In my previous post, we looked at how national governments get involved in world football, where does economics come into play in the sport? Simply put, the answer is the transfer market. If you do not know what this is, it is a time in the summer and in the winter when the market opens for clubs to buy, sell, and loan players to other clubs. But how does a club decide on the price of a player? This is the question that we are going to look further into.
In football, there is no price floor or price ceiling regulating the price of players, the cost simply depends on how much the manager is willing to pay for them. The tricky part is that there is no cost calculator, or statistic analyzer that values players based on the numbers they make on the pitch. Club managers have to look at a variety of different factors prior to purchasing a player. Some of these factors include squad status, age, adaptability, image rights, and many others.
Take squad status for example. If one manager, Clarence Seedorf, the manager of AC Milan wishes to buy Thiago Silva from Paris Saint Germain, he will have to pay much more than if he should choose to buy Marc Bartra from FC Barcelona simply because his squad status is much higher than that of the later. Silva is not only a starter, but is the captain of the team, therefore his value to PSG is much greater than Bartra is to Barca, who is not even a regular first team starter, and will therefore have to pay a much greater sum of money to allow the club to release him.
A second factor managers look at when valuing players is age. In most cases, young players are valued and a much higher price than those in a higher age bracket because they have much more potential. If a player is within the ages of 16-20 and is already recognized around the world, many managers will want to have him in their squad and so his estimate value will go up. In economic terms, demand goes up, price goes up. On the other hand, even if a player was once world class, managers will think twice before looking to purchase him if he is passed the pique of his career. Although he may still be far greater than many players, in a few years time, he will no longer be able to perform even close to the same level, and his price will decrease causing the club to lose money on him.
Adaptability is another huge trait managers look for. Obviously with young players who have not played in multiple leagues it is much harder to gauge, but with a little more experienced players adaptability is key. If a player is only capable of playing in one position, with a certain style of play, his value to the interested manager will decrease because he does not offer as much as the player with the same position who is able to play other roles in various styles of play.
Finally, managers look at image rights. Unfortunately, transfers are not always about the performance of the player, but the image they bring to the club and the sales they will make. For example, Fernando Torres was sold to Chelsea form Liverpool in 2011 for a total of 50 million pounds even though he seemed to be passed his pique. Although many Chelsea fans would say the transfer was a horrible mistake, when looked at from an economic perspective, it was quite beneficial to the club. Torres is known as a jersey seller. A study was done on this specific transfer and upon researching, it was found that in the first few months the huge figure of 50 million was already paid off from jersey sales alone. Even though Torres has never earned a regular spot in the starting 11 at Chelsea, from a business standpoint, Carlo Ancelotti, the club's manager at the time, did not make a mistake in signing Torres, but in fact it was a huge success.
In conclusion, there is not a concrete system in valuing soccer players, but instead their worth or price is decided by manager's demand of them based on the several factors above.
