Transfer economics are more complicated than we think

Clive Mason

When Aston Villa makes a new signing, the first number we all look for is the fee. Things are quite a bit more complicated than that, though.

Over at the SB Nation main site Graham MacAree has a fantastic piece examining the ways in which the economics of transfers are decidedly more complex than we tend to think. While we've all praised Paul Lambert for bringing in a scad of new signings this summer at a low price, I would expect that most of us don't know the wages these players are on. And without that information, we've two variables missing in a single equation, which means we can't tell if the deal makes any sense.

Let me give the helm to Graham for a second:

We can think of surplus value as that player's worth to a club minus what they're paying him. This is almost always a very large number, despite complaints about footballers' wages. It's surplus value that clubs are looking at. Having Lionel Messi is very well and good, but if you're paying €500 million a year for the privilege it's unlikely to lend your club much of a competitive advantage, best player in the world or no.

So not only should we consider a player's transfer fee, but also his wages when figuring out if a deal is any good. Extrapolating from this, we could get the following equation:

True value = value to club - transfer fee - wages

As should be obvious, the value of a player to a club is a pretty arbitrary number, and it must take into account a club's situation. When Darren Bent came to Aston Villa in the January 2011 transfer window, he provided a spark to the club that, in all likelihood, helped them avoid relegation. His exorbitant transfer fee and wages were justified by many who said that the money was well spent so long as Aston Villa remained in the Premier League.

Let's for a moment accept that argument. Had Manchester United picked up Bent that January, he would have been no more than an extra piece in a campaign that saw them win the league by 9 points. Obviously, to United, the value of Bent would have been lower, and thus they could have never justified the fee that Aston Villa paid. (Further complicating the matter, as Graham also points out, are the assets a club has available. If you're flush with cash like Manchester City, £20 million isn't as big of a deal.)

So it's already hard enough to know if a deal is any good, as we've got no great way of measuring a player's value to a club, since that is so inherently situational. Compunding this difficulty is the fact that most transfer coverage doesn't give contract details, so we can never really know what a club is paying for a player. We know the up-front transfer cost, but what about the weekly cost to have someone's services.

And that's something that we'd be wise to keep in mind. Martin O'Neill is retroactively hated around Birmingham as much for the players he brought in as for the wages he agreed to pay those players. And it's hard to tell for certain, but it seems as if Paul Lambert is doing a lot to change the way wages are handled at the club. There has been an emphasis on cutting the wage bill, and one can only imagine that most of his signings are coming on at reasonable rates. It's hard to imagine Aleksander Tonev, Nicklas Helenius, and Jores Okore - among others - being given Bent-esque wages. Nevertheless, we can't be certain about these things unless people report them, which isn't happening.

So when you read transfer stories, remember that you've only got one part of the equation: the fee. After the player is done at Villa we might be able to come up with a reasonable guess at their value to the club. But without that final piece of the puzzle - wages - we're never entirely certain if a deal was any good. I trust that Lambert isn't making stupid decisions, but it'd be nice to know for certain. Unfortunately, I doubt we will any time soon, so transfers are likely to continue to be far more complex than we traditionally think.

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