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European Soccer Transfer Fees Skyrocket

With the close of this summer’s transfer period in Europe a new record was set.

Just looking at the top five leagues (England, Italy, France, Germany, Spain) an astonishing $ 5.2 billion USD was spent, and that is for only one of the two annual transfer periods. The five-year growth in these five leagues is exactly 100%, starting with $ 2.6 billion in 2013.

The breakdown by league in 2017 is as follows:

  1. England: $ 1.8 billion
  2. Italy: $ 1.2 billion
  3. France: $ 0.8 billion
  4. Germany: $ 0.7 billion
  5. Spain: $ 0.7 billion

A single player record was set by Paris St. Germain acquiring Neymar from Barcelona for $ 262 million. That more than doubled the previous record $ 120 million Man United paid for Pogba in 2016. Ronaldo at $ 110 million in 2009 looks like a bargain, even adjusted for inflation.

These transfer fees are fuelled by foreign ownership money flowing into clubs, mostly from China, the Middle East, and the USA. There is a financial fair play system that is supposed to keep this escalation in check. The system is intricate but in essence it requires clubs to spend no more than $ 45 million more on transfers than they take in over the past three years. I am not sure how that is supposed to help as it only enforces a difference, not any maximums.

The result is that the clubs who attract the most money are buying the “best” players. The players take a significant share of the fees and huge salaries. Most important, player agents are making exorbitant commissions. Will buying expensive players win championships? Not in my opinion. It still takes good coaching, team chemistry, and 11 players on the field supporting each other. How much does the potential money from transfers play in the players’ heads? Will a player really support a Neymar so that Neymar’s value and income increases further?

The other side effect is a whole new economy in soccer. Clubs can make more money through transfer fees than through ticket and merchandising sales. Some examples:

In 2016 Borussia Dortmund paid $ 18 million for Ousmane Dembele and sold him for $ 120 million to Barcelona in 2017. That’s more profit on one deal than the club made in the past five years combined through soccer operations.

This year Dortmund paid $ 8 million for 17-year-old talent Jadon Sancho to Man City. The strategy is to develop Jadon and then generate a transfer fee of $ 100 million or more in three or four years.

And lastly, clubs are recruiting and developing local talent in the hope of hitting a future transfer jackpot.

So while the fans are cheering their team and enjoy high quality soccer on the pitch, club management are focusing on growing transfer fees, or growing soccer players’ value. At some point we need to wonder about the purpose of soccer. Is it sport or corporate business? Can it really be both?

 

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