Insights: How Do Transfers Work and What Do They Cost - Part 1

This is not going to be thrilling, but will hopefully be informative...

With the excitement of the transfer window in full swing, it’s only right to dial it back a notch. Let’s discuss something incredibly complex, tedious and boring. The numbers and processes behind making a transfer work!

Part 1 will be discussing the transfer process and part 2 will be discussing the finances of a deal. If I’m feeling like I really want to punish myself further, I might even dare to try and tackle the fallacy of the ‘release clause’ (it doesn’t exist, it’s a nonsense term).

Before I start, I have to give thanks to the excellent Marc Lamberts (@lambertsmarc) for his advice, guidance and insight into profiling vs scouting, and also confirming the process of transfers.

Firstly, I’m going to say this. I am by no means a finance expert for football as a whole. I can recommend either Kieran Maguire (@KieranMaguire) or Swiss Ramble (@SwissRamble) in that capacity. Secondly, I’m going to break one of my ten footballing commandments here - ‘Thou shalt not talk about finances, as it just confuses people and leads to a lot of nonsense’. However, I have spent a lot of time looking into transfer finances and particularly the costs on either side.

Without any further delay - let’s start off with how a transfer works.

A ‘Typical’ Transfer Process

Step 1: Scouting and Initial Enquiries

Firstly, clubs will scour the world in search of prospective players. They will watch them at least once, sometimes multiple times and produce reports on the players. These will cover details about the player from a footballing perspective, but also ideally shed some light on personality. Strengths and weaknesses will be assessed and there will be a very broad ballpark on possible availability and prices.

Profiling vs Scouting

It’s important to remember these are two different things. Scouts sometimes watch games for hidden talent, without necessarily having an assignment to watch a specific name. In contrast, profiling means that you collect information about a certain role - for example, a No. 10, a shadow striker etc. Collecting this data involves accumulating a vast amount of data and details both from a sporting and non-sporting perspective, and it means you get information about how they fit into your club culture, your wage structure, your tactics etc.

If we look at Romelu Lukaku for instance - he’s a good player, but was probably an example of poor recruitment because at no point did we consider using him in the same way Inter have (that said, we also can’t legislate for him doing stupid interviews…)

Step 2: Internal Approval

At this point, scouts will either report to a Head of Scouting, or sometimes to a Director of Football to propose players. Usually they will pitch a shortlist of multiple players for a single position, to cover for different eventualities.

Alternatively, they may report these suggestions to the Finance Director and other parties who are in charge of the club finances. The Scouting team will pitch their proposal to the DOF/FD saying they would like (x) player, explaining why (x) will benefit the team and crucially, they will provide details on how much (x) will cost.

At this point, either a) the FD/DOF will check if the proposal fits into their budgets. This results in them saying a) the player is too expensive, b) suggesting an alternative target for that position or c) deciding to approach the player’s agent.

Gauging Interest

At this point, they will speak to the agent to ascertain whether the player is interested in the move, and also get very broad information on a) the package the player wants (in terms of wages and other bonuses) and b) what the agent thinks the club will want for their player. It’s at this point usually clubs start to get an idea of the terms of a deal, both in regards to the overall cost, but also whether it will be paid upfront, spread over multiple years, a part-exchange etc.)

Assuming that the agent’s answers are acceptable to what the club wants, it’s time to move onto the next step.

Step 3: Offers and Formal Negotiations

As soon as the previous step takes place, it’s now time for the buying club to ask the prospective selling club if they would be willing to sell. If they say no - the entire process shifts back to the beginning with an alternative target from the list (unless players decide otherwise, more on that later).

If they say yes, it’s now time to formally ask for permission to speak to a player’s agent to negotiate a transfer. Up until this point, all discussions with agents have been hypothetical and quite loose - at this point, they can now become serious. They also might ask if they can speak directly to the player to pitch the move to them. I understand this is what has happened with Todd Boehly, Thomas Tuchel and Raheem Sterling. None of this will be granted unless the selling club ascertain that the buyer has a serious interest in making the transfer happen.

Serious Interest

It’s worth explaining the concept of serious interest. A lot of the time this phrase gets misused relating to players that have been scouted or watched. In proper terms, serious interest in a player usually manifests in two forms. Firstly, it is most commonly in the form of an offer. It’s very rare that a club’s first offer for a player is accepted, unless they are absolutely on the money regarding value. This is expected and it opens up conversations between the two clubs to negotiate and see how they can get closer to a deal.

The second form can be in the directly agreement of a fee, and also in responsibility for any significant costs that will arise from the resulting transaction. These include agent fees, signing bonuses and a whole heap of random charges and liabilities that will discussed in Part 2.

Once an offer that is either close to valuation, or one that meets valuation is made, the selling club will formally grant permission to speak to the player’s agent and potentially the player as explained earlier.

Step 4: The Player Package

Once the above has been agreed, the club is now formally allowed to send representatives - usually either the Director of Football, the owner and manager, or sometimes a similar figure of seniority to speak to their prospective player and his agent.

At this point, they will agree on firm commitments on things like wages, signing on bonuses and image rights. Other liabilities such as existing loyalty bonuses may also be waived in order to speed up deals, in exchange for a larger signing bonus. Broad discussions about the player’s personal life such as finding them in a new property, sorting out schooling for children etc. will also take place.

Assuming they can get an agreement, the player’s agent will notify the selling club of this. This is where we sometimes get public announcements of a fee agreed to make a transfer happen.

However, it’s not cut and dry at that point. The relevant parties still need to process the necessary paperwork and details to ratify the transfer on the FIFA Transfer Matching System (TMS). This will be the only place where accurate information about the player’s wages and the finances involved to make a deal happen will be registered, as well as details about potential sell-on clauses, buyback clauses etc.

Unfortunately for us, it’s only accessible by a very small number of people.

Once all of this is done, the buying club can officially announce they have acquired their new player!

A Few Exceptions

Most of the year, agents are just offering their players out. This usually happens without club’s consent and a lot of the time it leads to absolutely nothing.

In some cases, a club will make a player available and will ask an agent to find a new club for a player. At this point, they will directly get in touch with other sides that they think are interested and discuss things like fees, personal terms and levels of interest. More on that later.

Tapping Up

It would be churlish to pretend that every club doesn’t tap up players in one way or another. Whether it is talking to national team colleagues, finding out information from friends or family, or talking to ex-players - it is wrong and technically illegal, but policing it is nigh on impossible. The only way you can ever get somewhere with ‘tapping up’ is if you have clear evidence that it was taking place. One of the recent examples I remember of this was the photos of Van Dijk and Klopp meeting in that hotel in Blackpool when VVD was still at Southampton.

Usually tapping up players - if caught - results in either the transfer falling apart, or the selling club reporting the buying club to their Football Association once the transfer is concluded. That famously happened in the case of Ashley Cole to Chelsea.

Transfer Requests

These usually take place around the point of Step 3. If a selling club decides that they don’t want to let a player go, but the player decides they want to force the move to happen, they can submit a formal transfer request either themselves, or via their agent to their club. At this point, one of 4 scenarios are most common:

1. The club accepts the request for the sale or loan of the relevant player and begins to negotiate with the relevant interested party.

2. The club rejects the transfer request - which can lead to players refusing to train, going on strike etc.

3. The club informs the agent to actively go and look for a new club for their client - this may or may not involve them talking to the rejected buying club.

4. The club refuses to directly respond to the transfer request, which can result in an impasse, whilst privately sending out feelers to other clubs to become involved within the bidding process, creating an auction.

Typically in Chelsea’s case, they have seldom rejected formal transfer requests and usually allow the agent to negotiate with whichever parties meet their valuation of the player as quickly as possible. This avoids them keeping an unhappy player. However, other clubs have rejected transfer requests. There are also consequences for a player for requesting a transfer, however. They lose out on the money that they would be owed as standard for not requesting a transfer, which is baked into most contracts and usually around or up to 5% of the transfer fee, minus any taxes and liabilities. More om that tomorrow.

The Final Word on Transfers

I think it’s best to think of transfers as a very tight funnel. At the very highest level in the game, a lot of players will be discussed. Whether it is agents offering their players around, to extensive worldwide scouting networks, there will be huge swathes of names that are looked at and discussed.

From that batch, a portion of those will be discussed amongst agents and be recommended and debated with directors of football and finance directors.

From that list, a subset of those actually see an offer placed that registers serious interest to warrant further discussion.

From those offers placed, a smaller chunk of those actually result in discussion with the player’s club over the finer details of a deal.

And finally, from those, a small number make it to discussing personal terms, and a few of those actually manifest into transfers.

In short, it’s long, it’s complex and there are probably thousands of deals you’ve never heard of that your club was involved in.

See you tomorrow for the Finances portion.