Clubs spent a total of £295 million – the second-highest amount ever spent in the winter transfer window – according to figures from finance company Deloitte.
The five sides currently at the bottom of the English top flight spent more than 50 percent of the total.
Newcastle were the biggest spenders as they flexed their financial muscle under the club’s new Saudi-led ownership while Liverpool were the only side in the top four to significantly strengthen.
The most eye-catching move was Brentford’s signing of former Tottenham playmaker Christian Eriksen, just seven months after he suffered a cardiac arrest at Euro 2020.
Liverpool’s front three of Mohamed Salah, Roberto Firmino and Sadio Mane, who have served Jurgen Klopp so well, are all out of contract in 2023, by which point they will all be more than 30 years old.
Diaz appears a natural replacement for Mane as a right-footed wide player who plays on the left side of the attack and has an eye for goal.
He scored 14 times in 18 league games for the Portuguese giants this season and was top-scorer alongside Lionel Messi at last year’s Copa America.