Date: 8th April 2015 at 3:33pm
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Fascinating debut blog for Chelsea FanCast by Ken Barkway on player power…

All this talk of future burnt shirt and Liverpool outcast Raheem Sterling’s unwillingness to sign for the world’s most prestigious and historical club got me thinking about the situation “in demand” players find themselves in these days.

Firstly, the Bosman ruling of 1995 granted players the freedom to walk away from a club without attracting a fee. At the time this was heralded as the end of the transfer market – the passage of a decade of great change in the game has put paid to that myth. It has however made clubs cannier about their management of player contracts – hence this constant round of renewals three years into five year deals.

This isn’t altruism on the part of the club, nor a profession of undying love from the player. It is in fact a meeting of needs. Under contract the club is protected and will earn a transfer fee, and for the right player these are ever bigger. The player will have extended security and improved terms.

So far, so simple.

4449229The players hand has been further strengthened by Financial Fair Play (FFP). This to many is a surprise. Surely the straitened circumstances created by FFP will in turn create downward pressure on player wages and transfer fees? No. Not a bit. And here’s how….

FFP heralded by the slightly potty and not very bright idealist M. Platini as saving the clubs from themselves is in fact the big clubs pulling up the rope ladder to create what first year economics students would call “barriers to entry” of Europe’s great money go round – The Champions League.  Some clubs have complied, some have contrived dubious commercial deals with owners, and others have paid fines. But in the main clubs are attempting to comply.

For a great interview on FFP – Platini’s interview with the peerless Martin Samuel is essential reading.

FFP compliance has made clubs more aware of their player wages budget. Taking Raheem Sleepyhead’s case as an example: The player is reputedly earning something like £40k per week. He is again reportedly not biting the hand off History FC to sign the new deal worth a rumoured £100k a week. So now lighters of Liverpool are at the ready. His advisors are clearly bad people with no grasp of just how special the club is compared to all others – or he just might want to play nearer friends and family. Who knows – that is very much tabloid supposition.

The tear stained shrieks from Merseyside that he is being badly advised though are very wide of the mark. He is being brilliantly advised. Assuming his ascent maintains an even, upward trajectory until the end of his contract and his purported silly valuation stays in the region of the £50m hysterically quoted it makes no sense to stay put.Raheem Sterling

A new club obtaining his services would avoid the inconvenience of having to pay a transfer fee (£50m – that’s a whole Torres!) and writing it off over the period of the contract (usually 5 years for a hefty contract – which is also arithmetically simple) – bought for £50m he’d cost £10m a year before wages – or nearly £200k per week, a considerable FFP hit before wages. The cost of carrying the player would likely be in the region of £15m per year assuming wages at £100k per week.

Obtained free, clearly the economics of the situation change. The pesky transfer fee amortisation is no longer a consideration and the lucky buying club can spend £250k per week on the player and be better off by a few million in FFP terms.

This is why FFP and Bosman have inadvertently created the perfect storm of player power – and why I suspect we’ll see many more players running contracts down. It makes sense. And maybe, just maybe Sterling wants to play for a club whose year isn’t always next year.

Ken Barkway is a very dull accountant and economist who watches football over Jose Mourinho’s shoulder. Follow Ken on twitter @KenBarkway

 

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