various factors that influence the fees paid for the transfer of professional soccer players

This essay discusses the different elements that affect the transfer costs for professional soccer players in the top five leagues worldwide. A review of prior research is employed as the approach methodology, and both simple linear regression and multiple regression analysis are performed. Multiple regression analysis is used to identify the different variables that collectively predict a single outcome, which is the amount of transfer fees paid. Simple linear regression analysis is used to examine the relationship between a single variable and its outcome. Age, injury rate, position played, goal statistics, experience, and country are the various aspects covered in this essay. Factors determining the Fees Paid for Transfer of a Professional Soccer Player

Introduction

Soccer has been around for generations and goes back to as early as 1888 where the first English professional soccer league was formed after branching away from rugby sport in 1863. In the late 20th century, several football leagues sprung up and are today professional leagues known all over the world (Galarza, 2011). Soccer as a sport has great significance for a country and the world. On an international level, it promotes international relations peace during international matches between different countries and also when players from one country travel to another country to play for a club. The world cup, which is also a soccer event that takes place every four years, incorporates almost every country in the world to participate in the competition. Transfer of players happens during periods called transfer window which is usually two in a year and regulated by FIFA (Parrish, 2015).

For some South American countries like Brazil, soccer is not only considered a sport but a ritual and religion where opponents settle their differences through the sport. They, therefore, consider the players of the sport as “soldiers” and soccer legends are held in high regard. The economic benefits of soccer to the economy of a country cannot be ignored. Soccer matches attract millions of fans from all over the world who pay entry fees directly in the stadium or indirectly through the broadcasting sports channel. This contributes to the GDP of the country directly (Tuncel, 2016). Personally, soccer is a form of entertainment to watch for the fans and is in itself a form of exercise for the professional soccer players. This sport is not possible without the players who make the action happen. The players need motivation in order to perform to their full capacity. This paper critically examines the factors that determine the transfer fees paid for players in the top five soccer leagues in the world.

Soccer association over the years was based on tradition, but with evolution in technology, players are nowadays monitored in every step they take. They are tracked using sensors, and then an analysis of the recorded video is done to determine the various aspects of the player through a simulation model. All the data are stored in large databases including the tiniest of data such as the number of steps made by a player during the match. Through this data, the player moves and relevant information about the player’s performance can be analyzed and compared to other players (Tuncel, 2016).

Literature Review

The transfer of players from one club to another is managed and controlled by The Transfer System set up in 1885 by Football Association (FA). These transfer regulations were introduced to prevent players from club hopping thus protecting small clubs, but with time it became a form of trade (Morrow, 2013). This has been seen especially in the English clubs that do a lot of transfers as seen on media. Greulich (n.d.) notes that it is during the transfer window that clubs can improve their formation by buying young new players. He further adds that compensation is given for a transfer regarding money or trade-ins. It is from the player’s value that ultimately contributes towards the transfer value.

At the moment, Paul Pogba holds the world record for the most expensive transfer record in history. He was transferred from Juventus Club of Italian Serie A league to the English Premier League club Manchester United for a whopping 105 million euros. This happened in the summer of 2016 window period after Juventus Club were unwilling to let Paul Pogba go and so they had to be given an offer they would not refuse after lengthy negotiations. This was also attributed to fans outcry and demand for him to be brought back to Manchester United Club. Paul Pogba was born in 1993 France and plays as a central midfielder. He also plays for his international team France. Pogba had made 124 appearances with 28 goals for his previous club Juventus before the transfer (Shobe & Gibson, 2016). At the age of 26 years, in 2013, Gareth Bale was signed from Tottenham Football Club to Real Madrid Club for 100.8 million euros which became the highest transfer at the time. He currently holds the second highest transfer fees ever paid for an association soccer transfer. Bale was born in 1989 in Cardiff, United Kingdom. He plays as the center forward for the Real Madrid. He also plays for the Wales national team. Bale helped his team to win two champion league trophies in the past. He had made 146 appearances and 42 league goals for his previous club Tottenham before joining Real Madrid (Shobe & Gibson, 2016).

The value of a player is always viewed as the assessment of how much worth a player is approximate. From the (Oxford, 2006) dictionary, valuation is described as the evaluation and analysis of an investment and how able it is to bring income. Valuation can also be viewed in the qualitative aspect where the variables are depended on by information (Correia, et al., 2015). With the continued exorbitant expenditure on transfer fees, it is now impossible to predict the future (Drucker, 1954). This is compared to driving a vehicle on a dark night without any headlights. Drucker (1954) further suggests that better techniques should be used in valuation as normally it is done through the judgment of stakeholders and common majority feeling. There is no established scale or quantification for comparison. Calculation of value of players should be done through financial management study method in order to alleviate errors (Fouche & Barnard, 2013).

A number of documented literatures have shown that various factors contribute to the valuation of professional players. Gerrard (1995-2007) and Elliott (2014) both agree that the variables that contribute to the transfer fees of players include the future performance of the player. Fulfillment in the future depends on the previous goals scored, the rate of scoring, and the number of serious injuries experienced, the number of games played, nationality, age and international caps. Also, (Viney) points out that the player position greatly influences the transfer fees paid. Goalkeepers are more likely to get lower transfer fees compared to strikers. The bargaining positions of the selling and the buying clubs definitely play a part in the fees (Carmichael & Thomas, 1993). Desperate clubs will settle for fewer fees while well-performing clubs will negotiate for more. Elliott (2014) says English Premier League clubs are not allowed to have more than 25 players. Moreover, selections are made based on United Kingdom players, none- European players and non-European UK players. The specialty of players is also considered such as whether the player is left footed or right footed or can use both feet, and the player’s height.

Aims and Objectives

To determine the factors that influence the amount of transfer fees paid for a professional soccer player to or from the top five soccer leagues in the world i.e. Spain, England, Germany, Italy, and France.

To apply linear and multiple regression in the analysis of the contributing factors that determine the fees paid.

Methodology

To carry out an extensive literature review research of the various factors using the following methods:

Simple Linear Regression Analysis

A single independent variable, explanatory or predictor is used to predict the value of the response, outcome or the dependent variable (Mickey, et al., 2010). This method will be used to determine how a single factor will influence the amount of fees that will be paid for a player transfer.

Multiple Regression

Two or more independent variables or predictors together are used to predict the value of a single response, outcome or the dependent variable (Mickey, et al., 2010). This method will be applied to determine how two or more factors that go hand in hand together will influence the amount of fees that will be paid for a player transfer.

Results and Discussions

From the many kinds of literature reviewed, the following factors were found to have an impact on the transfer fees for professional players:

Nationality

This factor is affected by default as there is a homegrown quota rule which stipulates that out of the 25 players of a squad of any premier league, at least eight of the players must be from that country and also there is a premium for buying players from England. Some African players have a high chance of having fewer transfer fees since they might miss over five weeks of a season as they are playing African Cup of Nations at the time and the time missed can be taken into account. Comparing Robert Firmin from Lithuania who scored ten goals in 36 games for Hoffenheim the previous season and was bought for 28 million pounds versus Kevin Kampl from Slovenia who had scored 11 goals in 31 games from Salzburg in 2013 at a transfer fee of 8.5 million pounds to Borussia Dortmund (Foster, 2016).

Age

Most player transfers take place between the ages of 19 to 25 years. The peak ages generally for most players are 24 to 28, and at the upper ages, the value of a player starts to diminish. Considering Ronaldo and Kaka who were the most expensive players at one time. Table 1 below shows a few basic statistics at the time. Fewer transfer fees are given for younger players since there is uncertainty about their eventual contribution to the team. Also, old players are offered less as their potential has deteriorated and are likely to pick up injuries.

Table 1: Christiano vs. Kaka Statistics comparison

The difference between the two players is the age with three years difference. Can we conclude that the three-year difference can amount to the 24 million pound difference? Although Ronaldo has a better goal scoring ratio, he still earned more.

Experience

This is measured via other factors such as international caps and appearances made previously. The increase in the number of caps plays a major role in the positive value of a player, and also there are numerous rewards senior debuts. Youth international players are usually undervalued in Europe transfer selection models as their experience is considered young. Therefore clubs will pay little transfer fees for such players to be incorporated into the major leagues. But then again, experience comes with age. Therefore, an extreme of one aspect leads to a decrease in the other. For this reason, the average players regarding age and experience are most suitable (Fouche & Barnard, 2013).

Position played

There are five key positions in soccer with roles as a forward, winger, midfielder, defender and goalkeeper. But wingers can also play as forwards. This versatility is always considered by the buying club. The value and transfer fees of the different positions vary from lowest to highest starting from the goalkeeper to the forward respectively. This is because fans watch games in order to see passes, tricks, and goals of which the goalkeeper does very little about. Fans do not go to spectate matches just to see the goalkeeper manning the goal post. Again, the position played highly influences the number of goals scored. A forward is likely to score more goals than the defender. A goalkeeper is likely to score no goals at all. Some recruiting agencies use goal scoring potential as their basis for the selection of the most desired player.

Injury record

Players with a high injury record in the past are likely to fetch a lower transfer fee since the player will miss out on several matches when the player is re-injured. There is also fear of the player having a permanent injury that may render him unfit to play at all or stay out for a very long time. Injuries also come with age and experience. Some serious injuries take over a year to heal while some players are prohibited by doctors not to play for too long or play in positions that may worsen an injury.

Situation of the buying and selling club

If the club the player is being transferred to is desperate for a certain player, they are likely to offer more fees that are demanded during negotiations. Conversely, if the club is wanting a player is contented with the current squad, they will provide any amount the wish to offer and may leave the deal demands too much. A club from which a player is being transferred from will offer their player at low transfer fees in case they are facing financial constraints or if they feel the player’s trend value is slowly going down.

Image rights and iconic status

This is determined by how much famous or popular player is and how much people, and fans love him. Transferring clubs consider how much business the player will bring to a club through the forms of advertising the player does. The buying club will hold the rights to the advertising of such a player. Such players will definitely fetch higher transfer fees on the market.

Length of Contract

Longer contracts will definitely have high transfer fees compared to short ones. Longer contracts are always signed by younger players who show future promise regarding skills and goals scoring. Longer contracts signify that the club is looking into a long-term investment with the player being transferred.

Depreciation

The amortization of a player can be quantified by reduced scoring rate for forwards and by the number of goals that a goalkeeper is scored. Generally, the performance trend is analyzed before any transfers are done. Other intangible qualities such as the main team player or is an indispensable player of the team are observed.

Conclusion

In conclusion, a player from the English origin will have higher transfer fees offered for him compared to players from other regions. Younger players between the ages of 19 to 25 are considered and will have more expensive transfer fees compared to older players who are over 30 years. Players who have a longer experience in the field are preferred as they have mastered the game. Experience comes with age of the player. Forwards and strikers are more expensive compared to defenders and goalkeepers since they are the ones who bring fun in the game when scoring goals. Players with injuries will be sold off for lower fees as they are likely to miss a lot of matches compared to players with no injury records. Clubs buy or sell players according to their financial situation and according to the current form. If the club is in poor form regarding the squad, they will offer more for a player they believe will bring change to the club.

References

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