
    Hodee hodee hodee hodee hodee oh
    Scurlivou scurlivou scurlivou rlivourlivu
    Setetetete raburlutu scetete raburlutu toy
    He gave her his townhouse and his racing horses
    Each meal she ate was a dozen courses
    She had a million dollars worth of nickels and dimes
    She sat around and counted them all a million times
    Hidee hidee hidee hi
    Hooh whoaa oh oh whoa
    Hidee hidee hidee hi
    Poor Min, Poor Min, Poor Min

    Read more: Cab Calloway – Minnie The Moocher Lyrics | MetroLyrics

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