As rumours leak out of China that soccer star Gareth Bale is about to become the world’s first £1 million a week footballer with Jiangsu Suning, most fans are oblivious to what really goes on to strike a transfer deal.
Who stays and who goes comes down to the finances.
In Europe, players tend to have two types of move – a transfer with a fee or a free transfer.
But like the adage says, there’s no such thing as a free lunch.
Factors that could to determine a player’s price include talent, age, nationality current wages and length of contract.
Deciding the price
A player who qualifies for a European passport or as a homegrown talent adds to their value as they meet rules about how many foreign players a club can field.
English Premier League clubs tend to pay more than other teams because the league is awash with billions of pounds of cash.
A club coming late to the transfer window will probably pay extra to get the deal through.
After considering all these factors, clubs will agree a price and the player will agree his contract.
Intermediaries for both sides need paying as well – like agents and lawyers.
These costs are what makes a free transfer expensive with millions going to agents who are often family or friends of the player.
Football finances unravelled
And this is how the finances work.
A club signs two new players – call them A and B.
- A is on a £2.5 million a year contract – £50,000 a week – and cost £25 million over five years.
- B is on a free but is paid a £150,000 a week over five years.
Surprisingly, the free transfer costs the same because of how the club writes off the cost of their asset in the accounts.
- A costs the club £7.5 million a year – £5 million in amortised value and £2.5 million in wages.
- B costs the club £7.5 million a year in wages.
Amortisation is why clubs offer new contracts.
If player A gets a new five year deal after two years, his wages go up to £100,000 a week (£5 million a year) but the club can stretch the balance of the £25 million transfer fee over a longer term, in this case, the balance of £15 million over five years is £3 million a year outlay.