WSC 198 Aug 03

Barely a day goes by without some doom-laden tale warning of financial disaster for football. Welcome news of a sort therefore came with the announcement last month that Premiership clubs have agreed changes in the transfer system that promise to bring much needed stability to a very jittery market.

In addition to allowing loans between top-flight clubs, chairmen have also agreed that transfer fees between their clubs can now be spread over the length of a player’s contract. Thus, instead of having to pay multi-million pound costs in two tranches (half as a down payment, the rest a year later), purchasing clubs can now negotiate deals that allow much smaller instalments paid at regular intervals.

This seems entirely logical. Only a few clubs are in profit, with ready funds to spend big and quickly. TV revenue, season-ticket sales, prize money and merchandising come in year by year; clubs will now be able to lessen the impact on their outgoings as well as easing the burden on their overdrafts.

At a stroke, the imbalance with signing play­ers from abroad has been levelled out. Buy­ing a player from a foreign club allowed for much more flexibility as to when and how the fee could be paid; now a similar system applies to domestic deals as well. The rule change may also mean that far more devious clauses are inserted into contracts. Sell-on agreements and top-up payments based on appearances may become more Machiavellian still as clubs seek to ensure they get what they paid for. Witness Spurs’ negotiations over Bobby Za­mora, with Brighton allegedly only to get the full amount if Zamora somehow helped Spurs into the latter stages of the Champions League.

However, the new arrangement may in the long term simply exacerbate the concentration of wealth and power in the hands of a few. Clubs with large cash reserves may be able to outbid less wealthy competitors. No change there, but now they needn’t offer more money – just a greater proportion up front. They may even be able to offer a lower total fee than other clubs yet still get their man from a club that needs cash quickly. Would Leeds, for example, prefer to sell one of their remaining assets for a total of £5m but only receive £1.25m each year – or receive £3m immediately?

Phil Clisby of Soccer Investor says of the new arrangements: “Regarding the sale of players, for better-off clubs it is not such an is­sue and it may well pro­vide greater sta­­bility as the club knows it will receive a guaranteed sum for the specified period. But for clubs in financial trouble it could cause problems.”

The days of journeymen signing well paid long-term deals may also be over, as Clisby adds: “What we may see is more shorter-term contracts of up to two years, particularly by clubs in the lower half of the Premiership – clubs that have the threat of relegation and don’t want to risk being burdened with high-earning players on long contracts.”

Birmingham and Bolton brought a lot of players in on loan deals during last season’s January transfer window, for example. One and two-year contracts, echoing the current half now, half later, would negate the effects of the changes. Invariably, what happens in the Premier League will have a knock-on effect lower down – and unsurprisingly clubs out­side the top division could lose out. Clisby believes the situation may even arise where a Nationwide club sells a player to a Premiership club and receives a first instalment – say £400,000 – only to have to immediately pay out more to satisfy a predetermined sell-on figure agreed with the player’s previous club.

All of which poses the question – how long will it be before the clubs are demanding that the tran­sfer sys­tem is chang­ed yet again?

From WSC 198 August 2003. What was happening this month

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