How the falling pound is affecting the Premier League

Ever since that eventful day in June 2016, when the UK voted to leave the EU, we’ve seen considerable volatility in a number of areas, not least in the value of sterling against all of the world’s other major currencies. At one stage it had lost 15% of its value against the US dollar and, as anyone who has travelled to Europe last summer will also know, you certainly don’t get as many euros to the pound as you used to.

There was a time when these fluctuations in value would have left British football relatively unscathed. However, today, when over 69% of players in the Premier League are from other countries, the state of the pound has a major effect in a number of ways.

As the January transfer window approaches we’re about to see this very much in action and, if it’s anything like the Summer transfer season, it could well see some deals becoming impossible to pull off. The reason is simple – when buying players from other countries the deal is always done in the selling team’s currency whether it’s euros, roubles or even Brazilian Real’s. However UK clubs’ income is, inevitably, always in sterling so a currency conversion has to be made.

A prime example of this phenomenon came when Spurs were in the process of buying Davinson Sanchez from Ajax back in the summer. With an asking price of 50 million euros, over the process of negotiation there was a 6% drop in the value of the pound which effectively meant another 3 million euros had to be found to complete the deal.  In this instance Spurs decided it was a hit worth taking but this wasn’t the case in West Ham’s pursuit of Michy Batshuayi when the Hammers’ co-owner David Sullivan pulled out of negotiations citing an unfavourable interest rate as his reason.

Another way that the transfer market is being affected comes from the fact that many agents, whose fees can be notoriously high, demand payment in euros. As the people who also negotiate players’ wages they are also starting to demand higher amounts for their clients to allow for the weakening pound, putting an extra strain on many clubs’ finances.

However, despite all this negativity, the falling value of the pound is good news in a number of respects. For example, its volatility means that there is money to be made on using platforms like the IG forex broker and which can deliver returns whichever way the market is headed. More specifically for the teams themselves, if not just their financial directors, ones that are playing in European tournaments like the Europa or the Champions Leagues will find that prize money is paid in euros thus increasing any winnings they are lucky enough to claim.

Whether the relative weakness of the pound will remain an issue over the coming months and years only time will tell. But with any increased financial burdens the clubs find themselves under likely to be passed on in the form of more expensive tickets, it will pay fans to keep a close eye on the situation. In fact, it could even be worth looking into forex trading as a way to offset those potential extra costs of following your favourite team!

How the falling pound is affecting the Premier League

Comments 0 Comments

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.