Before talking about loans, it’s important to understand the basics of the transfer of a player between one club and another. The most straightforward transfer is a negotiation process between three main characters: the club, the player, and the agent. The negotiation process in theory is simple. In a player’s contract there is often a buyout clause, which essentially states the lowest initial bid that a club will accept to begin negotiations for a player. In some countries, like Spain, these clauses can be compulsory meaning that if a club bids any amount higher than the amount in the buyout clause, the player is mandated to transfer (1). Once this bid is made, then negotiations begin where the selling club wants to get as much as possible whereas the buying club wants to pay as little as possible. After weeks or months of a back and forth process, and if an agreement is made on the transfer price, the player then has a contract and salary for the buying club.


There are several advantages and disadvantages to a traditional transfer. The most clear advantage of a traditional transfer is that of a large club. Larger and more prominent clubs have access to the financial resources to purchase players with a higher price tag, compared to smaller clubs. This can cause a positive feedback look for these big clubs, where more expensive players help their team win more championships, attract more fans or attention, and also attract other prominent players to want to join. In the same way, this can have a serious detrimental effect on smaller clubs and in many cases, really hinder the development of those clubs and their players.

Matthijs de Ligt and Frenkie De Jong image from bleacherreport


Despite this system, there are a few anomalies to this trend. For example, one club that has taken advantage of this transfer system, despite not having many championship titles in the modern era is Ajax. Their business model is centered on the training and selling of young talented players that they have cultivated through their academy. The most recent of these youngsters are Frenkie De Jong and Matthijs de Ligt who have been sold to Barcelona and Juventus respectively. Interestingly, the money that Ajax has made from selling these young players has a twofold purpose: (1) support the nurturing of young talent in their academy and (2) the acquisition of older and experienced players to balance the young talent in their squad. One of the newest acquisitions of an older talent is Daley Blind from Manchester United for $18 million, a fraction of what they made from the $190 million sale of De Jong and de Ligt. The Ajax system is testament that within this system, there are some clubs that can still survive. Nonetheless, the increase in transfer fees has led to noticeable inequalities that EUFA still strive to correct.


This is where the loan process comes in, as an attempt to try and even out some of the injustices of the modern transfer market. Clubs also have the option of choosing to loan a player rather than transfer a player. Some of the differences between loans and transfers are quite obvious. Transfers are permanent transactions where one player will leave a club for another club. Loans, however, start out as temporary transactions sometimes loans can last a couple weeks or a couple seasons, depending on the leagues. Also, loans are subject to particular regulations that transfers are not. For example, we can take a look at loan regulations in the Premier League. The following regulations are imposed on loans: (1) clubs cannot register more than two players on loan at any one time (2) the maximum number of loans in the same season is four (3) clubs cannot loan to another premier league club a player that they have acquired in the same transfer window and (4) a club may not loan more than one of its goalkeepers to another premier league club (5).


Before 2011, seeking a loan for a player was not as common of a practice as is now, but still had its advantages over the traditional transfer. One instance where a club may want to choose a loan over a transfer may be that of a young player who is often not in the starting 11 or on the reserve team. That young player would still have his salary being paid by the club for essentially not contributing much to the club’s success. In cases like this, it would be advantageous for the original club and the young player to seek a loan to another player. In this example, the original club would now try and pay a subsidized or no salary (thus saving the money) and the young player could have some experience playing professionally at another club. This would help that player develop the skills and then when the loan is over the original club now would probably have access to a more skilled player. This would be good for the purchasing club as now that club can have a player for a fraction of the price than previously.


In the past decade, new rules and regulations of the UEFA Financial Fair Play (FFP) have also encouraged many more clubs in the recent decade to engage in loans, rather than direct transfers. The new FFP guidelines were first introduced in the beginning of the 2011-12 season and set in place to help clubs not spend more money on transferring players than the amount of money that they were bringing in. Thus, the primary surface goal was to improve the financial responsibility and hopefully longevity of clubs. Shockingly, in a study conducted in 2009 by UEFA, it found that more than half the 665 Europeans clubs included in the study reported suffering from financial losses in the year before (2). These new FFP policies may help the smaller European clubs, however, it seems to have more harm than benefit for larger, prominent clubs who have access to the massive amounts of financial funds to continuously acquire high caliber players. The most important result of the FFP is the spending limit policy, where a club cannot spend more on purchasing players than the amount that the club brings in (2).

Neymar and Mbappe image from

As a result of this, since 2011, there has been a steady incline in a particular type of loan, which clubs seem to be using to maneuver around the FFP policies and purchase expensive players. This particular type of loan is one where the club has an option to buy, often within a 12 month period (3). This is not to say that traditional transfers still do not occur (take Neymar from Barcelona to PSG for example), but more clubs in Europe’s big five leagues are engaging in loans with an option to buy (i.e. Mbappe to PSG) in order to obtain more good players in a single transfer season (4). Looking at PSG during that season (2017-2018) and their resulting signing of both Neymar and Mbappe is a key case study to why loans have skyrocketed in popularity. That season, PSG signed Neymar for a record 222 million euros. That same season, PSG signed on loan with an option to make permanent an 18-year-old Mbappe from Monaco. PSG intentionally did not say the loan was intended to be made permanent for 180 million euros, which would then have been a breach of the FFP regulations since they would have likely have been spending more money on the purchasing of players than the amount of money that the club was bringing in that season. Thus, by postponing their purchase of Mbappe, PSG was able to obtain Mbappe in their squad at the same time as Neymar without violating FFP regulations.


This increase in prevalence of the loan with an option to buy shows that although the FFP regulations have tried to close the gap between big European clubs and other smaller ones, there still lies inequalities in the way that these negotiations are dealt with. Now, although the ability of big clubs to exclusively use transfers to acquire new players may be affected slightly by the FFP regulations, they have still found ways around this in order to still get new talent and thus continue to contribute to their dominance.


Transfers and loans have truly globalized the game of soccer for better and for worse. The history of English soccer teams for example have been embedded in the communities that they represent, and the pride that goes along with that support community. However, now, often supporters of English clubs have no real connection to that area and find themselves sometimes supporting a squad of 11 players with no English heritage. Transfers and loans may be different ways to acquire players, but they still achieve the same goal: the transformation of soccer into a market system that often favors the biggest spenders and the highest earners. A system rooted in monetary transfers and loans will be far from creating any semblance of equality among clubs worldwide.



Written by Richard Huang