The frenzied extravagance in the transfer window's final hours prompted a puzzle about the Premier League as we believed we understood it. For months the clubs had assured us 25-man squads, Uefa's "financial fair play" rules and the horrors of Portsmouth's insolvency last season had prompted a new era of restraint. Then, yesterday, football went mad again, spending £200m on a few footballers even as the country enters an age in which we are told we cannot afford to keep libraries open.

To the headline question – are clubs reining in their spending, or spending lavishly again? – the answer is both are true, and the only place to make sense of that riddle is on the famously understated yacht of Roman Abramovich.



Three weeks ago, by Lake Geneva, Uefa presented its annual report documenting the vast, unnecessary losses top‑flight European clubs are making, overspending, on transfer fees and wages, in the game's greatest ever commercial boom. Based on the 2008‑09 annual accounts, income across the continent had continued to rise but more than half the clubs, 56%, had made a loss, with total losses adding up to €1.2bn (£1bn). The Premier League, by far Europe's most commercial, charging the most for tickets and reaping more from fans' pay-TV subscriptions, made higher income than any other league – £2.3bn overall – but 14 of our clubs made hefty losses. The debts of the 20 clubs, owed to banks or owners bankrolling the clubs, were £3bn.

Michel Platini, the Uefa president sadly maligned by little Englanders for trying to wrestle some financial balance into football, uses that data to demonstrate the need for "financial fair play". And whenever Platini explains the reasoning, that clubs should spend what they make, plan long term and build teams gradually, not rely on a random parade of owners, he customarily cites Abramovich as a supporter.

The Russian oligarch, we have been told, has seen the sense of sobriety after spending £726m on shaping Chelsea into his "trophy asset" since he bought the club from Ken Bates, and the club's other then shareholders, some named, some still unidentified, in 2003. The years of spending, from Abramovich's oil fortune, vastly more than Chelsea could otherwise afford in transfer fees and wages, culminated in a £71m loss in 2009-10, as revealed in their accounts released yesterday. Abramovich reorganised his £726m loan the previous year so that it is no longer owed to him by the club itself, but by his holding company which owns the shares, and the explanation from Chelsea – Abramovich himself has not granted an interview here since 2003 – was the owner agreed with Platini's ideas. It is said he really means the club to break even, believes it should live within its handsome west London earnings.

When Chelsea began this season recording imperious wins Abramovich looked to have timed and judged it right, but yesterday was his response to the team's fall from form: not to sack another manager, but to equip him with another, A-list striker, at £50m. The effect of the signings of Fernando Torres and David Luiz, and their wages, on the 2010-11 finances will not be declared until the club publishes its accounts next year, but unless there is a major clear-out in the summer it is impossible to imagine Chelsea breaking even.

Abramovich has been, it seems, convinced of the need for restraint while his team were topping the league. There is nothing in the financial fair play rules which excuses a club from breaking even if their billionaire owner finds it unbearable to see them stutter, and if Torres's signing does plunge Chelsea further into the red, and Abramovich's largesse, that could prove the stiffest test of Uefa's credibility when the rules come finally to be enforced from next season.

The other club with stark problems falling into line, Sheikh Mansour's Manchester City – losses £121m in 2009‑10 – were also responsible for bumping this transfer window spending up from the quiet £32m last January to busting the £175m record of 2008. City's £27m outlay on Edin Dzeko was spent on the day Platini, in Nyon, was outlining European football's overall losses and calling for calm, and in the week that Manchester City Council announced 2,000 redundancies.

Responding to the charge that their spending knows no bounds and they will monumentally breach the break–even rules, City said Dzeko just about completes the massive outlay – upwards of £500m – Mansour has lavished on the club since he bought it two and a half years ago, furnishing Roberto Mancini with a squad which can challenge the one compiled by Abramovich. City's January was also marked by getting Roque Santa Cruz (to Blackburn Rovers), Emmanuel Adebayor (to Real Madrid) and Wayne Bridge (to West Ham United) out on loan, signalling an intention to reduce a galactic wage. City keep maintaining, despite the mountainous losses, that they intend to comply with financial fair play.

Aston Villa's signing of Darren Bent, rising to £24m, can be isolated, too, as the tale of an owner, Randy Lerner, who does not intend to see his investment, £105m on top of the £62.5m he spent buying the club, flounder into the relegation zone. His is another club a long way from breaking even – their loss was, for Villa, a quite shocking £46m in 2008-09, the last accounts available.

The £35m Liverpool's US owners, John W Henry's Fenway Sports Group, agreed to pay for Andy Carroll, and £23m for Luis Suárez, do not fall into the same category, as they are largely accounting for the £50m the club received for Torres. So Carroll's transfer is the most eye-catchingly excessive, probably ever, yet does not rock the Premier League or Uefa equilibrium like the Torres deal because Liverpool are mostly spending out of income.

It may seem a touch Monty Python to argue that apart from the record transfer fee between British clubs and Carroll's fantastic fee this was, indeed, a month of restraint but outside those five deals, it mostly was. Manchester United and Arsenal continued to eschew big spending in January, appearing to embody clubs who build teams over the long term, although given United's Glazer-imposed debts, Sir Alex Ferguson has long made a virtue of that necessity.

Even at West Ham, Wolverhampton Wanderers and other clubs staring at relegation, there has been no reaching for the panic button of unsupportable spending. Parachute payments have increased, to £18m for the first two years of relegation, and four years altogether, so dropping down no longer means certain financial catastrophe. Insolvency beckons only if the clubs overspend – so that, at the bottom, rather than Uefa's financial fair play rules at the top, may seem finally to be nudging clubs towards an outbreak of sanity.