Could Fernando Torres and Andy Carroll mark the end of the bubble in football and can Chelsea now satisfy UEFA's new regulations?

In one incredible day, three Premiership clubs turned what had been a relatively quiet transfer window on its head. With over £130m spent on new players in the space of around two hours between 9pm and 11pm, it delivered a hammer blow to the argument that an era of austerity and financial management was beginning to edge into football in England.

With the upcoming implementation of the new UEFA Financial Fair Play regulations at the beginning of the 2011/12 season, it was believed that clubs were beginning to prepare for them by curbing their spending and cutting large earners from their wage bill. Instead, it seems to have served to create the most incredible and volatile transfer window in history.


The deal to bring Fernando Torres to Chelsea from Liverpool was in the region of £50m and makes him one of the most expensive footballers in history. Whether or not it can be argued that there is some value in that deal, it is an incredible amount of money. If we add in the signing of David Luiz from Benfica, Chelsea splashed out almost £75m in the space of about 30 minutes late on Monday night. All this came only hours after the club announced losses of £70.9m for the previous season.

And if the Torres deal seemed overly extravagant, the £35m deal to bring Andy Carroll to Liverpool from Newcastle is surely the most overpriced transfer in history. He cost well over twice what Newcastle paid to sign Alan Shearer fifteen years ago. Almost £10m more than Wayne Rooney cost. You could have signed arguably the best striker on the planet – David Villa – and had a couple of million left over.

It is crazy that the British record transfer is for a player with only 80 senior matches under his belt and with only one international appearance to his name. Indeed, he cost more millions than he has scored goals in his entire career since making his senior debut five years ago.


However, Liverpool are hardly a club to worry about in this situation. Despite spending over £58m on new strikers in one day, when you factor in the sales of Fernando Torres and Ryan Babel, they have a net spend of only £1m. Whilst the fees that they have been paying are over-inflated and simply obscene, financially they have spent almost nothing.

Chelsea are the club that are under most scrutiny today. £75m spent despite announcing huge losses seems almost unthinkable to the average person. Chairman Bruce Buck announced recently that the club were on course to meet the regulations once they are implemented.

The club slashed the wage bill by around £20m in the summer by selling and releasing the likes of Deco, Joe Cole, Ricardo Carvalho, Michael Ballack and Juliano Belletti, but given that Fernando Torres is on a reported £175k per week, that increases the wage bill by over £9m per year.


We can assume that David Luiz must be on fairly decent wages. If we conservatively assume that he is on around £60k per week, which is likely to be on the low side given that he is a Brazilian international signed for over £20m, we can add another £3m to the total.

That means that the two new signings have increased the wage bill by a minimum of £13m. If we include the wages from their only summer signing, Ramires, who is earning a reported £4m per year, this takes it to £17m. In other words, they have almost completely cancelled out the savings they made in the summer.

So, where is the savings likely to come from? Under the new regulations, injections of money from owners will be limited to €15m per year (around £12.8m). So we can write off that much from the deficit, making it a far more manageable £58.1m to cover.


Success naturally leads to more money – it is a general rule of not only football, but business in general. However, last season Chelsea won the double. So realistically, no further domestic success would be possible, and to budget on achieving that feat every year would be highly unrealistic.

They only reached the last 16 of the Champions League, which would have led to a large fall in revenue, given that they have become accustomed to reaching the semi-finals at least in recent seasons. The loss of two home games, plus the additional revenue that comes from success in this competition would potential help to cancel out some of the losses, but relying on continued success in this competition is a risky proposition.

Finishing in the top four of the Premiership is an absolute minimum for Chelsea to even think about meeting these new regulations. Without the Champions League and the money that comes with it, Chelsea would be in severe problems.

However, another problem they will now face is how the new regulations deal with player transfers. Chelsea cannot simply write off the spending from this transfer window as a simple lump sum payment now. Rather, they must amortise the fee over the course of the player’s contract.

Therefore, given that both Fernando Torres and David Luiz have signed five year contracts, the transfer fee would be split evenly over the period of the contract. In other words, they must mark down a cost of £15m per year for the next five years for these transfers.


This adds another £15m each year that Chelsea must try and cover in order to break even and fulfil UEFA’s new regulations.

Chelsea are hoping that they have cut the deficit by recent changes, including having increased ticket prices by over 10% over the summer, reduced bonus payments for the players, a new deal with Adidas that will increase sponsorship payments from around £10m per season to around £20m per season, and increased income from TV revenue.

However, the bright point for Chelsea is the question of whether UEFA will actually stringently enforce the regulations. Currently, the likes of Chelsea, Real Madrid, Liverpool and Barcelona would all fail under the regulations. Would UEFA really ban them from European competition? Would they have a Champions League without a number of the biggest names?


Even if they do enforce it, there are a number of caveats built in. For the 2011/12 and 2012/13 seasons combined, clubs can overspend by €45m so long as it is covered by an injection of equity from the club’s owner. For the next three year period, they can overspend by another combined €45m, then €30m for the next three years, then €15m, and only then must clubs actually break even.

In other words, clubs do not actually have to break even for another 14 years. They can continue to make losses, albeit steadily reducing losses all the way until 2025. And to add to this, if clubs can show that they are heading in the right direction and moving toward breaking even, UEFA would reduce the sanctions.

As far as I can tell, that is a major get-out-of-jail card. For example, if Manchester City replicate last year’s losses of £121m in the first year of the new regulations, but cut this to a mere £110m in the second year, they could avoid being banned from Europe because they have cut their losses and are moving in the right direction. No matter that they have lost a nine-figure amount – they are trying hard.


The new regulations are a good thing in so far as they look to curb the spending in football which have risen to even more unbelievable levels in an incredible couple of hours on deadline day. However, there are other problems with them that will be explored at a later date.

Chelsea face a major battle to meet these regulations and their long-term plan of breaking even by 2010 has clearly failed spectacularly. Whether they can continue to look to cut their costs without sacrificing success on the field is unknown, but they have to try to fulfil the new requirements or risk the wrath of UEFA and Michel Platini.

Again, whether he would follow through with his threats remains to be seen, but can the likes of Chelsea, Liverpool and Manchester City take that risk. Surely not, which means that the 31st January 2011 could be marked down as the final peak in the ridiculous bubble that has been seen in football over the past decade.

Renewed Sense of Optimism at Villa Park

Two weeks ago, a ten-man Aston Villa side fell into the relegation zone of the Premiership for the first time in eight years following a 1-0 home defeat against Sunderland. With morale at rock bottom, reports of bust-ups between players and management and the dwindling support of the fans, things seemed to be on a downward spiral for the side that have finished in the top six of the league for the past three years.


However, there is now a renewed sense of optimism around the club. Gerard Houllier joined the club after the summer transfer window had closed and thus was unable to make any changes to the squad to suit his style of play and management. The day after the Sunderland defeat, Aston Villa announced their first new signing of the window – Kyle Walker on loan from Tottenham. Whilst a decent signing, this merely seemed to confirm the view that funds had dried up at Villa Park. Having to bring in a player on loan from a side we were challenging last season seemed symptomatic of the slump that has befallen the club since Martin O’Neill departed.

However, only nine minutes into his debut, Walker collected the ball just past the halfway line, running past Rob Kozluk and slotting the ball into the corner of the net. The first glimpse of light in what have been dark times at the club in recent months.


At Liverpool, Gerard Houllier was often criticised for his signings, and that is one of the things that slightly worried Aston Villa fans. However, he has made a spectacular start in bringing new players permanently to Villa Park.

His first permanent signing was the Cameroon international midfielder, Jean Il Makoun, from his former club Lyon. Makoun has played regularly at the top level in France with Lille and Lyon, as well as being a proven Champions League quality player with both clubs. Given that Lyon paid almost €15m for him three years ago, he would appear to be a bargain at the reported €5m that Houllier has paid Lyon for him.


The transfer dealings were only just beginning. Reports began to surface that Blackpool captain, Charlie Adam, was a serious target for Houllier. After bids of £2.5m and £3.5m had been rejected by Ian Holloway, the two clubs were set to agreed terms on a deal worth around £4m only two days ago. However, one event was about to change all that.

On Sunday, rumours on an Aston Villa fans forum claimed that Darren Bent was unhappy at Sunderland and that Aston Villa were on the verge of an £18m deal to bring him to the club. It seemed an outlandish suggestion, given the supposed lack of money at the club. However, less than 24 hours later, the breaking sports news was that he was in the Midlands to discuss terms with the club over a deal worth £18m, possibly rising to £24m with add-ons.


This was the moment that the clouds over Villa Park truly parted. It dispelled all the newspaper gossip that there was no money to spend to try and turn around the season. And more than anything, it showed that Villa mean business again.

Darren Bent is one of the most proven Premiership strikers of recent times. In the past five years, only Didier Drogba and Wayne Rooney have scored more goals than Bent. Given that he spent a prolonged period of that sitting on the bench at Tottenham, it is a phenomenal record.

Aston Villa have been crying out for a proven goalscorer for over a decade, ever since Dwight Yorke left to join Manchester United. Various players have had the odd decent season – Dion Dublin, Juan Pablo Angel, Gabby Agbonlahor and John Carew amongst others – but Darren Bent is the real deal.

And it is unlikely that Aston Villa’s dealings in the transfer market will end here. However, it will now become more difficult to secure good value deals. Until the Darren Bent deal, clubs were under the impression that money was tight at Villa Park. However, it is now clear that there is funding available to strengthen the squad.

It is believed that the money received from the James Milner deal is still available to spend, and was not used to fund the Darren Bent signing. If this is true, it means there is still another £15m or so still available to Gerard Houllier, plus whatever he can recoup from moving squad players out.


Steve Sidwell has already departed to join Fulham and a number of other players are likely to be following him out the door. John Carew is set to move to West Brom on loan with a view to a permanent move, whilst Curtis Davies and Stephen Ireland are being strongly linked with Celtic. The likes of Habib Beye, Stephen Warnock and Luke Young are decent bets to be leaving Villa Park over the next two weeks.

It is likely that there will be another two or three players coming into Villa over the next couple of weeks. The club are still debating a further bid for Charlie Adam, having been on the verge of agreeing a £5m move before the Bent deal revealed the extent of funding at the club. Blackpool reportedly now are demanding £7m for their captain, which may put off any further offers.

A left-back is almost certain to be joining the club, given the recent demotion of Stephen Warnock to the reserve team. Various names have been mooted in the press – Maynor Figueroa and Taye Taiwo are two popular names – but the favourite currently appears to be Montpellier and Bosnia captain, Emir Spahic. Whilst predominantly a central defender, he can play on the left, and is well-known to Houllier from his French connections. One other outside possibility would be Newcastle’s Jose Enrique, who has been one of the most impressive fullbacks in the league so far this season.


Another central midfielder is also high on the list, with Charlie Adam the favourite. However, the recent bad blood between Holloway and Aston Villa has made Blackpool unwilling to sell him to Villa, and he is likely to move to Everton instead. If he does not join, it is unclear whether there are other targets, although newspaper gossip is suggesting that there is an interest in Japanese star, Keisuke Honda. Whilst this would be an incredible signing, it seems highly unlikely and there would be far bigger clubs in for him if he were available.

As to the third reported signing, there are reports that there is interest in bringing a new keeper to Villa Park. Brad Friedal is beginning to show signs of his age, although remains a very good Premiership keeper. However, he is naturally reaching the end of his career, and Brad Guzan has hardly suggested that he is ready to make the step up to the big time.

The other suggestion is that there may be interest in another striker, although it is likely to be a younger striker who will be slowly brought into the first team picture. Quite who that might be is a mystery, but it remains to be seen.

The recent flurry of transfer activity has launched a new era of renewed optimism at Villa Park that has been missing since the summer and the departures of Martin O’Neill and James Milner. Clearly, the club need to start getting the results on the pitch, but Houllier is building a very strong team at Villa Park, whilst he still retains the crux of the side that recorded consecutive European finishes. If he can restore confidence to the players, Aston Villa should be moving back up the table in the coming months.

Lyon: Transfer Market Masters

Just over twenty years ago, a small team in the French second division was taken over by a 38 year old local businessman called Jean-Michel Aulas, who promised a great future for the club. Now, Lyon have won seven titles in the last decade, they are one of only four clubs to have qualified for the Champions League for eleven consecutive years and they are rated in twelfth place in the football money list.

Until the turn of the millennium, Lyon was better known for its excellent cuisine and as the birthplace of modern cinema. Football was barely even a major part of life for the locals, let alone nationally or internationally. However, they are now viewed as the biggest club in France and genuine contenders on the European stage.

It was the appearance of Jean-Michel Aulas that coincided with the growth of Olympique Lyonnais. When he took over in 1987, they were in the second division with an annual budget of only £2m. His first decision was the appointment of a young local manager by the name of Raymond Domenech. In their first season, they finished top of the second division having gone unbeaten throughout the season. Twelve months later, they qualified for European competition for the first time.

It is the long-term planning and philosophy in the transfer market that sets Aulas and Lyon apart from other teams, both in France and further afield. There have been two phases of the plan so far completed, and phase three has just begun. Part one ran from 1987 until 1998, where the priority was advancing to Ligue 1 and achieving consistent results in the league play. Part two ran from 1999 until 2010, where the objective was to maintain the club’s position in Ligue 1’s top three, and thereby regularly take part in European competition.

With the announcement of a new stadium, and the redevelopment of training facilities, the third part of the plan has just begun, and aims to turn Lyon into a major footballing superpower in Europe. Last season saw Lyon play in their first Champions League semi-final, and they will look to try and repeat that success this year.


However, Lyon’s rise and continued success has been built on their success in the transfer market, and they owe this to the foresight and philosophy of their president. Aulas follows the rationality that if you buy good players for less than they are worth, you will win more games. You will then have more money to buy better players for less than they are worth. The better players will win you more matches, and that will attract more fans, and thus more money.

Lyon follow five golden rules when it comes to dealing in the transfer market. The first of these is that all transfers are made by a group decision. Any transfer is debated by a panel that consists of Aulas, Bernard Lacombe, the head coach and four or five other senior coaches. The manager himself is somewhat sidelined in the proceedings. The major decision-maker in the club is Bernard Lacombe. Widely recognised as the best eye for talent in France, he is a former manager of Lyon, but was moved upstairs into a technical director role to keep him at the club long-term.


Lyon recognise more than any other club that the manager himself should not be entrusted with the responsibility of deciding transfers. He is merely a middle manager, who is obsessed with the short-term. The standard English model is where the manager is a short-term dictator, who is responsible for everything until he is sacked. The next manager then clears out his predecessor’s signings at a discount.

The second is to predominantly buy players in their early twenties. They aim to buy players between the ages of 20 and 22, who have potential and are considered the best in their country. They recognise that how good a player is at around 17 is rarely an accurate indicator of how good the player will become. However, by their early twenties, they are old enough to have almost fully developed, but still too young to be overly expensive.

The club still maintains a small-town mentality, and there is no overwhelming desire from the fans to sign big name star players. Instead, they have bought talented, but relatively unknown, players on low salaries. Players such as Michael Essien and Mahamadou Diarra are some of the best examples of this policy.

The third policy is to try and avoid signing strikers. They recognise that strikers are the most overvalued players in the transfer market (goalkeepers are generally the most undervalued). Therefore, they aim to develop their own strikers through their much vaunted youth academy, and then sell them on for a profit. In recent times, this process has been followed by the likes of Hatem Ben Arfa, Karim Benzema, Loic Remy, Sidney Govou and Freddy Kanoute.


This leads into the fourth policy, which is to sell any player if another club offers more than he is worth. Aulas, more than anyone, recognises that players are simply assets, and that sentimentality has no place in football. “If an offer for a player is greatly superior to his market value, you must not keep him.”

As they expect to sell their best players, they replace them around twelve months before they leave, avoiding any disruptive transition period. As Aulas explains, “when Michael Essien goes to Chelsea for £24m, we already have a certain number of players who are ready to replace him. Then, when the opportunity to buy Tiago arises, for 25% of the price of Essien, you take him.”

However, despite the fact that Aulas expects to sell his star players, he is renowned as one of the toughest negotiators in world football. In his own words, “every international at Lyon is untransferable until the offer surpasses by far the amount we had expected.” Throughout negotiations, he constantly rebuffs approaches and states the player is unavailable, but the moment the offer surpasses the amount he wants, the player is offloaded.

The final policy seems incredibly obvious, but has seemingly gone unnoticed by many clubs worldwide. It is to help your foreign signings with their relocation. They have a translator, who also helps them find a house, arrange their bank accounts, get their bearings and generally reduce the worries of moving and relocating. They also focus almost exclusively on Brazilians and French-speaking signings.

There is a long list of talented Brazilians that have arrived on the European stage via Lyon. The likes of Sonny Anderson, Cris, Fred, Edmilson and Juninho amongst others have come to France as virtual unknowns and proved to be excellent players. They use their former captain, Marcelo, as an exclusive agent and talent scout. They also focus not only on the quality of the player, but also on the ability of a player to adapt – in other words, they sign serious players, rather than necessarily the most talented on-field performers.


All of these approaches combined have turned Lyon into a top team. They have only lost money in one year since 2004, and have been averaging a pre-tax profit of €23m over the past five years. The majority of this has come from player trading, where they have averaged a profit of €40m a year. Sales such as Michael Essien for €38m, Mahamadou Diarra for €26m, Florent Malouda for €19m, Karim Benzema for €35m, Hatem Ben Arfa for €11m are only a few of the big-money sales over the past five years.

Last season saw a change in philosophy though. They saw the chance to close the gap on the major European teams, given their position of financial strength compared to other sides during the financial crisis. They splashed out a combined €96m on Lisandro Lopez, Michel Bastos, Aly Cissokho, Bafetimbi Gomis, Dejan Lovren and Jimmy Briand. They followed this up with a net spend of €24m this summer, including the big-money signing of Yoann Gourcuff for €22m.


However, this is not a sign of a long-term shift in philosophy. They have announced their plan to return to an excess of player trading from 2011 onwards. The next batch of academy graduates is beginning to break into the first-team. Maxime Gonalons, Jeremy Pied, Clement Grenier and Alexandre Lacazette have all started matches for Lyon this season.

Thus far, Lyon and Aulas have executed their long-term plan to perfection. Aulas sums up his approach with a cycling metaphor. “Each year, we fix as an aim to have sporting progress, and progress of our financial resources. It’s like a cyclist riding: you can overtake the people just in front of you.” However, the third phase is the most ambitious of them all. And only time will show whether Lyon can become one of Europe’s biggest teams. But on past performance, you would not doubt that Aulas can live up to his lofty expectations.

Torres to Chelsea? Should we believe what we read in the papers?

As the season comes to a close, attention once again turns to the transfer window. Fans expectantly wait to discover who their club will bring in over the summer, and which players are deemed surplus to requirement. The problem is that clubs generally keep their transfer dealings quite private. This means that fans resort to following the rumours published in the daily newspapers. However, it is difficult to know how reliable these rumours actually are – do they actually know something or have they simply made them up? And are some papers more reliable than others?


The tabloids are by far the most prolific rumour-starters. In particular, the News of the World has produced an average of 6.94 rumours per day, since the beginning of the 2006 summer transfer window. They are followed by the People (3.27 per day), the Daily Mirror (2.97) and the Sun (2.12). Unsurprisingly, the broadsheet press publish far less rumours – the Daily Telegraph produce only 0.29 per day, followed by the Guardian (0.32), the Independent (0.36) and the Times (0.65). These statistics are not really that surprising. It is common knowledge that the tabloids tend to print more rumours, compared to the broadsheets, which tend to post more analytical material. However, is there any correlation between the type of newspaper and the accuracy of their rumours?


Despite printing by far the greatest number of rumours, the News of the World has the lowest percentage of correct rumours. A correct rumour is defined as one that has led to either the player making the transfer mentioned in the rumour, or signing a new contract as specified in the rumour. The News of the World has a success rate of only 12.19%, although it is generally more accurate for the larger teams, such as Manchester United (20.41%) and Chelsea (18.18%) than some of the smaller clubs like Stoke (4.55%) and Hull (4.00%). The People is only fractionally better with a success rate of 13.25% and the Daily Mirror scores a 18.05% success rate.

The most accurate newspaper in England is the Guardian, which accurately predicts 30.34% of its rumours. It is closely followed by the Independent (26.69%) and the Times (25.79%)


Therefore, it is noticeable that the broadsheets, despite printing far fewer rumours, are actually far more accurate. It seems to suggest that they are generally far more careful with the rumours that they print, taking more time to research them, rather than the somewhat scattergun approach of the tabloid press, who are more likely to publish their ‘big scoops’ solely to attract new readers.

The final interesting thing to look at is which teams’ transfer activities are usually most accurately captured in the rumour columns of newspapers. Interestingly, it is Burnley, Wigan and Birmingham that come out highest in this. Manchester United are the first big team to show up in the list in 4th, with 26.3% of rumours printed about them turning out to be true. Liverpool are the only other big spenders to appear in the top half of the table, with a 25.5% accuracy rate.

Chelsea languish down in 18th place in the table, with only a 18.15% success rate. Other upper half Premiership sides, Manchester City, Tottenham, Aston Villa, Everton and Arsenal are all in the lower half of this table. This is interesting as it suggests that the more successful a side is in the Premiership, the less accurate the rumours concerning their transfers. This could potentially be because more obscure links begin to spring up concerning the bigger sides, especially those that tend to spend larger amounts of money in the transfer windows.


For example, in the past couple of months, Chelsea have been linked with Fernando Torres, Angel Di Maria, Sergio Aguero, Frank Ribery, David Villa, Edin Dzeko, Zlatan Ibrahimovic and Kaka on more than one occasion. Clearly all of these are not going to be true – indeed, it would be surprising to see more than about two or three of these at Chelsea next season.


It is only natural that the big sides should have more rumours printed about them – it is these big sides that sell newspapers. As a result, it would only appear natural that fewer of these rumours are correct. It is not the case that big sides buy more players than the small clubs – if anything, it is the reverse. However, it is interesting to see that it is the broadsheet newspapers that are the most accurate, despite printing the fewest rumours.

(Data from http://www.footballtransferleague.co.uk)