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Transfer market activities bring excitement and dynamism to the world of football

In the business of football (soccer), leagues, clubs, and players are objects of concentrated discussions and media attention in periods when transfer market activities are peaking. From a business perspective, clubs and leagues find themselves in a context characterized by ‘a pursuit of X-factor’ while the players are striving to find a good balance between factors such as sporting ambitions, playing time, personal development, and MONEY. These constituents are part of the business model, which is in play in the ‘transfer window’. The citations below help to emphasize some of the interesting themes when discussing the transfer market activities:

“The football transfer market is an intriguing, relatively uncharted and potentially very relevant vehicle for explorations of the practical valuations of intangible assets: human capital. As attention for the product football has increased multifold over the last decade(s), the player transfer market has evolved into an international arena of competing stakeholders, with player agents, club executives, and national and international football associations all fighting over the product football and its primary source of income: football players. Hence, any attempt to analyze the empirical valuation of (transferred) football players should try to incorporate a multitude of determinants. Thankfully, the player transfer market is becoming less and less bound by market restrictions. However, the fact that it is a more liberalized market does not mean that it is an efficient market by definition, as the agents operating in it (primarily clubs) may show ‘irrational’ behavior (not driven by financial incentives per se) specific to the football industry.” (Van den Berg, 2011, p. 54)

“There is a growing concern amongst football supporters, government and the wider community about the increasing level of financial and operational difficulties facing many of today’s professional football clubs. The focus of much of this concern currently centers on the many of the clubs owners and where their interests really lie. Clubs that were once the cornerstones of local communities run with sporting success as the primary motivator are seemingly becoming the ‘playthings’ of wealthy individuals with no links to the community or the clubs history.” (Kelly et al., 2012, p. 243)

Inflation has been part of the model over the years (especially due to the Bosman ruling). New questions and discussions are brought to the surface and act as an omnipresent and integral part of the transfer market thrill, e.g. will Gareth Bale end up in Real Madrid and will his price surpass that of Christiano Ronaldo or will Wayne Rooney stay in Manchester United, will he move to Chelsea, or will he be part of the roster of a club in another league than the English Premier League? No matter what, we know that the historic development concerning transfer market activities points to the fact that these questions, discussions, and the actual results of the transfer market activities are sources, which provide a dynamic flow of energy (positive and negative if linked to various stakeholder groups) and a good level of excitement in football. We also know that historic milestones in terms of transfer fee records are subjects to change. This fact has been visible along the process of football’s rapid commercialization extravaganza. Moreover, the business of football has experienced a massive impact of entertainment. Players are part of the business of entertainment and show business for what reason leagues and top clubs have an interest in recruiting the best players as it takes the overall standard and/or quality of the league or club to a higher level. In that sense, football has become more money-driven over the years, which is a tendency that has also been sparked by the massive investments in players in clubs such as Chelsea, Manchester City, and Paris Saint-Germany to mention a few examples of clubs that have transformed substantial capital injections into national or European titles. Some stakeholder groups, especially among football fans, feel that this development is negative in the sense that it subtracts vital components like loyalty and passion from the game? Again, it should be underscored that professional football is serious business these days and that the biggest clubs play an exhausting number of games in various competitions during the season for what reason they need a large pool of players. Additionally, they need star players capable of making a difference, which is a derived part of the impact of globalization on football businesses.

In the contemporary sports market, professional football plays an essential role. The business model is distinguished by the way in which leagues and clubs aim to squeeze the surrounding market place for money, of which the majority still goes to players. As a result, clubs and leagues have become better at finding ways to monetize from their commercial activities. In that regard, I also find it amusing and exciting to discuss all the elements, which surrounds the transfer market activities. The latter entails more than a transfer fee and a monthly salary to the player. Image rights and long-term commercial ROIs related to other business units are part of the model. A club’s transfer market activities branch off to other business units in the club and many considerations may be related to signing or selling a player. Football is an ego-driven business and the egos of players, coaches, managers, investors and chairmen comprise ‘a melting pot of unpredictability’, which is another exciting parameter of this business. What about politics, buyout clauses, or local and national pride? For instance, Spanish club Athletic Bilbao followed a ‘a Basque-only’ policy for many years. Although, the policy has become ‘stretchier’ today, it still shines through as an ever-pervading element of the club’s culture in terms of sending a team with a majority of Basque players on the pitch. Real Madrid’s Christiano Ronaldo has been associated with a gigantic buyout clause, which could release him from his contract with the Spanish top club. Bayern Munich has always shown a tendency to buy promising stars in the German Bundesliga and has thus implemented a strategy linked to beating national competition by buying the best players of its league rivals (Mario Götze from Borussia Dortmund is a recent example).

Other factors also add a level of excitement to the transfer market activities, e.g. religion, daring to challenge and dream etc. The Old Firm in Scotland, i.e. the rivalry between Celtic and Rangers, is an example of a battle between two clubs with different religious foundations. This fact has also influenced the clubs’ transfer activities and although the old battles between the clubs were characterized by Celtic not having Protestant players and Rangers not having Catholic players, the modern and more open approach to running a football business has opened up for more flexibility in that sense and for fighting against sectarianism. All in all, an analysis of transfer market activities gives insight into many exciting and dynamic features but winning games and titles are still important when analyzing the transfer market. Winning is ‘value for money’ when analyzing whether or not the signing of a specific player has been successful since titles enhance all other elements of a football club’s business model. Commercial reasons is also part of that equation for what reason the overall impact of David Beckham’s transfer from Manchester United to Real Madrid would have ‘peaked’ if he (on top of his ‘jersey-selling’ abilities) had helped the club to a new UEFA Champions League title.

This video shows funny and interesting aspects of football transfers:

Video – football transfers.mp4

Sources:

Kelly, K., Lewis, R., & Mortimer, T. R. (2012). In Football We Trust?. International Journal of Business and Social Science, 3(8), 243-54.

Van den Berg, E. W. A. (2011). The valuation of human capital in the football player transfer market. Erasmus University.

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