toffeeblue9
Player Valuation: £35m
Been reading a number of posts over the last few days about "net spend" and how people assume Moshiri isn't investing money in the club etc and Everton are simply spending the "Lukaku money" etc.
Davek and I have had each other on ignore for a long time, but I've picked up from the posts of other people that he is (unsurprisingly) making this argument, along with a few other people.
To be blunt, it's moronic. It illustrates a lack of understanding of how finances in football work.
I apologise in advance that this is going to be lengthy, but for those of you who can be bothered, point the next idiot who mentions "net spend" in the direction of this explanation. To save myself a bit of time, some of this is taken from various good articles on the subject available on the internet.
There is far more that goes into player costs than transfer fees. Unless the number being offered up clearly includes wages (which is more than half of the equation), and ideally at least a nod towards agent fees and image rights payments, you can safely disregard it as not reflective of that club’s available resources to bolster its squad. To try and debunk this myth about "net spend", I thought it might be helpful to examine some of the actual costs involved in a typical transfer to all of the parties involved
Buying a player
A transfer fee which is publicised is not necessarily the true value of the cost incurred by the buying club for purchasing a player. Teams will agree between them a value which they will feel is a fair price, but there are numerous other financial considerations to the transaction for the purchasing club
Hopefully this gives you an idea about the complexities (and significant cost) involved in any single transfer and player contract and how "net spend" is the laziest, least well-informed argument out there in football discussion. It is simply not a measure which is considered by clubs when looking at the cost of transfer activity. Cash flow, player trading profits from an accountancy perspective, etc (none of which I've chosen to go into here) are all factors, but "net spend" most certainly is not. The next time someone tries to simplify a debate about a teams relative lack of spending by using "net spend" as a measure, please feel free to give them the cyber equivalent of a bitch slap.
Davek and I have had each other on ignore for a long time, but I've picked up from the posts of other people that he is (unsurprisingly) making this argument, along with a few other people.
To be blunt, it's moronic. It illustrates a lack of understanding of how finances in football work.
I apologise in advance that this is going to be lengthy, but for those of you who can be bothered, point the next idiot who mentions "net spend" in the direction of this explanation. To save myself a bit of time, some of this is taken from various good articles on the subject available on the internet.
There is far more that goes into player costs than transfer fees. Unless the number being offered up clearly includes wages (which is more than half of the equation), and ideally at least a nod towards agent fees and image rights payments, you can safely disregard it as not reflective of that club’s available resources to bolster its squad. To try and debunk this myth about "net spend", I thought it might be helpful to examine some of the actual costs involved in a typical transfer to all of the parties involved
Buying a player
A transfer fee which is publicised is not necessarily the true value of the cost incurred by the buying club for purchasing a player. Teams will agree between them a value which they will feel is a fair price, but there are numerous other financial considerations to the transaction for the purchasing club
- Agents Fees - Often overlooked by the casual fan, most teams will enlist the services of an agent when buying a player. The costs for using an agent varies from deal to deal, but 2012 figures published by FIFA showed that 28% of the money spent on transfers was being paid to agents and third parties, this includes money paid by buying clubs, selling clubs and by the players themselves where they have agreed to pay the agent involved a fixed fee or percentage of their signing bonus/overall remuneration package - https://www.theguardian.com/football/2013/jan/08/fifa-transfers-agents-third-parties - In the recent example of Romelu Lukaku, the reported cost to Man Utd of Mino Raiola's services was £12m - this is on top of the reported £75m transfer fee. Regardless of the agent involved, the costs are usually significant.
- VAT - Transfers between clubs in the UK are subject to VAT at the current rate of 20% of the value of the transfer fee. Whether or not VAT is included in the "publicised" transfer fee is totally dependent on the clubs involved. The selling club may include VAT in the figure to help to illustrate to their fans the hefty fee they received, while the buying club may exclude it to try to sell the narrative that they have negotiated a great deal for themselves. An example would be the British record transfer of Alan Shearer in 1996 - £15m was indeed the transfer fee that Blackburn Rovers received, whilst Newcastle had to pay 17.5% (the rate of VAT at the time) extra on top of this, as the official invoice from Blackburn Rovers illustrates - clearly this can add considerable cost to a deal.
- The Premier League - Yes, they take their slice of the action as well. The Premier League charge a transfer levy of 4% on top of the transfer fee. So transfer fee of £10 million, automatically becomes £10.4 million. Charitable bunch that they are, they state that the sums received by the League by way of levy shall be used to pay premiums due under the Professional Footballers’ Pension Scheme and any surplus shall be added to the Professional Game Youth Fund. Page 225 of last season's Premier League Handbook for anyone who is interested - http://pulse-static-files.s3.amazon...169074163/2016-17_Premier_League_Handbook.pdf
- Add-ons and installments- The majority of transfer deals these days are paid in installments, it would be rare to find an example of a transfer which was paid in full, up front (again confusing the "net spend" theory), most transfers also include some form of additional add-ons, usually performance related to the player or the buying club. Sometimes these are publicised as part of the overall transfer fee (again, this would depend whether it was the buying or selling club who are the source of the information). Take a look at the transfer documents relating to the 2015 transfer of Wilfried Bony to Manchester City for a typical example of how a transfer arrangement like this is constructed
- Signing Bonuses - Any agent worth their salt will negotiate a signing bonus for a player signing with a new club. As a rule of thumb, the typical sort of signing bonus involved in a transfer deal these days is about 10% of the transfer fee (I can't give you a source for that, it's information given to me by a colleague whose brother works for an agency - take that one with as much scepticism as you like). The payments for a "signing bonus" are usually staggered over the course of the players contract and are normally owed, in full, if the player leaves the club before that contract is over. A typical example which relates to the transfer of Bebe to Man Utd in 2010...
- Wages - This is better understood by your casual football fan because the vast majority of us are paid wages by our employer, as footballers are. The strange thing about wages, though, is that they are almost universally overlooked when engaging in the "net spend" debate. A great example would be Zlatan Ibrahimovic. He arrived at Manchester United last summer for no transfer fee, so your average "net spend" theorist puts that as a zero in the "transfer fees paid" column and moves on. Completely overlooking the fact that Zlatan added an annual cost of over £19 million to Manchester United based on his salary alone. If United had spent and received nothing in transfer fees and just taken Zlatan on a Bosman free deal, they would have been added over £19m to their costs over the last season. The excellent Football Leaks book has been a great source in laying bare the true cost of some deals - http://www.dailymail.co.uk/sport/fo...n-Utd-signing-Ibrahimovic-Pogba-revealed.html
- Image Rights - On top of their (already considerable) basic wages, footballers now typically demand payment from clubs to use their image in advertising and publicity. This was first exploited by David Beckham and is now commonplace in football contracts. Footballers will typically run a separate company which "owns" their image rights and this company will be paid by the club the player plays for in exchange for allowing them to use the player in advertisements etc. Often these image rights companies are based offshore, allowing them to exploit tax loopholes in the payments they receive (whereas PAYE tax is difficult to negotiate around on basic salary). The following is an excerpt from Juan Mata's contract at Chelsea (available on the Footballleaks site) which relates to image rights and illustrates how players negotiate not only image rights lump sum payments, but also percentages of any net receipts from appearances or endorsements
Hopefully this gives you an idea about the complexities (and significant cost) involved in any single transfer and player contract and how "net spend" is the laziest, least well-informed argument out there in football discussion. It is simply not a measure which is considered by clubs when looking at the cost of transfer activity. Cash flow, player trading profits from an accountancy perspective, etc (none of which I've chosen to go into here) are all factors, but "net spend" most certainly is not. The next time someone tries to simplify a debate about a teams relative lack of spending by using "net spend" as a measure, please feel free to give them the cyber equivalent of a bitch slap.
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