Will Brexit’s effect on the pound affect Wenger’s transfer plans?
In an increasingly globalised world the effects of Brexit was always going to be felt far beyond British shores. Perhaps some who voted to leave the EU were unaware of the wider implications of their decision but whether they were many or few is largely irrelevant. A choice has been made, irrespective of arguments of how that choice was influenced, and now we must all deal with the consequences.
Wherever you are waking up in the world it is likely this choice will have a profound effect on at least one aspect of your life. If you are reading this article it’s probably going to be football. With the pound worth significantly less than it was just a few weeks ago we must question how that will impact the transfer plans of Arsenal Football Club.
Arsenal moved early in the transfer window to secure Granit Xhaka for around €35m including add ons but depending on how that deal is structured it could cost us a few extra million sterling. Foreign exchange rates are important, especially for English clubs buying players from clubs overseas. Gabriel is an example of Arsenal benefiting from the Pound showing strongly against the Euro.
A year ago a player priced at €40m would have cost £28.5m, today it would be around £5m more. Of course, currencies are moving all the time but the changes are relatively small. Premier League clubs rarely deal in dollars but the drop we saw last Friday was 7 times the level of change you would see on a typical day. Modern finance is run almost entirely on confidence and those sorts of drops aren’t forgotten quickly and have a knock on effect of dampening confidence. Eventually it will peter out but whilst the UK’s position in Europe is uncertain confidence will continue to flounder.
This could hugely impact the transfer plans of many clubs as buying from the continent becomes more expensive. Will it be the start of football’s bubble bursting? Perhaps not.
So what does this mean for Arsenal? Hopefully not too much but it does mean our ‘dry powder’ has a reduced purchasing power and that may influence the players we are looking at.
Alvaro Morata for example, is rumoured to cost around €60m in what would be a quick profit generator for Real Madrid and plenty are taking advantage of free betting online to get good odds on Wenger signing Morata regardless of the value of the pound. Before voting closed last Thursday, when markets were confident Britain would vote to stay, £1 was worth €1.31 and Morata would have cost £45.8m. At the time of writing it is worth €1.20 and Morata would now cost £50m.
I have previously spoken of my admiration for Morata. His goal-scoring record is not particularly eye-catching but he does boast a goal or assist every 98 minutes in his career to date. Olivier Giroud is a fine player and we’re lucky to have him but one drawback for many is his lack of pace with many claiming this hinders Özil. Morata is a version of Giroud with rapid pace. Would that be enough to convince people of his talent and worth? Perhaps not but if we are to claim that Giroud would be perfect for us if only he was quicker then Morata is the answer to that.
Is an increase of 9% going to put us off? Perhaps. We are linked with a £55m move for Romelu Lukaku and perhaps that is an effect of post-Brexit currency movements. An additional £5m for a proven Premier League scorer of similar age makes financial sense, especially if the pound drops against the euro more.
We may see more inter-league purchasing than predicted because of the performance of sterling because no matter what happens, a pound is a pound. The new TV deals threatened to make it almost impossible to buy players from other Premier League clubs as they had no real reason to sell. Now, however, they may be more willing to sell to league rivals as their pounds are worth less in Europe.
Whether this is a good thing or not remains to be seen but I can imagine a long, drawn-out transfer window as clubs try to eke as much value out of their weakening currency as possible and the prospect of over-complicated negotiations doesn’t bode well for Arsenal fans desperate for new signings.
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