What is value in the transfer market?

In my last post I put forward that there are at least 3 different type of shoppers in the transfer market. As such quality and value have different meanings to the different buyers and also to the vendors. Today we’ve seen Liverpool value Jordan Henderson at £20m whilst a few weeks ago Real Madrid paid £9m for Nuri Şahin so why the discrepancy?

Every transfer is a gamble.

The reality is no one can predict how a new player is going to perform at their new club, and no one is exempt. There have been numerous players who were rubbish before moving clubs and suddenly becoming world class, whilst some of the best players in the world can forget to take their talent along with them to a new team.

The art is minimising those risks and or maximising the potential. Instinctively the first step to minimising risk is the buying price, as it’s much easier to write off a million dollar purchase than to have the patience to nurture a £20m flop. Yet no one can deny that at €94m Christiano Ronaldo represents good value for Real Madrid.

While it’s easy to determine the current value of a product or a company, football managers are trying to put a price on a human being, who can stop performing because he doesn’t like the weather, or missing his dog, or food, or language, or anything else that affects a product as fragile as the human being.

Price does not equate to quality

History has taught us that in no way does price determine how good or bad a player can be. The price paid for a player is simply the product of negotiations between the two parties.

Continues after ad…

Every team would give you a different value for every player, it’s not about market value, I’d go as far as saying there is no such thing as market value for a player. Deals are made between two parties, there is no established trading price for any player only how much one is willing to pay and at what price another is willing to sell.

The difference is in negotiation acumen or style, depth of pockets, and perceived value.

What can you do for me?

The big question is how will a player fit at a club, how will he improve the team. Exactly why Barcelona placed a lower value on Cesc than they did on Villa. While they already had players to fulfil the role Fàbregas would have played in the team, Villa filled avoid on the pitch hence they paid more for Villa than they were willing to pay for Cesc—one big reason why Cesc will be staying at Arsenal.

Off the pitch there is also value in a player’s brand that must also be paid for, demand for Real Madrid’s shirts went up 350% when David Beckham signed. Whilst it is said that they (Real Madrid) sold 1.2 million “Ronaldo 9” shirts within 6 months of his arrival in Madrid. At €74 that is almost €90m, with hindsight it’s easy to see that €94m was an absolute bargain.

Unfortunately hindsight is not available on the negotiation table, therefore clubs simply have to look at how much they can afford, and take a risk based on how good that player will turn out to be.

So if Liverpool were to sell Henderson for £30m in 2014, and Şahin were to move on for a loss after a year in Spain—like Huntelaar— then the current brouhaha about Henderson will all be forgotten and Dalglish will be hailed a genius. Only time will tell.

Comments are closed