Ever wondered what really goes on in a transfer window? What add-ons are? Or how much an agent gets in commission when a player moves clubs? Our Q&A with Tor-Kristian Karlsen, a Norwegian football scout and executive and the former chief executive (CEO) and sporting director at AS Monaco, answers these and more.
Q. Where does the money come from? Why are soccer clubs able to spend millions to sign a player?
A. Substantial media contracts represent the majority of the income for clubs in the biggest European leagues and in most cases dwarf other (commercial) revenue. Some clubs also have exceptionally wealthy owners — either through outright private means or in the shape of various financial entities like hedge funds, private equity or even national sovereign wealth funds (like Saudi Arabia have done with Newcastle) — whhich often bolster the transfer spending in an effort to fast-track the club to success, and eventually, open new lucrative income streams.
However, even seemingly rich clubs like Barcelona can have issues (as explained here.) Top European sides are still spending big, but UEFA’s financial fair play (FFP) is designed to try and level the playing field a bit.
Q. How much of a player’s transfer fee actually goes to a club? What’s the typical fee for an agent and how is the money transferred?
A. The biggest slice ends up with the club from which the player departs, though it’s common that the player’s previous club retrains a stake of their next transfer fee. The size of this varies from every transfer, but a 10%-20% cut of the next fee is fairly normal (typically calculated on the basis of the profit made from the transfer fee rather than the full amount.)
In the case of players aged 22 or younger, a solidarity payment of 5% of the total transfer fee is also due. The solidary fee is then in turn distributed — by the destination club — among the clubs which held the registration of the new signing while the player was aged between 12 and 22.
Agents are remunerated differently across Europe and beyond. In certain countries they may receive up to 15%-20% of a player’s salary (or the transfer fee), whereas other places have more rigid legislation in place which doesn’t allow payments of more than 5%-7% to the agent.
FIFA, meanwhile, in response to clubs worldwide paying in excess of $500 million in intermediary fees in 2020 (a year in which transfer spending was compromised by the COVID-19 pandemic), is set to cap intermediary expenditure to a maximum 10% of the transfer fee (when representing the club) and 3% of a player’s salary (when representing the player.)
The money from a player’s transfer is wired between the two club’s official, assigned bank accounts — as indicated in the FIFA TMS (Transfer Matching System.)
Q. What are examples of some add-ons to a fee? And why are they included in seemingly every transfer deal now?
A. Add-ons are additional payments that kick in once a certain objective is reached. The objective can be the player winning trophies, qualifying for Europe or reaching a set number of appearances for the new club. Those are the most common examples, but other more creative ideas — national team call-ups, goals scored, or even winning the Ballon d’Or — can also end up in the transfer agreements. And there is no limit, meaning that when Bayern Munich signed an 18-year-old Renato Sanches from Benfica for an initial €35m in 2016, the add-ons (including if he was named in the World Team of the Year or FIFA World Player of the Year) made the total deal worth €80m.
Add-ons are usually a means to smooth things right at the end of negotiations when the two parties are close enough to agree in principle, but not quite near enough to close the deal.
Q. What sort of bonus payments do players usually get?
A. At the highest level, bonus payments are usually performance related: games played, matches won, goals scored, etc. While some clubs operate with a strict, team-defined bonus system, others are inclined to offer additional terms or the odd perk to make a big-name signing extra happy.
Players are well taken care of by their clubs, with player liason officers handling a lot of their personal business like finding houses, schools for their kids or even fixing windscreen wipers. So once they are part of the squad, there isn’t much they need to focus on outside of the pitch.
Q. What role does the CEO, manager and board play in recruiting a player? And who are some of the key people behind the scenes?
A. Ideally the selection — from the initial spotting and scouting of the player, to requesting the initialisation of the signing — should be made by the head coach, scouting staff and sporting director (where such a role is in place.) The CEO would normally start work when finances start to enter the frame (though preparatory negotiations are typically handled by the sporting director), while the board or owner will have the final word in approving the move.
There are tons of other people involved during the process, with lawyers and agents scrutinising the contracts in the final stages of the deal, plus plenty of club support staff doing their bit. Though transfer agreements and personal contracts are getting progressively standardised these days, there are always minor details to be thrashed out — such as the wording of the text, or resolving small technical matters.
While the paperwork is being prepared, the club’s medical team will be performing an extensive in situ check on the prospective signing (having already checked over their prior injury record.) All being fine, the club’s media and communications officers will ensure a smooth (and preferably slick) presentation of the new signing, usually on social media to begin with.
Q. How long can clubs spend scouting a player before they decide to sign them?
A. At the highest level, players are increasingly signed on the back of a rigid, lengthy process which entails months of preliminary scouting with the target having featured on both short and long lists. In certain cases, a player may even have been spotted years before, with regular checks being made — physical scouting, data analysis and via video streams.
In other scenarios, opportunities may arise due to injuries or a change of priorities (a sudden departure being a common reason.) Those cases might necessitate a tweak to a club’s strategy, leaving aside certain elements of the preferred modus operandi to move swiftly. Even then, however, the player would almost invariably have appeared on the scouting team’s radar at some point. Though they may not have undergone all the standard scouting steps, an extensive dossier on the player would, in most cases, already be in place.
Q. What is the hardest thing when it comes to transfer negotiations?
A. Negotiating transfer fees with the clubs (unless there’s a release clause) and wages with the player pose the most challenges. In principle, one should be willing to walk away from any negotiation, but if your No. 1 target has signalled the intention of joining your club — and an agreement with the other club might be doable too — closing the deal can be become costly, with demands increasing almost by the hour.
Language barriers can come in to play but the player usually ensures they are represented by someone who can make themselves understood internationally. Things like working out tax issues can be tricky, but in most cases it’s chiefly the player’s concern more than the club’s and most high-level agents would have prior experience or a deep knowledge of the matters at hand.
Q. What are some of the key reasons that a transfer falls through?
A. Today extremely few transfers would ever be jeopardised due to slow or incompetent handling of paperwork. All international transfers are uploaded to FIFA’s exceptionally simple and practical TMS and the registration documents are effortlessly uploaded to the national FAs digitally. Moreover, during the year’s two transfer periods, club staff (and FAs) would be on stand-by to handle any incoming paperwork or be ready for most eventualities.
David de Gea may be pleased to know that the days of faulty fax machines are numbered! When a transfer breaks down it is predominantly down to money — the player or the club, or in few cases the agent’s fee, failing to agree on the numbers — or a sudden change of heart from either of the three parties. On rare occasions there could also be something in the player’s medical that a club isn’t happy with.
Gab Marcotti and Rob Dawson update on Cristiano Ronaldo’s future after he was left on the bench for Man United’s win vs. Liverpool.
A. In most cases it’s a matter of getting the player off the books as the termination settlement is often significantly lower than the total outstanding wages if the contract was left to run down. Especially with a player on an expiring contract — with an extension ruled out — one might be better off agreeing to an early termination if the head coach has made it clear that player is no longer likely to feature, or is perceived to have a negative influence on the team.
Q. Why do some clubs leave it so late until deadline day to do their business?
A. There are several reasons. Sudden injuries or departures — where the club received an offer too tempting to turn down (again, especially relevant when the player is in the last year of contract) — can precipitate last-minute transfer moves. Though it might not be in line with the club’s long-term strategy or best practice, starting the season badly can also force some last-minute activity in the transfer window. As much as it can be an expensive way to paper over the cracks, being seen to strengthen the team is often the only way to appease disgruntled fans or media questioning the club’s ambitions.
Certain opportunities may also arise right at the end of a transfer window, with previously unavailable players suddenly being open to join due to previously unforeseen circumstances, or as a result of “transfer dominoes” elsewhere. Some clubs — especially those who aren’t desperate to let a player leave — know that they’re likely to fetch a greater transfer fee as the deadline looms, so will only start listening to offers with just a day or two to go. On the other side of the coin, a club may feel it’s easier to put pressure on another club or player as the time ticks down, so they may end up with a cheaper deal than if they had made a move months earlier.