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THE FINANCES OF FOOTBALL TRANSFERS 
What are the true costs behind a football transfer?
How are clubs able to finance their transfer activity?
I'll break it down in this short thread, giving you a simple example to follow
THREAD
What are the true costs behind a football transfer?
How are clubs able to finance their transfer activity?
I'll break it down in this short thread, giving you a simple example to follow
THREAD
TRANSFER FEES ARE PAID IN INSTALLMENTS 
When the media quote a transfer fee e.g. £60m, often the buying club will not transfer the full £60m on the day of the transfer
This reported transfer fee is often different to the amounts paid to the selling club
Let me explain
When the media quote a transfer fee e.g. £60m, often the buying club will not transfer the full £60m on the day of the transfer
This reported transfer fee is often different to the amounts paid to the selling club
Let me explain
EXAMPLE 
Chelsea "pay" £60m for a striker
The transfer fee agreement may state:
• £30m up front
• £5m on the 1st and 2nd anniversaries of the transfer
• £10m if the player wins the Premier League & UCL
• £10m if the player scores 50 goals for Chelsea
This is common
Chelsea "pay" £60m for a striker
The transfer fee agreement may state:
• £30m up front
• £5m on the 1st and 2nd anniversaries of the transfer
• £10m if the player wins the Premier League & UCL
• £10m if the player scores 50 goals for Chelsea
This is common
EXAMPLE cont.
So if the player doesn't win the Premier League/UCL and fails to score 50 goals, Chelsea will only pay an overall £40m to the selling club
A £20m variance to the reported transfer fee of £60m
So if the player doesn't win the Premier League/UCL and fails to score 50 goals, Chelsea will only pay an overall £40m to the selling club
A £20m variance to the reported transfer fee of £60m
WAGES 
Usually, a player's salary over the length of a contract will be the most expensive element to the club
In 2019
Avg. Premier League player salary exceeded £3m per year (Global Sports Salary Survey)
Or ~£61k per week
This figure has risen by ~£10k in 2 years
Usually, a player's salary over the length of a contract will be the most expensive element to the club
In 2019
Avg. Premier League player salary exceeded £3m per year (Global Sports Salary Survey)
Or ~£61k per week
This figure has risen by ~£10k in 2 years
WAGES cont.
However, an elite Premier League player could be earning up to £13m per year (pre tax)
Or ~£250k per week
Over a 5 year contract, his wages will cost the club £65m
For context, the Paul Pogba's reported transfer fee to Man Utd was £89m
Wages are significant
However, an elite Premier League player could be earning up to £13m per year (pre tax)
Or ~£250k per week
Over a 5 year contract, his wages will cost the club £65m
For context, the Paul Pogba's reported transfer fee to Man Utd was £89m
Wages are significant
BACK TO OUR EXAMPLE
So, the transfer fee for Chelsea's new striker is £60m
His wages are £65m over his 5 year contract
The total cost to Chelsea is £125m
Below is an annual breakdown of this cost
So, the transfer fee for Chelsea's new striker is £60m
His wages are £65m over his 5 year contract
The total cost to Chelsea is £125m
Below is an annual breakdown of this cost
COST TO THE CLUB 
Annual Total Cost = amortised transfer fee (transfer fee ÷ contract length) + annual salary
• £60m fee + 5 yr contract = £12m per year (amortised transfer fee)
• £250k p/w contract = £13m annual salary
£12m + £13m = £25m annual total cost
Annual Total Cost = amortised transfer fee (transfer fee ÷ contract length) + annual salary
• £60m fee + 5 yr contract = £12m per year (amortised transfer fee)
• £250k p/w contract = £13m annual salary
£12m + £13m = £25m annual total cost
WHERE DOES THIS MONEY COME FROM? 
1. Broadcasting Revenue
• TV rights deals e.g. BT & Sky
2. Commercial Revenue
• Marketing & sponsorships with other brands
3. Matchday Revenue
• Ticket sales, food & hospitality
1. Broadcasting Revenue
• TV rights deals e.g. BT & Sky
2. Commercial Revenue
• Marketing & sponsorships with other brands
3. Matchday Revenue
• Ticket sales, food & hospitality
1. BROADCASTING REVENUE
A TV channel must buy the right to broadcast a match from the football league
These rights are sold domestically & abroad
A new Premier League club can expect ~£100m in broadcasting revenue
• £75m domestically
• £25m abroad
Bigger clubs earn more
A TV channel must buy the right to broadcast a match from the football league
These rights are sold domestically & abroad
A new Premier League club can expect ~£100m in broadcasting revenue
• £75m domestically
• £25m abroad
Bigger clubs earn more
2. COMMERCIAL REVENUE
What do Arsenal, Real Madrid & AC Milan all have in common?
They all have "Fly Emirates" as their global sponsor
Emirates spends 35% of its advertising budget in football
https://www.emirates.com/uk/english/about-us/our-communities/sponsorship/football/
What do Arsenal, Real Madrid & AC Milan all have in common?
They all have "Fly Emirates" as their global sponsor
Emirates spends 35% of its advertising budget in football
https://www.emirates.com/uk/english/about-us/our-communities/sponsorship/football/
2. COMMERCIAL REVENUE cont
Shirt sales are another huge source of income for clubs
Juventus sold 520,000 Ronaldo shirts in only the first 24 hours of him signing with the club
This equates to $60m in sales
However, clubs will only get 10-15% of shirt sales
So $6m-9m for Juve
Shirt sales are another huge source of income for clubs
Juventus sold 520,000 Ronaldo shirts in only the first 24 hours of him signing with the club
This equates to $60m in sales
However, clubs will only get 10-15% of shirt sales
So $6m-9m for Juve
3. MATCHDAY REVENUE
Ticket sales, merchandise, food & drinks
Bigger clubs generate more of this income than smaller clubs due to stadium capacity & ticket prices
Arsenal:
Stadium capacity = 60,000
Avg ticket price = £85
Derby:
Stadium capacity = 38,000
Avg ticket price = £25
Ticket sales, merchandise, food & drinks
Bigger clubs generate more of this income than smaller clubs due to stadium capacity & ticket prices
Arsenal:
Stadium capacity = 60,000
Avg ticket price = £85
Derby:
Stadium capacity = 38,000
Avg ticket price = £25
ACCOUNTS BREAKDOWN 
Here's a breakdown of Chelsea's accounts for the year to 30th June 2018
• Revenue = £448m
• Wage bill = £246m (55% of turnover)
• Pre tax profit = £30m
REVENUE STREAMS
• Broadcasting = £204m (45%)
• Matchday = £74m (16%)
• Commercial = £170m (39%)
Here's a breakdown of Chelsea's accounts for the year to 30th June 2018
• Revenue = £448m
• Wage bill = £246m (55% of turnover)
• Pre tax profit = £30m
REVENUE STREAMS
• Broadcasting = £204m (45%)
• Matchday = £74m (16%)
• Commercial = £170m (39%)
STATSTICS - 2019 
• Record spending by clubs of $7.35bn
• 18,042 international transfers
• 80% of all spending on transfer fees came from 100 clubs
• England had the largest negative net balance of -$549.9m
(Fifa- Global Transfer Market Report)
• Record spending by clubs of $7.35bn
• 18,042 international transfers
• 80% of all spending on transfer fees came from 100 clubs
• England had the largest negative net balance of -$549.9m
(Fifa- Global Transfer Market Report)
Football is an industry
Some clubs have modest financial capabilities whereas others are able to throw hundreds of millions for a player to join their team
Unfortunately, it's unlikely that the smaller clubs will ever catch up to the big clubs for this reason
Some clubs have modest financial capabilities whereas others are able to throw hundreds of millions for a player to join their team
Unfortunately, it's unlikely that the smaller clubs will ever catch up to the big clubs for this reason
