The Big Question: As the football transfer window closes, is spending out of con

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At midnight last night, football's summer transfer window – a period in which players can be bought and sold – closed worldwide until 1 January, when it will reopen for a further month. Also yesterday, one Premier League club, Manchester City, was sold to the Abu Dhabi United Group, which promised to spend £30m on a single star player.

What is the point of a transfer window?

Until six years ago, there was simply a deadline towards the end of each season after which no transfer could take place. This prevented teams at the top or bottom of the league making short-term purchases to buy their way to a championship or to avoid relegation.

By reducing the period in which players could be bought and sold to three months in the summer (1 June to 31 August), and then from 1 to 31 January, the intention was that clubs should do the bulk of their trading in the European closed-season, then rely on the wits and skill of their managers and coaches to work with what they had, and allowing one further window in January – when far fewer deals are normally done – for any adjustments by the way. Many in the sport feel, however, that this is an artificial innovation which merely creates panic-buying, brinkmanship and uncertainty, especially right at the end of each window.

How much do top players cost these days?

There was an outcry in 1905 when the first fee of £1,000 was paid by Middlesbrough for Sunderland's Alf Common, and again when each new landmark was reached: £100,000 in 1961, £1m in 1975 and so on. The world record is £46m paid by Real Madrid for Zinedine Zidane in 2001. Had AC Milan been prepared to sell the Brazilian midfielder Kaka – the World Player of the Year – this summer, a new high would undoubtedly have been reached, but the Italians resisted Chelsea's overtures.

The British record of £30m, paid by Chelsea for another AC Milan player, Andriy Shevchenko, was regarded as a spectacular waste and he has now returned to Italy at what will be a huge loss. But players like Manchester United's Cristiano Ronaldo would be worth more than that, Tottenham have been holding out for £30m for their Bulgarian forward Dimitar Berbatov, and Real Madrid want at least that amount for their Brazilian forward Robinho.

How can clubs afford these fees and wages?

The formation of the Premier League in 1992 brought the first of several lucrative television deals, the latest of which was worth £1.7bn in Britain and £625m overseas. This enabled leading clubs to pay for the all-seater stadia demanded after the 1989 Hillsborough disaster and, in turn, to increase admission charges as spectators flocked back in vast numbers. The success of the Premier League also led to valuable new sponsorship deals and increased sales of replica shirts. The 20 Premier League clubs are each effectively guaranteed a minimum of £30m a year from television contracts and a sliding scale based on where they finish in the league.

Last season, the champions Manchester United received £49.8m from these sources alone. The biggest clubs, especially in London, now charge up to £94 for the best seats at ground such as Arsenal's Emirates Stadium (believed to be worth £10m in naming rights) which holds 60,000 people. A clever manager like Arsène Wenger or Arsenal can make as much money selling players at the right time as he spends on new ones.

Then there are wealthy investors, such as Chelsea's Roman Abramovich, who buy ownership of clubs for motives ranging from local pride through to prestige and investment potential. Eight of the 20 Premier League clubs have been sold to foreign owners, all of whom accept the need to spend large sums on new players. None are short of a few dollars, or roubles. In the lower divisions, however – there are more than 70 other professional clubs in England alone – finances are very different. Most of them make a loss, several have been forced into administration and others survive only by selling their best players and buying much cheaper ones.

Why do they buy so many players from abroad?

Essentially because most clubs believe the best British players are too expensive, whereas bargains can still be had abroad, especially from poorer countries and clubs in Eastern Europe, South America and Africa. Any player with a European Commission passport is entitled to join a British club. Those from outside the EC have to obtain a work permit – the onus being on the purchasing club to prove that they cannot find a player of equal quality at the same price. A set formula is generally used, based on him playing regularly for his country. With only a third of all Premier League players eligible to represent the English national side, the football authorities are keen to have the sport exempted from EC labour laws, which Brussels is currently resisting.

Can value be measured?

When Liverpool narrowly beat the Belgian team Standard Liège last week in a qualifying match for the lucrative Champions League, Dirk Kuyt scored their winning goal in the last minute. Kuyt cost Liverpool a fee of £10m plus significant wages, but that one goal could be worth up to £20m, which is the amount a successful English club makes by competing in the Champions League. Liverpool were also delighted with last season's most expensive purchase, the Spanish forward Fernando Torres, who cost £22m but scored a remarkable 33 goals. On the other hand, supporters of every club could name a player who justified the terrace chant "What a waste of money". Having cost £30m, Shevchenko would certainly fall into that category.

Why don't clubs just develop their own young players?

Some clubs, like Manchester City, Middlesbrough and West Ham, have a well-earned reputation for doing just that. Coaching of boys is done from a very young age and Premier League clubs run their own academies for youngsters at a cost of about £1m a year. But the pressure on managers to achieve instant results or face the sack means the temptation is always to buy a proven player, rather than wait for a home-grown one to mature.

Where will it all end?

At the top end, British football is strong enough to withstand the credit crunch, although many of the smaller clubs will feel the pinch even more painfully. Transfer money paid to other British clubs continues to circulate throughout the sport; it is the vast sums paid to agents and in players' wages that are a cause of greater concern. The other most worrying possibility for individual clubs is what would happen if a mega-rich backer such as Abramovich decided to cut his losses and go elsewhere.

Have transfer fees reached absurd levels? Yes

* Historically they have far outstripped inflation

* 2 Clubs over-reach themselves financially in paying such huge sums

* 3 Every transfer is a gamble on a player's form and fitness

No

*They are simply a matter of supply and demand

* Players can be signed for nothing when their contract runs out

* Many signings pay their way by selling shirts and helping to win trophies