Trivial Transfer Fees
The 29th of January saw two of the biggest shocks of the season on Tyneside, with Newcastle following up toppling Premier League champions Manchester City Park by breaking their transfer record for the first time since 2005 to bring Major League Soccer’s player of the year Miguel Almiron to St. James Park for £21.6 million. By Premier League standards, the Toon have endured a big money transfer dry spell since Michael Owen arrived for £16 million in 2005, even with the Premier League’s ever growing TV deals and transfer fees are inflating every season.
The general assumption remains that these astronomical transfer fees are linked directly to a player’s ability when, in fact, a player’s skills have become merely one of hundreds of factors in determining a valuation. Deciding on a fee has become far more complex in the modern footballing world - where clubs have transformed into global corporations, brokering multi-million-pound player deals and this has resulted in the introduction of a wide variety of factors contributing to perplexing transfer fees.
To understand modernised transfer values, you must first look back to 2016 when PSG more than doubled the world record transfer fee to sign Neymar’s from Barcelona for £198 million. This transfer caused a seismic shift within the already inflated market and led to an explosion of player’s valuations, yet the transfer had a further ripple effect that altered how players are valued in a more interesting and complex way.
Neymar’s departure created further fallout in Spain, with the terms of his contract meaning Barcelona had no option but to accept PSG’s bid, as the Parisian club had matched his release clause. In response to this, many clubs began including excessive and unrealistic release clauses in their player’s contracts. Real Madrid lead the way in this field, with Los Blanco’s new signing from Manchester City Brahim Diaz having had a €750 million release clause inserted into his contract, despite only having scored two senior career goals.
Unrealistic clauses such as this, give the selling club more control in transfer negotiations, and creates a subset of the market for each individual transfer, between the buying and selling club. The isolation and individuality of these markets create near perfect economic conditions and as result the key factors in determining a player's valuation are how badly the pursuing club wants the player (demand), how desperate the selling club are to keep them (supply).
These conditions were outlined through Virgil Van Dijk’s January transfer from Southampton to Liverpool, where the fee of £75 million was 50% more than that of the world’s second most expensive centre-back, yet was justified by the Reds dogged pursuit of their one and only centre-back target and Southampton’s determination not to sell their captain. When you factor into this that Liverpool were on the verge of selling Phillipe Coutinho to Barcalona for £106 million, it becomes clear that Southampton knew that they could hold out for such an excessive fee due to Liverpool’s desperation and financial capabilities. This demonstrates clearly how a player’s value is fluid and dependant on a club’s ambitions to buy or sell the player, as well as both clubs’ financial state – a factor keenly felt within England where many top division clubs are charged a ‘Premier League premium’ when bringing in players.
In response growing transfer fees and the growing influence of Financial Fair Play (FFP) clubs have been forced to operate more resourcefully within their transfer dealings. Signing a modern day player has become such a lavish investment, that clubs are forced to attempt to minimise the risk attached to such investments, which has generated a focus on player’s potential sell on value.
Barcelona demonstrated the importance of this by replaying Neymar with Ousmane Dembele, for a fee of £97 million. This cost perplexed many, following his solitary season at Borussia Dortmund yielding only six league goals and seemed excessive for a player yet to prove himself at the top level. However, operating within FFP rules meant that within a three-year period Barcelona’s – along with all other European clubs- expenditure must not exceed their revenue and therefore, should a failed signing need replaced, their sell on value is crucial. This allows clubs to offload players without massive losses, which would limit any future spending.
Signing a young player with potential, such as Dembele, carries a far smaller risk than signing an established player at a similar cost as a higher potential sell on value provides a safety net for the club should the transfer not work out. It is far more likely another sizable club will be willing to gamble on a young Dembele, should his transfer to Barca not work out, than it is that a club would shell out for on a more experienced player who had failed to impress at the Camp Nou. Of course it is not the Barcalona’s goal to see Dembele fail but the reduced risk the investment carries is certainly an attraction. Perennial selling clubs in Dortmund’s position recognise this and in turn charge a premium to elite clubs for these lower risk investments, in part contributing to Dembele’s over inflated transfer fee.
A final key contributing factor to modern transfer fees is a player’s brand value. This particular consideration may disgust many ‘proper football men’ and keep Graeme Souness up at night, but football clubs are now a brand and players are their ambassadors. This factor was clearly seen when Manchester United broke the then world transfer record to bring Paul Pogba back from Juventus for £89 million. Whilst the World Cup winning Frenchman is an exceptional talented, his footballing ability is far from the level his transfer fee suggested.
Pogba’s marketability was a key factor in Manchester United’s willingness to break the bank for him. The Pog-back campaign launched by Manchester United demonstrated the key role his celebrity and social media presence played in his transfer and this power ultimately gave him the upper hand in his feud with previous manager Jose Mourihino. Manchester United are arguably the most successful club in the modern era from a purely business perspective, regularly topping the Delloite money table, despite failing to top any other sort of table since 2013 and the reasoning behind signings such as Pogba demonstrating their shift in transfer priorities from football to business.
Within the modern transfer market, we no longer see individual chairmen brokering deals, instead we see hundreds of lawyers determining contract conditions, sell on percentages and ultimately a fee for a player. The market has become so complex and inflated that a players footballing ability has ultimately taken a back seat in determining their transfer value, pushed aside by business interests and financial due diligence. Many fans are desperate to cling to the theory that transfer fees is intrinsically linked to a player’s value and you will often hear cries of ‘he’s not worth that’ when the simple fact remains that- he is. One player’s valuation, what one club is willing to pay and what the other was willing to sell at, varies from club to club, country to country and basing any assumption of a players footballing ability is a far too simplistic an approach. Players have simply become pawns in far more complex and confusing business dealings and so to stack any extra pressure or expectations on their shoulders in relation to a transfer fee which they had little part in determining, is unjust and unwarranted. So as Almiron crosses the white line for the first time here’s hoping the Geordies forget his record-breaking fee and can gee him up instead of heaping the pressure on.