Inside the opaque world of transfers
Thanks to a dense, opaque system, information about player costs, transfers and wages emerges mostly through the media. According to the Premier League website, Sky and BT subscriptions fees from UK viewers help boost Premier League television revenues. It’s a good bargain for Premier League clubs as they can spend more than they earn directly, especially when it comes to individual spending caps for each team.
To put that into perspective, the total £3.6 billion earnings of Premier League clubs in 2015-16 as reported by the Guardian, were projected to rise to £4.5 billion last season. Chelsea, last season’s champions were paid £151 million from the Premier League’s TV and sponsorship distribution. Tottenham Hotspur, Manchester City, Liverpool and Manchester United all earned more than £140m, while Sunderland, who finished last, received £93m.
Player costs are crucial to understand as it helps teams calculate the value of players and the money they have to spend for that value. The “net spending” idea is misleading if looked at as how clubs consider player costs.
For example, on the books, Manchester United signed Henrikh Mkhitaryan from Borussia Dortmund for a transfer fee of £35m, which gives Mkhitaryan a salary around £180,000 per week to stay at Old Trafford for four years. In reality, according to the Guardian, cash rich clubs such as United play the smart card, paying the entire transfer fee in the form of instalments or every 12 months to reduce the overall cost while increasing the value of a player for a lower cost over the span of two or three years.
Instead of recording Mkhitaryan’s transfer fee as £35m for what he was bought, United records it as £8.75m in each of the next four years till his contract expires.
Premier League clubs use this sort of universal accounting to examine player costs.
There is much more to a transfer deal that meets the eye, especially after player bonuses, wages, and image rights come into the picture. With Manchester United looking at Mkhitaryan costing £8.75m per year and spending a reported £9.36m in wages (£180,000 per week multiplied by 52 weeks), his overall cost to the club becomes £18.1m per year.
This £18.1m per year is what United paid attention to while purchasing Mkhitaryan, not just his transfer fee.
While Manchester United are also happy about a zero net spend on striker Zlatan Ibrahimovic who signed on a free transfer, United can boast about him adding well over £10m to the club’s player cost last season.
A topic also rarely touched upon in transfer deals and wages are the image right dispute between player and club in securing a deal.
Cash rich clubs such as Manchester United pay the entire transfer fee in instalments or every 12 months to reduce the overall cost while increasing the value of a player for a lower cost over the span of two or three years