The end of transfers as we know them?

SHOULD Lionel Messi and Barcelona fail to repair their differences over the coming months, and the little Argentinian magician decides to leave Catalonia for a swansong, who will be able to afford him? Messi will be costly, unless he opts for a charitable mission, perhaps one that elevates or enhances an under-achieving club while adding to the legend.

With the financial and cultural cost of the pandemic still uncertain, the full extent of which may not be known for another 12 months, Messi and others of his kind could find the cost of securing a world-class superstar, albeit one that is at the tail-end of his career, may deter clubs that would normally have bitten-off the hand of the players’ agents in an instant. There may be a whole list of stars, such as Mbappe and Neymar, and would-be stars that could find themselves temporarily priced-out of a moribund market, which may stop transfers or, at the very least, put moves on hold.


The question is, should the transfer market be rightfully depressed in a time when clubs have lost a significant slice of their income, wages have been suspended or cut and, outside the rarified cauldron of professional football, people have lost their jobs, been furloughed and the pandemic has claimed thousands upon thousands of lives? Would tempered enthusiasm for high-spending and a curb on spiralling wages not be more empathetic than somewhat hollow gestures of solidarity and agenda-driven virtue signalling?

The Premier League has its critics concerning its activity in the transfer market. In the summer of 2020, around £ 1.2 billion was spent, which prompted politicians to question the wisdom of such spending when the UK government was considering financial support for sport.

There are signs that the transfer market, which has over-heated like a 19th century Californian gold rush in recent years is losing momentum. Just consider that the recent transfer window was arguably the most uneventful in years. The covid-19 pandemic is far different from the financial crisis of 2008-09 in that clubs are actually being affected operationally. In 2008, there were pressures, but by and large, football was able to continue almost as normal. There has never been anything like the financial impact of the pandemic to test the solidity of football’s business model in the post-WW2 world. According to Deloitte, the top 20 revenue generators in European football could lose around € 2 billion over the course of 2019-20 and 2020-21.

The January 2021 window saw gross expenditure in the Premier League total just £ 70 million from 24 transfers, of which 75% of the spend was connected to just three transactions. A year earlier, the amount was £ 230 million from 46 transfers. Moreover, the gross spend in January 2021 across the Bundesliga, La Liga, Serie A and Ligue 1 was around one third of the January 2020 window.


In all of the big five leagues, 2020-21 spending has dropped dramatically versus the three-year average, most notably in Spain, which has dropped 70%. Germany has fallen by 51%, France 40%, Italy 33%. The Premier League, in 2020-21, has declined by just 20%.

Interestingly, in 2020-21, only one a small number of the elite clubs has increased their gross spending in the transfer market. Chelsea, who paid the equivalent of € 247 million versus € 45 million in 2019-20, were the biggest spenders, accounting for approximately 20% of overall Premier expenditure. This was partly attributable to the transfer ban imposed on the club in 2019. 

Of Chelsea’s rivals in England, Manchester City only just increased their outlay, while Liverpool spent € 83 million compared to € 10 million in 2019-20. Internationally, all the major clubs spent far less than normal, notably Real Madrid, Atlético Madrid and Juventus. The elite clubs are all net buyers, but some clubs rely on transfer income to balance their books and to remain competitive. If the pandemic induces a prolonged period of transfer inactivity, these clubs are likely to experience some real challenges.

For example, Portugal’s top clubs have generated over € 2 billion since 2011-12 from transfer sales, resulting in a net gain of more than € 1 billion. Similarly, the Netherlands’ trio, Ajax, PSV Eindhoven and Feyenoord have earned € 1 billion, on a gross basis, from the market. Should a lack of liquidity hit the football market, net-sellers like Benfica, Porto and Ajax could be squeezed in the short-term. English clubs will also be faced with additional hurdles due to Brexit such as a restriction on the amount of under-21 players and a ban on making under-18 signings. 


The transfer market has shifted in recent years in so far that fund managers have realised the opportunities in professional football. InterTrust Group, a specialist financial services company, said in its paper, All change – how player transfer funding has evolved, “the game changer to football player transfer funding has been long coming”. In the past, bank lending was the primary source, but bespoke financing arrangements have become more common, including the use of special purpose vehicles.

However, the pandemic has seen some funding sources retract from the market. The consequences of a diminishing appetite have included loans being subject to early repayment, payment holiday requests and in the worst cases, payment defaults which have impacted cash flows and investors. 

The next key period will come in the summer, which will provide pointers to the long-term health and capabilities of the transfer market. There’s little doubt that clubs will come under enormous financial pressure over the coming year, but the after-shock of a depressed market will extend beyond the balance sheet of the clubs themselves and the personal wealth of players. 

A lot of the football industry’s peripheral business will suffer, starting with intermediaries such as player agents, not to mention the smaller clubs that rely on regular sales of home-produced talent to more affluent members of the football hierarcy. We could be at an inflection point in the transfer market, which some will wholeheartedly applaud, but others will fear because of the dislocation. Change is certainly needed and long overdue, but slow, measures may have to be adopted to ensure the eco-system remains intact and shock-proof.

Source material: KPMG Football Benchmark,  Deloitte,  Keiran Maguire,  InterTrust Group,  Transfermarkt.

Photo: Flickr Mo640 CC BY-SA 2.0

Banish transfer fees – and see what happens

IN THIS time of global upheaval, football soldiers on, playing to empty stadiums in deserted towns. The tumbleweed continues to roll in the streets surrounding football grounds, but the grandstands echo to the sound of the dugout. The longer this prevails, the financial structure of the game will surely be seriously compromised.

The 2019-20 season only touched on the problems that lay ahead, 2020-21 is in danger of having a long-term and somewhat existential threat to many clubs.

However, the transfer market continues to boil away, albeit at a lower temperature than in the past. There’s a moral question or two to be answered about the persistence of the market, although in 2020, activity was lower than in the previous year. 


A recent article in The Athletic suggested transfer fees are actually illegal and the way forward may be to abolish them. Football finance expert Stefan Szymanski, the co-author of the excellent Soccernomics, said everyone has the right to move jobs except footballers, adding no law has ever been passed to exempt clubs from labour laws. 

Szymanski, whose paper in July 2015 (The economic arguments supporting a competition law challenge to the transfer system) questioned the post-Bosman transfer market, said clubs need to treat players less like horsemeat. “It’s not difficult, every other employer has to do it.”

While Szymanski believes very few small clubs are ever able to generate substantial revenues from player trading, it cannot be denied player trading has become an essential part of many business models. The question is whether there is an alternative and if there is, how do you wean clubs off a system they feel reliant upon? Removing transfer fees would require a huge recalibration of the industry, which actually might take years to achieve.

When he issued his paper, Szymanski felt at worst there would be no change to a world where big clubs dominate and the rest are constantly on the brink of financial collapse. At best, he added, smaller clubs might attempt to match the big clubs by hiring top players on short-term contracts. “After Bosman, the football authorities sat down to create a new system, which is what we have today. If this system were now to be abolished, no doubt there would be negotiations and a new system created. It is not necessary to pre-judge that new system in order to accept that the current system is unjust and illegal.”

As far as FIFA are concerned, the current level of transfer activity reflects the game’s resilience and strength of football’s employment market. In the governing body’s Global Transfer Market Report, FIFA confirmed transfer market activity fell by 5.4% in 2020 to 17,077 transfers. It was the first time in 10 years the volume declined.

Food chain

Transfer fees totalled US$ 5.63 billion in 2020, the lowest since 2016 and a decrease of 15% on 2019. Surprisingly, only 13.3% of all transfers have fees attached to them. Furthermore, of those transfers with a fee, 51.4% include a sell-on clause in the agreement. In deals with no transfer fee, only 2.8% have a sell-on clause, a figure which probably affects clubs lower down the football food chain. Over 60% of transfers involve players that are out of contract.

The pandemic has not stopped clubs from spending and there has been a number of sizeable transactions, although only 130 over US$ 10 million. Naturally, the biggest deals have included Chelsea (Kai Havertz), Juventus (Arthur), Napoli (Osimhen), Manchester United (Fernandes), Manchester City (Dias), Paris Saint-Germain (Icardi), Barcelona (Pjanic), Bayern Munich (Sané) and other members of the elite.

Premier League clubs dominated the top 10 spenders in 2020, Chelsea, Manchester United and Manchester City in the top three. In fact, English clubs spent more than any other country – US$ 1.6 billion – in 2020. The highest amounts went to Spanish clubs (US$ 340 million), and Portuguese clubs (US$ 261 million). The Premier League has accounted for a third of all European top division spending over the past few years.

The absence of transfer fees would not just affect individual clubs, but would also impact domestic football in countries that rely on a flow of international transactions. Brazil, which accounted for over 2,000 deals and over US$ 300 million in fees in 2020, is responsible for the most frequented transfer route. In 2020, 274 deals featured movement of players between Brazil and Portugal, the busiest trade path. Spain received the highest amount of transfer income, almost US$ 800 million.

As we have seen, some clubs have become very proficient at player trading, providing a steady flow of players to the market. The leaders in this field are Benfica, Porto and Ajax, but other clubs, such as Red Bull Salzburg, Sporting Lisbon and Genk are on the rise. In 2019-20, Ajax  and Benfica each generated over € 200 million of transfer income. It is likely these player trading clubs will not make as much from this important revenue stream in 2021 as the pandemic hits home. 


Removing transfer fees would also have an indirect effect on the game in that it would curtail some of the activity that acts on the periphery of the industry. Intermediaries may find their income goes down dramatically. Conversely, with expenditure on player acquisition no longer an issue, it is not out of the question that player wages might increase – if the money is still there, of course.

The transfer market in women’s football is only just getting underway and in 2020, international transfers broke the 1,000 mark for the first time, an increase of 24%. A new world record was created when Chelsea signed Pernille Harder from Wolfsburg for £ 250,000. At this stage of its development, the women’s game could easily implement a ban on fees in the future.

One unforeseen consequence could be a rise in illegal activity in order to encourage transfers. Given the football industry is now a global business that has begun to ape other corporate sectors, the eradication of transfer fees is unlikely to be endorsed by clubs, associations and even governing bodies – unless, of course, there is a huge disaster waiting to happen. It will be a case of “turkeys don’t vote for Christmas” even if it delivers longer-term benefits. Question: When did football ever think long-term?

Photo: PA