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Premier League and the euro

10, 03, 15
by Stefan Szymanski
0 Comment

The continuing crisis in the eurozone is set to generate an invasion of British tourists this summer. Today the FT reported that euro is heading to parity with the US dollar, as investors move capital out of Europe. Greece and Russian concerns are part of it, but also the policy of quantitative easing about to be adopted by the European Central Bank is causing investors to look for returns elsewhere.

In many ways this is good for Europe. After the financial crisis in 2008 the UK effectively devalued sterling which helped to stimulate exports and provided some cushion against the recession. Now sterling is appreciating significantly, up 23% since August 2013, hence the attractiveness of a European holiday this summer.

Some of those travelling to Europe may be football managers and executives buying up European talent. Tottenham were paid €91 million by Real Madrid for Gareth Bale. Back in August 2013 when the deal was being negotiated that was equivalent to £80 million. At today’s exchange rate it is just £65 million – so if they bought him back for the same euro price it would be as if they had loaned him to RM for a rental of £15 million.

That may not happen. But the EPL will surely be buying in Europe next season. In 2013 they spent £531 million abroad according to Deloitte. So essentially that money would go 23% further this summer, which is a large increase in purchasing power and would make a big difference to clubs, players and agents in Europe.

Of course, this effect is still not as big as the staggering new broadcast deal, but it all goes to enhance the league’s economic power. Expect the percentage of England qualified players in the EPL, currently around one third, to fall yet further.

 

 

 

 

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