Premier League pays 10% more for players due to FX

The UK's Premier League football clubs have been forced to shell out millions of pounds more on new players due to adverse foreign exchange rates and the pound plummeting to a 12-month low during the transfer window, according to a study from corporate FX boutique Foenix Partners.

Clubs were forced to spend 10% more on acquiring new players from the continent, compared with the summer transfer season, pushing the overall cost of Premier League footballers to more than £1 billion and transfer spend to a five-year high of £175 million – £90 million of which was spent on players from countries using the euro.

Research by London-based Foenix Partners shows Premier League clubs, which spent £110 million on players from overseas, could have saved themselves millions of pounds had they acted in the summer.

"Foreign exchange rates can have a huge bearing on the cost to clubs completing international transfers, and while it may not be the sexier part of football, it is important to manage. Clubs always pay for bought players in the local currency of the club they are buying from," said Richard de Meo, founder and managing director of Foenix Partners.

In the summer transfer season, which closed at the end of August, a pound translated to 1.4386 euros, some 8.5% more than during the January window, when sterling was worth only 1.288 units of the single currency and 1.3150 euros on the last day of the current window, February 1.

The euro has been boosted by becoming a temporary safe-haven currency, as declining global risk appetite due to concerns about China, plunging commodity prices and equity market declines tempered investors' willingness to hold the UK currency.

"The euro has become a safe-haven trade, and the weakening of the pound against the euro from the last transfer window to this one is significant. It means Premier League clubs are left facing paying more than they would perhaps like, particularly amidst the ‘panic-buying' month of January," he added.

Clubs that acted to get players through the door in the August window gained more – particularly if the players' value has gone up in the meantime
Richard de Meo, Foenix Partners.

Watford ended up being the highest euro spender, forking out around £26.7 million on players from Europe, signing Nordin Amrabat from Malaga for £6.7 million, as well as Adalberto Penaranda (Udinese) and Abdoulaye Doucoure (Rennes) for around £16 million. Mario Suarez also joined the club for about £4 million.

Other significant euro-denominated moves included Giannelli Imbula, who became Stoke City's record signing when he switched from Porto for £18.2 million within the last minutes of the transfer window. Norwich, which signed Timm Klose from VFL Wolfsburgh for £8.5 million, and Arsenal, which spent £5 million on Mohamed Elneny from Basel, also paid out in euros.

"Clubs that acted to get players through the door in the August window gained more – particularly if the players' value has gone up in the meantime. Someone in this bracket would be Manchester City's Kevin De Bruyne, who would have cost considerably more now due to the rate than he did in the summer when he was sold for £55 million," de Meo added.

But, while UK clubs overpaid on FX, the exchange rate has become more favourable for European clubs purchasing Premier Club players, whose unchanged sterling price tag would equal a 10% discount in euro terms.

"While many clubs like to leave deals until the very last hours of the window, it can also mean they are leaving themselves open to greater costs if the rate continues on the downwards trend it has followed," de Meo said.