The Transfer Market

As in any professional sport, the buying and selling of players is a critical component of soccer. However, rather than trading players back and forth, clubs buy and sell players via the transfer market. Navigating the transfer market requires vigilance and an ability to pick out exceptional players from a huge pool. Teams invest huge amounts of time and money into scouting talent and analyzing statistics to secure the most gifted players for the right price. The larger a club’s budget, the more money they are able to spend, which gives them more agency when deciding who they should sign. There are numerous scenarios through which a player can switch clubs, but a key distinction is whether their contract with their current team has expired or not. If their contract has ended, a player no longer has a transfer fee associated with them, and is free to either renegotiate a contract with their current team, or enter the transfer market in hopes of finding a new team (Quick, 2017). The only complications involved in these deals are between the player and their new club over what their wages, contract, and bonuses will be. However, if a player is looking for a move prior to the end of their previously agreed upon contract, then the purchasing club must pay a transfer fee to the old club as compensation (Quick, 2017). These values are set by the old club, and are sometimes astronomically high to avoid losing some of their most valuable players. For example, when Leo Messi signed a new contract in 2017 with his current club, FC Barcelona, his transfer fee was set at a remarkable $853 million (Bonesteel, 2017). It would be costly, risky, and nearly impossible for any club to attempt to pay off this fee in hopes of acquiring the six time Ballon d’or winner. 

 

There are three groups of people primarily responsible for finding talent and bringing it to the attention of clubs: scouts, analysts, and agents (Thomas, 2014). Scouts are a widespread phenomenon in sports, and their role in hunting for talent in soccer is parallel to other major sports. They put in long hours at academies and tournaments browsing the pool of players, and often travel across the country to watch a particular player. These scouts are usually associated with a club, and their ability to identify emerging talent is enormously underappreciated. An example of the extreme value that experienced scouts can bring to a club can be found at Leicester City. Their journey to the 2016 Premier League title will go down in history as one of the most improbable and extraordinary stories in sports for numerous reasons, but one reason that stands out is how inexpensive their trophy winning team was. Their entire team cost just ₤54.4 million (ESPN Staff, 2016). Because Leicester City did not have a budget comparable to the English powerhouses that typically claim the top six spots in the league, they relied heavily on their scouts’ ability to uncover hidden gems. Steve Walsh and David Mills are not two well known figures of that historic Leicester City unit, but they were two of the club’s scouts who are largely credited with discovering Riyad Mahrez, N’Golo Kante, and Jamie Vardy (Wallace, 2016). Mahrez and Vardy proved to be an invaluable striker partnership that spearheaded the Leicester front line, while Kante anchored their midfield and did much of the teams’ defensive work in the middle of the field. Mahrez and Kante both played in the second tier of French soccer before joining Leicester, and were signed for $400,000 and $5.6 million, respectively (ESPN Staff, 2016). Vardy had been making his way up through the tiers of English soccer throughout his career, and was signed for just $1 million (ESPN Staff 2016). Compared to the value they added to Leicester that year, these were extremely low transfer fees, and much credit is owed to Leicester’s scouting team for putting in the time and effort to make such clever signings. 

 

Another important group involved in the buying of players through the transfer market are analysts (Thomas, 2014). This role is a relatively new phenomenon in soccer, but their role is growing in popularity (Thomas, 2014). Analysts are employed by clubs to look at the data, and draw conclusions from statistics about which players will provide the most value for their club. Although many remain skeptical about the value of analysts, when utilized in tandem with traditional scouting methods, clubs can often come away from a deal with more confidence about their new player’s chances of success. Jase Kim, analyst for the Colorado Rapids, explains how analysts can help clubs narrow down both the players they’re considering and the footage they need to watch (Bogert, 2020). Without their ability to discard data, teams would be overwhelmed by the number of players, teams, and games they needed to try and pay attention to in order to make a prudent signing. For Major League Soccer teams that often aren’t operating with as large of a budget as European teams, this reality only heightens the value of data and analysts. MLS teams need to make smart choices when navigating the transfer market to make best use of their limited funds, and combining the wise eyes of on the ground scouts with helpful trends from analysts is an effective way to do so. 

 

The last group involved in the transfer market are agents. Whereas scouts and analysts are loyal to a single club, agents represent players, and work to ensure that the player’s best interests are being upheld in the deal (Thomas, 2014). When a player is looking to leave a club, agents are often the people to help them do so, and can provide guidance and assistance by calling potential new clubs and surveying the market to see how their client stacks up against the current competition. Agents can be very influential, and are often lauded for their ability to secure impressive deals for their players. One example of an agent who has come to dominate the European transfer markets is Jorge Mendes. Mendes’ clients include Cristiano Ronaldo, James Rodriguez, Angel di Maria, and Diego Costa, along with many other top players (“Jorge Mendes,” 2019). His ability to complete deals for the highest fee possible attracts players, clubs, and even managers, who all have something to gain from a high transfer fee (Alves, 2019). Mendes’ success highlights how agents can be negatively perceived by some clubs that end up having to pay exorbitant transfer fees as a result of his negotiation skills. Agents receive a cut of every transfer fee they help orchestrate, and so there is also a stigma that they act out of self-interest at times. For Mendes, he receives 10% of every transfer he is involved with (Alves, 2019). Although this is a steep price, his consistent and unparalleled ability to cut deals has made him respected across European football. Mendes’ influence and gift for molding the transfer market to benefit his clients demonstrates the powerful role agents play in the transfer market. 

 

Although scouts, analysts, and agents do their best to study and master the transfer market, it has proven to be a volatile place, especially in recent years with an influx of money in major European leagues. In the 2015-16 season, the 20 wealthiest clubs earned $8.9 billion in revenue (Quick, 2017). Commercial revenue from merchandise and corporate sponsorships is the largest source of income for most clubs, along with broadcasting rights and ticket sales (Quick, 2017). These totals exclude money made from transfer fees (Quick, 2017). If that figure were included, it would further demonstrate how clubs have recently generated enough money to pay astonishingly high transfer fees. This development has largely taken place over the past few years. Of the top ten most expensive transfer fees, seven have taken place between 2016 and present day (Doyle, 2020). 2016 was viewed as a turning point in the transfer market. Once Manchester United paid Juventus €105 for Paul Pogba, it was a signal to other clubs that they had to be prepared to spend significant amounts of money to land top talents, or otherwise count on their scouting teams to continue to uncover hidden talent (Doyle, 2020). However, just a year after Pogba’s dramatic transfer to United during the 2016 summer transfer window, his record breaking fee was obliterated. Paris Saint-Germain, a club with a reputation for signing expensive players, triggered Barcelona’s €222 million release clause (Doyle, 2020). The expensive price tag coupled with Neymar’s recent success alongside Messi and Suarez at Barcelona left fans stunned by both PSG’s willingness to spend so much money, and Neymar’s desire to leave the Catalonian club where he was so revered. PSG paying that much for Neymar also sent shock waves throughout the European soccer world. If PSG were willing to pay that much for one player, it meant that other clubs might have to follow suit to prove their commitment to signing the best players. 

 

Since Neymar transferred to PSG, no club has come close to breaking the transfer fee record again. The second most expensive transfer fee was paid by PSG as well, who spent €145 million to sign Kylian Mbappe from Monaco (Doyle 2020). However, the recent trend of high transfer values has forced clubs and fans alike to wonder if these players are worth their price, or if the influx of money in soccer has led to the inflation of transfer fees. Data suggests that Neymar hasn’t been worth the price. Since signing in the summer of 2017, PSG has played 92 competitive games across the 2017-18 and 2018-19 seasons (Lane and Gal, 2019). Neymar has missed 42 of those games, 38 due to injury and 4 due to suspensions (Lane and Gal, 2019). Over the course of these 42 games, PSG still had to pay $32.9 million in wages (Lane and Gal, 2019. There is always the risk that any team’s major signing could get injured, but the length and frequency of Neymar’s injuries has cost PSG serious money. PSG also brought Neymar to the club with hopes of finally achieving success in the Champions League. They have routinely dominated in France’s domestic league, but failed to make it past the quarterfinals in the Champions League. However, in the two seasons Neymar has spent with the club, they have been eliminated in the Round of 16 both years; in 2017-18 they lost to eventual champions Real Madrid, and in 2018-19 blew a 2-0 against a struggling Manchester United team, eventually losing on away goals (“All the 2017/18 Champions League Results,” 2018, “Champions League 2018/19: All the Fixtures and Results,” 2019). 

 

The doubts that haunt PSG about whether Neymar was a worthwhile purchase are one of several reasons why studying the transfer market to identify patterns and trends is enticing. There are numerous factors that clubs take into consideration before purchasing a player, but which of these statistics matter most, and what are the intangible factors that prove influential? Our research project aims analyze trends in the transfer market to determine what strategies have the most pay off when scouting players. 

 

Works Cited

 

Alves, Marcus. “Jorge Mendes: How Ronaldo’s Super-Agent Has Built a Football Empire.” Bleacher Report, Bleacher Report, 24 Oct. 2019, bleacherreport.com/articles/2859480-jorge-mendes-how-ronaldos-super-agent-has-built-a-football-empire.

Bogert, Tom. “Soccer Analytics: Three Real-Life Examples That Show How Analysts Impact Their Clubs.” MLSsoccer.com, 16 Apr. 2020, www.mlssoccer.com/soccer-analytics-guide/2020/three-real-life-examples.

Bonesteel, Matt. “Lionel Messi’s New Barcelona Contract Includes Absurdly Expensive Transfer Fee.” The Washington Post, WP Company, 25 Nov. 2017, www.washingtonpost.com/news/early-lead/wp/2017/11/25/lionel-messis-new-barcelona-contract-includes-absurdly-expensive-transfer-fee/.

Doyle, Mark. “The 100 Most Expensive Football Transfers of All Time.” Goal.com, 31 Jan. 2020, www.goal.com/en-us/news/the-100-most-expensive-football-transfers-of-all-time/ikr3oojohla51fh9adq3qkwpu.

ESPN Staff. “Leicester Squad Cost Compared to Man City, Tottenham and Arsenal.” ESPN, ESPN Internet Ventures, 9 Feb. 2016, www.espn.com/soccer/barclays-premier-league/23/blog/post/2803406/leicester-squad-cost-compared-man-city-spurs-arsenal.

“Jorge Mendes.” Forbes, Forbes Magazine, 21 Sept. 2019, www.forbes.com/profile/jorge-mendes/#3288dec3ec27.

Lane, Barnaby, and Shayanne Gal. “3 Charts That Show Neymar Has Been a Massive Waste of Money at Paris Saint Germain.” Business Insider, Business Insider, 1 Sept. 2019, www.businessinsider.com/neymar-has-been-a-massive-waste-of-money-at-psg-2019-8.

Quick, Miriam. “How Does a Football Transfer Work?” BBC Worklife, BBC, 29 Aug. 2017, www.bbc.com/worklife/article/20170829-how-does-a-football-transfer-work.

Thomas, Andi. “The European Soccer Transfer Market, Explained.” SBNation.com, SBNation.com, 28 July 2014, www.sbnation.com/soccer/2014/7/28/5923187/transfer-window-soccer-europe-explained

UEFA.com. “All the 2017/18 Champions League Results.” UEFA.com, 4 June 2018, www.uefa.com/uefachampionsleague/news/0252-0d047f2e3b30-2ef67bde4bc4-1000–all-the-2017-18-champions-league-results/.

UEFA.com. “Champions League 2018/19: All the Fixtures and Results.” UEFA.com, 1 July 2019, www.uefa.com/uefachampionsleague/news/0252-0e9902dd97ae-bd3c7b568287-1000–champions-league-2018-19-all-the-fixtures-and-results/.

Wallace, Sam. “Leicester City’s Linchpins: The Experienced Backroom Staff Who Laid Foundations for Club’s Unlikely Title Push.” The Telegraph, Telegraph Media Group, 13 Feb. 2016, www.telegraph.co.uk/sport/football/teams/leicester-city/12156199/Leicester-Citys-linchpins-The-experienced-backroom-staff-who-laid-foundations-for-clubs-unlikely-title-push.html.