Where Does the Money Go When a Club Buys a New Player from Another Club?

In the world of professional football, the transfer of players between clubs can involve complex financial arrangements. This article will explore the various aspects of where the money goes when a club decides to buy a new player from another club, covering scenarios such as the use of release clauses, the impact of agent fees, and the operation of sell-on clauses.

Introduction

Modern football transfers are often financially driven, with the allocation of funds to different parties dependent on the specific terms of the player's contract and the mechanisms in place to facilitate the transfer. Understanding these mechanisms is crucial for both clubs and fans to grasp the full picture of the financial implications of player transfers.

Case 1: When the Player Already Has a Contract with His Current Club

In certain situations, a club may wish to sign a player who is still under contract with their current club. This scenario can be tricky and often involves a financial release clause. For instance, if Manchester United desires to sign Cristiano Ronaldo who is under contract with Real Madrid, the process is not as straightforward. The club would have to pay Real Madrid the release clause amount—a predetermined sum that allows the player to leave the club—and then negotiate terms with the player himself. If the release clause is significantly high, as it often is for top players, the cost can be substantial. In Ronaldo's case, for example, suppose the release clause is set at one billion euros. Manchester United would have to pay Real Madrid this amount to activate Ronaldo's transfer, and subsequently, they would need to make a competitive offer to the player to secure his signature.

Note: The money paid to the previous club (Real Madrid in this case) typically does not benefit the player directly. The player may receive a portion of the fees, as discussed later in our article.

Case 2: When the Player Is a Free Agent or Under Contract with an Expired Clause

In cases where a player is a free agent or his contract with his current club has expired, the process is much simpler. Clubs like Barcelona can sign Lionel Messi directly, provided they make a suitable offer. The money in this scenario goes directly to the player or their agent. The club negotiates terms with the player or their representative, and the transaction is more direct without the need to involve the previous club.

The Role of Agent Fees

Agent fees play a significant role in football transfers, especially in the first two scenarios. An agent typically receives a percentage of the transfer fee as a commission for facilitating the move. The percentage can vary but is usually around 5-10%. In the case of Ronaldo's hypothetical move, the agent representing him would receive a substantial sum from Real Madrid should they agree to the release clause. Similarly, if Bath’s player is transferred and Bath has an entitlement to a portion of the transfer fee, their agent would receive a commission based on the agreed amount.

Sell-On Clauses: A Source of Additional Revenue

Another crucial aspect of player transfers is the sell-on clause. This is a provision that guarantees that the player's original club will receive a percentage of the transfer fee if the player is subsequently sold by the new club. This mechanism is used primarily to ensure that the original club is not left out of the financial benefits when the player's value increases. For example, if Manchester City sells Gashi to Liverpool with a sell-on clause, and Liverpool then sells Gashi to Chelsea, a portion of the transfer fee from the Chelsea deal would be paid to Manchester City. This not only helps the original club to participate in future sales but also provides them with a secondary source of revenue.

Conclusion

The allocation of the money when a club buys a new player from another club is multifaceted and depends on various contractual agreements. Understanding these arrangements can shed light on why certain transfers are more expensive than others and why clubs sometimes engage in strategic negotiations to secure the services of a player. For more detailed insights into the intricacies of football transfers and related financial mechanisms, continue reading this article.