Football Transfers Explained

Footballing player transfers have grown and evolved throughout time to the point where world class players like Carlos Tevez, can sign for West Ham on a free, but proceed to move onto bigger and better things with a sell-on fee reaching into the ten’s of millions, of which West Ham do not see a penny of.

Gone were the simple times of two football clubs agreeing a fee for a player. Nowadays, agents have a comfortable seat at the luxurious transfer board table, shouting orders at both club and player. If that wasn’t enough, large conglomerate entities that sponsor the players, also have a hand in decision making.

For example, if Adidas have the sponsor holding rights of a player that wishes to move to a club where the main sponsor is their major competitor, a conflict of interest looms over the deal. Hence, the sponsors need to intervene with the aid of lawyers before a player can move. It has been known that a player may make a u-turn on joining a club after consulting with his sponsors. Longwinded transfers are normally due to the player’s image rights and/or sponsor negotiations.

Transfers also revolve around the risk-factor (RF) the player carries with him. If the insurance organisations behind the club deny them cover for a player they wish to be transferred to their club, the deal is likely to fall through. Just like your own personal credit rating, professional players have a RF attached to them. Hazardous injuries, age, and off-the-field disputes play a major role in the RF rating of a player.

Footballers are now also permitted to take a medical with an interested club, even prior to the fee being rubber-stamped. An estimated fee does need to be arranged and approved by both parties before the player can take a medical with the interested party.

Pre-Fee Medicals, as they are known, are carried out if the interested club is not entirely confident with the players RF rating, although this may not be the only reason. Any reason can be given by the interested club. If the club holding the players registration view it as valid reason, the pre-fee medical can take place. Once the player has been cleared by the interested club’s medical team, the final negotiations surrounding the fee can be arranged.

Pyramid Transfers are also a common occurrence in today’s game. A pyramid transfer is where a player’s fee may be set at £10 million by his club. That valuation may fall short of the value placed on him by the interested club. The interested party may offer a down payment of approximately 60% of the fee (in our case £6 million). The further 40% can be agreed by both parties looking at many avenues open to them. For example, the remaining 40% can be paid in seasonal instalments, with added interest being allocated for the duration of the repayment.

Some clubs agree to the remaining balance being paid on appearances or achievements with the player at the club. This method is the most commonly used mode by most clubs within Europe.

Player exchanges are also common in our game. A player wanting out of a club may be worth more than the budget of the interested club allows. In such cases, the interested club may allow the other party to take a pick of one or more players from a list. As long as the player moving in the other direction agrees to the deal, the transfer can take place.

Non-Registration transfers are not a common occurrence within the British game, but are fairly common in the French, Spanish, Italian and South American leagues. A player may be purchased by a third-party organisation. These entities are normally financed by businessmen, but run by agents and in some cases, former players, scouts and coaches.

Their interest lies with making as much money from the player in a short period of time as possible. Third party organisations can hold as many player registrations as they wish. The procedure is simple. An organisation hires scouts or agents to find them a player(s) with extreme potential playing at a small club. It is in the interests of the third party if the player is in his late teens and also if the club the player is registered to is having financial difficulties.

The third party carries out negotiations with the club for the player. These negotiations normally entail a transfer fee. The fee is calculated at a slightly higher market value than the present worth of the player. The remaining salary that the player was to receive from the club is deducted from the fee also.

If the negotiations go well, the third party takes control of the registration of the player. In effect, this means that the player is owned by another entity and not the club he plays for.

The third party organisation drafts a new contract between the club and themselves (not the player). The contract is often short, in the region of one or two seasons. The player is paid by the third party and holds all the rights of that player, including sponsorship and media rights. Player’s under a third party contract are often paid more than those who are contracted to a club. This is due to the investment of time and energy the player will need to make.

Most third party players are asked to commit more hours per week to training. A coaching team is normally set up for the player so as to ensure that he receives all the necessary training and development needed to enhance his all-round ability.

The aim of the third party is to move the player onto a bigger stage, namely, a bigger club, playing in a well established league. All transfer fees are given to the third party organisation.

Loan transfers are when a player is moved to another club for a duration of time. The club holds onto the player’s registration. Some loan transfers require the club purchasing the loan to pay the players wages for the duration of the loan. Sometimes a small fee is involved. A future permanent transfer fee can also be agreed.

Some clubs in France have been known to calculate a formula regarding a future transfer fee. The two clubs involved can base the fee on a projected performance basis. For instance, if the club purchasing the loan player makes the European qualification spots due the player’s reported impact, the fee is calculated to equal x. If the club make no improvement with the player in it, the fee is calculated to equal y (if the interested party still wishes to purchase the player permanently that is).

Co-ownership is a rare occurrence in some leagues within Europe and South America. Two or more clubs may own a percentage in a player’s registration. The ownership is never split equally. The club holding the higher percentage of the player’s registration can often dictate where the player plays, but is not in control of the player’s sponsorship and/or media rights. Third party organisations have been known to also own a share in a co-ownership registration.

Player Leasing is a procedure that has not yet taken place in any of the British leagues. A player is registered to one club. That player is then loaned to another club for a period of no more than three seasons. Each season the player is with another club, that club pay a seasonal fee depending on negotiations carried out between the clubs. The club that is hiring the registration of the player is not allowed to return the player in the first season, but can return the player after the first season is over, even if the lease contract lasts for a further two seasons. Again, the fee is based on appearances and progression with the club.

Free transfers/Bosman Ruling & Compensation Releases are when a player has either reached the end of their contract and wish to leave the club they are with, or are released by a club for various reasons. Compensation Releases are when a club, normally suffering from financial difficulties can no longer pay the player’s wage. If no interested party is found, the club, with the aid of the administrators, can structure a package for the player. If the player is owed a further million on his contract, the club can agree to make a one-off payment to the player for £500,000. If the player agrees, the payment is made and the player and club cut their ties.

Sometimes, an interested party is found that is willing to take the player off the books of the troubled club. The interested club will not agree to pay the player the same high wage his is currently on. In this case, the player’s current club, who are desperate to move the player on, will pay the difference in salary for the current duration of the player’s contract. This is something Leeds United sought to do.

There are many other transfer modes that take place in the world’s leagues. We cannot do a write-up on all of them unfortunately. We hope this article has further educated the Footballing public.

Our research for this article has been taken from SportsCube Inc, INM Ltd, Opinum Loklater Ltd & David Gochen. We appreciate the assistance given by these parties.