Every hardcore football fan loves a juicy transfer story, especially when the summer (and even January) windows are open. What is not known, however, is that there is more to a deal than meets the eye, when considering the number of parties involved and how all of the different numbers are broken down.
Where things really become interesting is with a big, blockbuster transfer in the high 10s of millions, or even low hundreds of millions as we have seen in a couple of instances over the last few years.
Quite often, these are deals that are orchestrated by some of the best agents in the game, known as ‘super agents’ and as a result, the deals often involve the world’s best and most sought-after players.
Only the biggest clubs in the world are usually in a position to afford such transfer fees (especially those in the hundreds of millions), and that means one of about four or five – PSG chief among them.
Their in excess of £180 million deal for Neymar from Barcelona to PSG in 2017 exemplified just how much of a complication large transfer fees can be.
Despite the fees that are involved, however, these are often convoluted and not as straightforward as they might first appear. Let’s take a look at some of the key components in a football transfer.
This is quite self-explanatory, though there have been many instances in the past whereby fees from this perspective are dictated in a number of ways. The simplest one is that a club wants to sell a player and essentially places him on the transfer market – often for a fee that they would be willing to accept.
However, as per standard practice in negotiation, interested clubs will usually offer at a certain percentage lower than the price that the player has been placed on the transfer list for.
The second scenario is that the ‘selling club’ simply does not want to sell, though in some cases this is often a bluff to see how interested other clubs are and what price they are willing to up to without being prompted. Once this is established, the selling club will do one of two things.
Either they reject it out of hand, hoping that another, significantly higher bid comes in, or they will counter with a price of their own. In some cases here, this gives the buying club an edge, because they know that they could get the player at a certain percentage lower than that of the counter.
There are of course cases where a ‘selling club’ will absolutely not move on their valuation of a player and an interested party refuses to submit a higher bid, as was the case in the summer of 2021 when Manchester City pursued Tottenham striker Harry Kane to no avail.
Once a deal has been negotiated by all parties, the selling club receives access to the amount that the buying club has agreed.
Often, when it comes to buying players or making offers, these are often part of a shortlist drawn up by a buying club. As a result, they will usually have a ceiling in terms of the fee that they are willing to go up to for each player.
In most cases, if a ‘buying club’ cannot secure their first or even second choice of player in a particular position, they move on to the next target. Many clubs refuse to be ‘held to ransom’ when it comes to agreeing on a fee for a player.
Once a fee is accepted and upon completion of a successful medical of the player in question at the buying club (paid for by the buying club) and all contracts are signed, then the ‘buying club’ approves the transaction of funds which the ‘selling club’ can then access.
Perhaps the most important function of a football transfer is the player and often in terms of transfer fees, they are usually compensated as well. As part of the deal, a player will usually receive a signing on fee (on top of the transfer fee), from the ‘buying club’ – which is typically a substantial lump sum.
With younger players, this signing on fee (although lower), is often crucial for them to be able to pay for accommodation, though this is something that isn’t usually widely considered by the public.
In addition to signing on fees, there is the player’s salary. Over the last few years, there have been some eye-watering wages offered and agreed between players and clubs. Usually, it looks as if a ‘buying club’ might be getting a good deal until they enter negotiations with a player and this can often be a stumbling block.
When Cristiano Ronaldo sensationally moved back to Manchester United in the summer of 2021, the transfer fee of in excess of £20 million, may on paper have seemed like a good deal (even considering the player’s age), however, his wages are nearly half a million GBP.
There are circumstances, whereby a player receives a percentage of the transfer fee – usually rare cases, based on how good he is. Depending on how the deal is negotiated, this is either paid for by the ‘buying club’ or the ‘selling club’ – there simply isn’t a right answer for this.
Arguably the most contentious part of a transaction, football agents have a bad name due to the tactics that they engage in and the fees that they receive as part of a football transfer.
In a lot of cases, most football transfers often start due to an agent playing games with their clients. Sometimes, if their client is looking for an improved contract (of which the agent receives a fee), they will usually start talking to other clubs about their client’s potential availability, or even leak the situation to the media.
When it comes to transfer negotiations, an agent will sometimes influence the fee by introducing more parties into the deal and encouraging them to make an offer to inflate the price of the player. This is because an agent gets a percentage of the overall transfer fee, usually from the buying club for helping to broker the deal.
Even player contract negotiations are often left up to the agent. While his client may have instructed the agent of his minimum requirements, often these are negotiated substantially upwards by the agent – again with the agent receiving a percentage of the agreed contract.
Despite the bad press that football agents receive, ultimately it is their job to represent their client’s requirements to the best of their ability and they are the most crucial component in a transfer negotiation.
Structured Transfer Deals
Over the last couple of decades, clubs have come up with clever ways to tailor deals to their, often financial advantage – usually by the ‘buying club’ and often by a specialist negotiator employed just for the purpose of completing transfer deals.
Sometimes, these could be structured as a loan deal with a view to buy/option to buy. Often there will be a loan fee involved when it is just an ‘option to buy’. In addition, a ‘buying club’ may offer instalments over the course of two or three transfer windows – sometimes there is a financial fair play (FFP) advantage for doing this – alternatively, it frees up more funds for other deals.
Another play is that the ‘buying club’ includes clauses in a deal such as a bonus payment to the ‘selling club’ if the player wins a major trophy or individual honour – sometimes even agents negotiate these clauses for themselves.
Tax On Football Transfers
In the Premier League, all clubs who take part in domestic transfers are required to pay the standard 20 percent tax rate for transfers, however, interestingly, for all transfers that are completed between European countries, there is no tax involved.
Of course, players are required to pay tax on their salaries, and with many earning over six figures per week, this is usually at 50 per cent in total. To further put this into perspective, since Raheem Sterling’s blockbuster move to Manchester City, he has become one of the highest-earning players in the Premier League. Earning around £300,000 per week, this equates to £15.6 million pre-tax per year.
This is usually the reason why agents push so hard to negotiate as good a contract for their clients, especially when considering the average lifespan of a footballer is around a decade and for some, maybe only three or four years playing at the peak of their game.