Is spending big in January worth it?
The January transfer window is often thought of as an opportunity for teams to cement their position or solve problems encountered in the first half of the season. There's a temptation to spend big to achieve that top 4 finish or to get yourself out of trouble at the bottom.
But does spending in the January transfer window make any difference to a team's results? In this article we analyse the data to find out.
Who spends in the January transfer window?
The heat map below shows the net spend of teams by their position in the table on January 1st for each of the last 10 seasons. We define net spend as expenditure on new players minus income received from selling players. A positive number means that the team spent more on buying players than they received from selling them. A negative number means that their income from selling players was greater than the amount spent buying them.
From the heat map it can be seen that much of the big spending in January is done by teams chasing titles, Champions League places or battling relegation with six of the top spenders of the season coming from the top 6 and three coming from the bottom 6. However, spending at the bottom is still more common with teams in the bottom 6 spending on average 3.5 times more than the teams at the top and 2.6 times more than teams in mid-table.
Net spend in January transfer window by Premier League position at 1st January, 2012/13 to 2020/21 seasons
This season, Newcastle has been taken over by the Public Investment Fund, the sovereign wealth fund of Saudi Arabia. A reported collective wealth of £320 billion makes the Magpies by far the richest club in Europe’s top five leagues. They have not been afraid to spend their money, with over 90 million net spend on transfers in their first window, the most spend in January by any team in the Premier League.
But is the big investment worth it? Does it guarantee survival in the Premier league? In this final section we investigate further the relationship between net spend and an improvement in results.
What difference does spending make?
Below are graphs from the previous nine seasons showing the correlation between net spend and the change in points per game (ppg) pre and post January transfer window - defined as ppg from the start of the season to the opening of the window compared with ppg from the closure of the window to the end of the season.
While several of the graphs show positive correlations, they are not strong and given that there are years that show negative or zero correlation, it is difficult to conclude that spending more in January guarantees an increase in the quality of results. An analysis using a team quality rating based on FIFA ratings showed similar results.
While this analysis shows insufficient evidence that higher January spending leads to better results on the pitch, it is not saying that all transfers in January are worthless.
From watching football, it is clear that individual transfers can have an impact on team performance. In the 19/20 season Manchester United signed Bruno Fernandes and saw an increase in ppg of 0.74. Last season, Jesse Lingard went to West Ham on loan in January and scored 9 goals in 16 appearances to increase their ppg by 0.33. Perceived player quality and transfer net spend are not enough to account for the short-term success of a transfer window. More intangible factors like settling in time, suitability to the team system and whether transfers solve a team issue are all important. Other factors such as injury or loss of form to key players and a change in manager and playing style can also affect the team’s performance.
Ultimately, the January transfer window is largely about solving problems but spending a large amount of money is no guarantee of success. But it's a risk many teams are willing to take.
