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Soccer's $2 billion summer industry
by Paul Kennedy, September 5th, 2007 7AM

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An increase in television revenues and the arrival of new owners have triggered record spending by English Premier League clubs on the transfer market.

English teams spent more than 530 million pounds ($1.1 billion) on players on the 2007 winter and summer markets, according to a report by Deloitte & Touche LLP. Spending by teams from Europe's big 5 leagues during the summer window that ended Aug. 31 totaled about $2 billion.

Five EPL clubs spent more than $70 million each on the summer transfer market:

-- Manchester United $102 million;
-- Liverpool $100 million;
-- Tottenham $80 million;
-- Manchester City $74 million;
-- Sunderland $70 million.

The biggest factor in the increase in transfer fees -- and salaries -- in England is the increase in fees television broadcasters will pay English clubs over three years -- a record $4.6 billion, an increase of 70 percent over the previous agreements. Each EPL club should receive about $100 million a year beginning in 2008-09.

Those kind of income figures have not been lost on foreign investors who have targeted EPL clubs big and small.

Both Manchester United (Glazer family) and Liverpool (Tom Hicks and George Gillette) have American owners. Manchester City was recently sold to former Thailand prime minister Thaksin Shinawatra.

A dozen EPL teams spent more than $40 million apiece, and eight set club transfer records.

-- Derby County: Robbie Earnshaw ($7 million)
-- Everton: Ayegbeni Yakubu ($22.5 million)
-- Liverpool: Fernando Torres $49.5 million
-- Portsmouth: Sulley Muntari ($14 million)
-- Reading: Emerse Fae ($5 million)
-- Sunderland: Craig Gordon ($18 million)
-- Tottenham: Darren Bent ($33 million)
-- West Ham: Craig Bellamy ($14 million)

Net EPL spending -- money spent on transfers minus money received for transfers -- increased $160 million to roughly $540 million in 2007.

Clubs from the Football League -- England's lower professional divisions -- were beneficiaries of the spending spree. Three former EPL clubs -- Charlton Athletic, Southampton and West Bromwich Albion -- each received more than $30 million in transfer fees in 2007; 14 Football League clubs received more than $4 million.

Outside England, the big summer spenders were Real Madrid, Barcelona and Atletico Madrid in Spain.

Real Madrid spent more than $160 million on new players in summer 2007, including the acquisition of Dutchman Arjen Robben from Chelsea for a reported $49 million -- the second-highest fee of the summer behind Liverpool's $49.5 million spent to acquire Spaniard Fernando Torres from Atletico Madrid.

Barcelona spent roughly $100 million, including $30 million on Arsenal star Thierry Henry, while Athletico Madrid also spent in the neighborhood of $100 million.

"Looking further afield," said Alan Switzer, director in the Sports Business Group at Deloitte, "it comes as no surprise to see Real Madrid and Barcelona spending at least as much as their English rivals on transfers, given that they have the highest revenues in world football in 2005-06."

Real Madrid and Barcelona negotiate their own TV deals that will earn them about $200 million a year beginning in 2008-09.

Outside England and Spain, Germany's Bayern Munich was the biggest spender with almost $100 million committed to overhaul its squad.



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