Of math and men - Dissecting football transfer valuations

One of the biggest transfer sagas of the Summer

Since yesterday, Gareth Bale’s value has gone up a reported £39 million, rising from the earlier bid of £86 million. He is now currently valued at a whopping £125 million by his parent club Tottenham Hotspur, and the pursuit for talent has just been taken up three notches.

Given that the earlier offer by Real Madrid was a mix of money and players, this is still to be taken at face value; to essentially simplify the apples and the oranges for the layman. From the transfer of Zinedine Zidane from Juventus to Real Madrid back in 2001, to Ronaldo’s departure from Manchester United, all the purchases have been beyond logic, at least for the working class.

It simply defies reason as to how a player could be worth so much money, especially with the economic downturn only still receding. Certain counties have been built on lesser amounts, if not countries. There has to be a science which determines the value of a players, which clarifies that such valuations are not simply figures that catch the eye of the marketer. Let’s take a look at a few of the criteria that determine the notional value of a footballer.

Talent

Top of the list, this is clearly the first point of differentiation when it comes to evaluating a player. A player has to possess certain qualities in the first place to be considered by another club, and there is a margin where buyers operate. If a club in need finds a player who fulfils that particular need, the player is automatically on the shortlist.

Every team has a decent sized squad, but not every one of them makes the cut, and talent is the key point of interest for a scout. Again, the value automatically goes up if the chosen player is in the list of the best in that particular position. So if the player is a left back and is extremely talented and is considered one of the best in the league, he will cost way more that anyone who brings up the rear of that list.

For instance, Robin van Persie filled the role of an out-and-out striker that Manchester United wanted to help them push themselves to the top of the table. His sure-fire talent ensured that he had another stupendous season, scoring 30 goals in all competitions, just seven short of his best season with his previous employers, Arsenal. United paid £24 million for their man essentially because van Persie was peaking in form and they could afford a little splurge.

Position

A football team has 11 players who fill various positions in the squad and all of them play an equal role in helping propel the team forward. That being said, they are not all on the same plane, at least not in this era of supremely attacking football.

Attack allegedly being the best form of defense, the final third commands the highest remuneration. Strikers, attacking midfielders and wingers garner the maximum amount of interest and subsequent coverage.

The trend clearly showcases the aforementioned argument, with only a select few like Rio Ferdinand, Ashley Cole and Dani Alves on top of that particular chain of command. Teams generally prefer to score more than they let in, and the easiest way to achieve that is to bring in the cream of attack and settle for a decently average defense which can play its role satisfactorily.

The criterion of ‘position’ also entails the player’s placement in his parent club’s hierarchy. A player who is a first team regular will logically cost more than a fringe player. A player who is indispensable to his squad will cost even more, because that forces the parent club to look for a worthy replacement, which calls for further effort on their behalf.

Age

Another very important factor to be taken into consideration is the age of the player. However, this is not part of a linear equation, as a player in his early twenties may have an upper hand over an older colleague in terms of youth, but experience trumps youth in most cases.

Ideally, a mix of youth and experience is preferred, and the hypothetically plotted graph meets around the age of 24 and 25, where most top class talents have spent enough time polishing their skills at the top most levels and are still in control of their youthful abilities.

This also has a converse meaning, mostly with regard to players who are closer to the twilight of their careers. In crude accounting terms, depreciation has to be taken into account, and for players who are nearing the end of their contracts, smarter decisions are called for.

Robin van Persie – Good signing or bad?

Again, the Robin van Persie transfer would be a good example here; at the age of 29, a footballer is closer to burning out than being primed for a long reign at the top, and Wenger took that into account to make a killing. A player will walk away on a Bosman if he sees out his contract, and a manager who has paid a substantial amount of money for the player to begin with, would rather cash out than stay put.

Additional elements

A lot of other factors too come into play in addition to the three mentioned above, one of which is the league the player plies his trade in. An English Premier League player who is on the fringes of his squad will command a greater value than the cream of the I-League.

Also taken into account is the brand that the player has built for himself. David Beckham’s transfer to the MLS was funded by the entire league rather than only Los Angeles Galaxy, as the midfielder was seen as a valuable part of their presence across the world. He brought in an iconic stature that the MLS craves deeply, in addition to the revenue from appearances and shirt sales.

Merchandising is a huge part of the football arena today and Real Madrid reportedly broke even a year after they bought Cristiano Ronaldo, who eventually became their most profitable player.

Some of the factors are completely out of the management’s hand, like how soon the player will fit into the squad, the initial teething phase, his ability to deliver soon and whether he actually believes in the way forward laid out for the club. Carlos Tevez was quick to deliver but he was homesick soon enough and didn’t turn out to be the best investment Sir Alex Ferguson made, after he made his way to their noisy neighbours.

These factors will only come into play once the deed is done, and can only be speculated upon till the cows come home.

Even if a club is unhappy with a player, it will be extremely satisfied to see him walk away at a cut price as long as he gets off its wage bill. Similarly, a player out of a contract is a ‘free agent’ and will therefore be valued accordingly.

Transfer workarounds – for the shallow pockets

There is the choice to loan a player out, rather than sell him outright, with or without an option to buy later. Here no money may change hands, and only the wages may be divided as agreed.

There is also the option to bring in third party agreements, where a third party may invest in a player, and will benefit from the eventual sale of the player. But there are extremely strict regulations enforced on account of the varying interests of third parties, who will logically have a vested interest in the said player.

There are also performance clauses which are included in a player’s agreement, which basically translates to tracked deliverables which decide the return. ‘Pay as you Play’ is an agreed form of conduct where players are paid for their actual appearances as opposed to a set weekly wage structure.

All these workarounds are essentially to lower the bill for a club, and are used quite infrequently and as desired. A lot of rules that are necessary to govern the transfer market are in place. The sacrosanct rule in the transfer market is that no club can approach any player independently.

A club must first touch base with the parent club, and once a transfer amount has been agreed upon, only then can it negotiate personal terms. Aside from this, if they stay in line with the transfer windows, any club with the appropriate money can do as they please, and run amok among the less privileged. Just like Real Madrid.